SAN FRANCISCO (TheStreet) -- Ray Edelman, co-manager of the Allianz RCM Large-Cap Growth Fund (RALGX) , says technology will lead the market next year, especially companies such as Apple (AAPL) - Get Report and Microsoft (MSFT) - Get Report.
The fund, which has earned four stars from
, has risen 36% this year, better than two-thirds of its peers. It has gained 2.3%, annually, on average during the past five years, better than 74% of its Morningstar rivals.
Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks in five fast and furious questions.
Are you a bull or bear?
I am a bull. The U.S. economy is growing and should continue to expand in 2010, boosted by government spending and an increase in capital spending. While we expect the overall direction of the market will be higher over the next year, we would not be surprised to see the market pull back sometime during the first half of 2010, following the steep gains posted since March.
Further out, we are concerned about the large budget deficit and its impact on future growth in late 2010 and 2011, especially as the government winds down its fiscal stimulus programs.
What is your top stock pick?
Our top stocks picks are Apple and Microsoft. These companies have strong product cycles -- iPhones, Macs, Windows 7 -- that should help drive revenues and earnings higher.
Outside of technology, we also like energy services stock
in industrials. We believe both stocks are well positioned to benefit as demand accelerates and capital spending increases.
What is your top "under-the-radar" stock pick?
Starwood Hotels & Resorts
is a great sleeper pick. Lodging stocks were hard hit by the recession as businesses reduced travel budgets and consumers tightened their purse strings. We expect Starwood will outperform the market as revenue per available room and occupancy rates recover.
We like Starwood's significant international exposure as international markets are showing signs of improving faster than the U.S. Approximately 60% of Starwood's managed and franchised hotel revenue is generated internationally.
What is your favorite sector?
Definitely technology. The sector has been a winner in 2009 and is likely to continue its leadership position in 2010, driven by trends including the continued move towards a digital lifestyle, increased adoption of smartphones, and a PC replacement cycle.
What sector or stock would you avoid?
Food and drug retailers. They are facing deflation and intense competition from retailers including supercenter giant
, the price leader in the segment.
Reported by Gregg Greenberg in New York
Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.