Investors should be playing defense, not offense, now that the S&P 500  is up more 3% in 2016, said Todd Lowenstein, senior portfolio manager for HighMark Capital Management. The outlook is a "little gray," he added.

"You have an aging market cycle and an aging economic cycle with corporate profits at their peak," said Lowenstein. "Complacency is low, and you have risks hiding in plain sight, like the Chinese banking system problems and emerging market debt."

Lowenstein said HighMark takes a long-term, contrarian approach to investing. Even though he sees problems brewing in the overall market half way through the year, he said he is still finding stocks to buy.

For example, Lowenstein is bullish on GE (GE) - Get Report , which is down over 3% year to date. He said the market is not sufficiently appreciating GE's "silent transformation," akin to the industrial giant it once was.

"By 2018, they will be 90% industrial," said Lowenstein. "They are launching productivity improvements and getting religion on asset utilization and driving improving margins. We anticipate accelerated capital return as well."

Lowenstein is also positive on Target (TGT) - Get Report , down 5% year to date, despite the fact that the retailer's shares were slammed earlier this month after it missed Wall Street's first-quarter revenue forecasts and offered weak guidance. Target reported a 5.4% decline in sales, which CEO Brian Cornell blamed on "an increasingly volatile consumer environment." Second-quarter-earnings guidance of $1 to $1.20 a share fell short of estimates of $1.36 a share.

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"They are getting back to basics. We think, given the low expectations surrounding the stock, investors are getting paid to wait," said Lowenstein.

Finally, Lowenstein is a fan of Microsoft (MSFT) - Get Report , up 11% year to date -- another stock that was hammered after failing to hit Wall Street's profit targets in the first quarter. In Lowenstein's view, Microsoft may have had a bump along the road in the first quarter, but the company is successfully making the transition to the cloud.

"This is a compounding machine that investors do not want to leave behind," added Lowenstein.