Editors' Pick: Originally Published Wednesday, Dec. 16.

MKM Partners
is cautious about 2016, but the boutique investment firm has 11 favorite stocks for next year.

"With modest growth, impending Fed tightening and an aging business cycle, our macro outlook for 2016 is a cautious one," wrote Michael Darda, Chief Economist and Chief Market Strategist at MKM Partners in a note to clients.

"The last three tightening cycles (starting in 1994, 1999 and 2004), did not occur with credit spreads as wide as they are today or inflation expectations as low as they are now. [Nominal GDP] growth was steady to accelerating, instead of slowing," he wrote. "Thus, we continue to worry that the Fed will risk tipping the business cycle over without much actual 'tightening.'"

MKM Partners investors should make sure their portfolios are "defensive, diversified, liquid and set up to handle heightened volatility in assets and sectors sensitive to the business cycle," the note said. For investors that cannot hold cash and must be invested, the firm recommends investing in utilities, muni bonds and long treasuries.

Check out MKM Partners' top stocks for 2016. The group is paired with ratings from TheStreet Ratings, TheStreet's proprietary ratings tool, for another perspective and includes snippets of MKM analysts' investment theses on the stocks.

TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equity market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014, beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year. 

Here's the list and when you're done check out Bank of America's 10 stock picks for 10 S&P sectors in 2016.