7 reasons to be bullish now

Reasons for being more positive: continued healthy wage gains and record household net worth; strong corporate balance sheets that support business-investment spending; lower interest rates; deficit spending by governments that stimulates growth; and a weak dollar that has spurred enough growth in exports to offset housing-sector weakness.

Here are some ways to play the rebound:

Go with tech-stock growth

Robert Turner of Turner Investment Partners favors growth stocks in a slower growth environment. This seems counterintuitive, but it makes sense.

As the economy slows, fewer companies can generate superior growth, and that pumps up demand for some stocks because of their scarcity value. Turner is worth listening to because his Turner Concentrated Growth Fund (TTOPX) is up about 29% this year, compared with 4.4% gains for the S&P 500.

To find growth, Turner likes the "three V's" in technology: the rise of Internet video, which benefits Cisco Systems (CSCO, news, msgs); the "virtualization" of servers to increase capacity for companies, a job done by VMware (VMW, news, msgs); and the new Vista operating system, which Turner thinks will continue to help both Intel (INTC, news, msgs) and Microsoft (MSFT, news, msgs). (Microsoft is the publisher of MSN Money.)

Follow the leaders

Robert Bacarella manages the Monetta Fund (MONTX) by following the smart money into companies for which investor expectations are improving. He does this by monitoring stocks' price and volume changes, checking company reports for signs of improvement and peeking at the portfolios of his most successful peers. His large-cap growth fund is up 25% this year with this strategy.

One group that stands out now is industrial companies that sell equipment, especially agricultural equipment, and machinery abroad.

Two companies in this group that look attractive are Manitowoc (MTW, news, msgs), which sells cranes, food-service equipment and marine products, and Chicago Bridge & Iron (CBI, news, msgs), a global construction and engineering company with exposure to the energy sector, where growth has been strong.

Broken but fixable

One portfolio that Bacarella checks regularly is the Hodges Fund (HDPMX), run by Don Hodges. It's easy to see why: The fund is up 24% annualized over the past five years, or 10.4 percentage points a year better than its peers. Plus his fund's top holdings are updated more frequently than most mutual funds. You can check them at his company's Web site.

Hodges says he likes several well-known companies that have been beaten down in part by tax-loss selling, even though they have powerful long-term franchises. His list: Wal-Mart Stores (WMT, news, msgs), Home Depot (HD, news, msgs), Hershey (HSY, news, msgs) and Citigroup (C, news, msgs).

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"At the moment they look uninteresting, but they are great companies that will adjust and do well in time," Hodges says. "Investors have knocked them down to prices where they represent good value and limited downside risk."

Big, international and safe

Like Turner, T. Rowe Price fund manager Bob Smith likes large-cap growth companies, in part because they have more room to cut costs but still have enough to invest for growth. He also looks for those that have big exposure to emerging-market economies, where Smith thinks growth will remain strong even if the U.S. economy slows.

Smith ran the T. Rowe Price Growth Stock Fund (PRGFX) for 12 years, and he just took the helm of the T. Rowe Price International Stock Fund (PRITX). His former fund returned 12.9% a year over the past five years.

He points out that emerging-market governments are in better financial health than they have been in for a while. This means they will continue to spend on infrastructure improvements even if the U.S. economy slows. "Companies that are exposed to these markets are going to grow faster than those that aren't," he says.

One play on these themes is General Electric (GE, news, msgs), which gets a lift from the infrastructure build-out in places such as India and China because it sells equipment for power plants, rail systems and alternative-energy systems. There's also strong demand from the Far East for planes using General Electric's aerospace products.

Smith likes Danaher (DHR, news, msgs), an industrial conglomerate that sells water-filtration systems and manufacturing-process-control systems. The company has solid financial strength, which means that "during tough times they can buy other companies at great prices," Smith says. Schlumberger (SLB, news, msgs), down 18% since mid-October, looks like a bargain because its oil-services business should grow by 15% to 25% a year for the next three years, he says.

At the time of publication, Michael Brush owned T. Rowe Price mutual funds.

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