Veteran portfolio chief sees bright spots in volatile market

With an investment career spanning more than 40 years, Ed Cowart has seen his share of bull, bear and deer-in-the-headlight markets.

Given the market's recent wild swings, Cowart, a managing director and co-portfolio manager at Eagle Asset Management, says investors not only should get used to continued market volatility and wide swings, but learn to love it.

"It seems like something big has happened, but the overall path of the market hasn't been all that dramatic, it's only a few percentage points off all-time highs,'' says Cowart, who oversees the Eagle Growth & Income Fund and helps manages the money management firms's equity income managed accounts.

Volatility represents buying opportunities, especially for those with long-term investment horizons. "I tell people if you have 20 to 30 years ahead of you, hope stocks go down" to take advantage of depressed prices," he says.

"We think there's still money to be made in stocks. Most bull markets have topped out with market multiples in the low 20s," Cowart says. "We're around 15 to 16. You still have the wind at your back. Where else are you going to go?"

Although overseas markets, particularly Europe, offer more potential in the wake of quantitative easing, Cowart says U.S. stocks are more attractive.

"It seems odd that six years past the recession, it's only in the past year or two that we've begun to get a normal recovery. What we've got operating right now is a virtuous circle of employment growth, leading to income growth, leading to sales and production gains."

Cowart, who specializes in the energy sector, says that despite the slide in crude oil prices the past six months, several beaten-down oil and energy sector stocks are compelling at current levels.

Crude oil prices have already risen from last week's sub-$45 a barrel 2015 lows, with benchmark West Texas Intermediate settling near $49.86 on the New York Mercantile Exchange. Still, crude is down more than 54% from June 2014.

"We're pretty confident things are at or near a bottom in oil prices,'' says Cowart, noting that several energy companies are slashing capital expenses and curbing production, which the industry hopes will reduce the global oil glut while cheap gas prices continue to drive up demand.

Heavily leveraged companies with high oil productions costs are likely headed for failure, says Cowart, who expects oil and gas industry mergers & acquisitions - at 10-year highs in 2014, to continue at high levels.

But Eagle recently added to its holdings in the sector, including oil and gas producer Occidental Petroleum (OXY), energy services provider Halliburton (HAL) and shale oil driller EOG Resources (EOG). Cowart also likes Devon Energy (DVN) and Baker Hughes, the energy services provider Halliburton has proposed acquiring for $34.6 billion.

"It's a cheap way to buy Halliburton,'' and "you're going to have a (combined) company with strong products and distribution that will compete around the world."

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