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A number of large-cap stocks have spent the last decade in the doldrums, but have emerged with better numbers and incredibly low price/earnings ratios. In this exclusive interview with MoneyShow.com, John Buckingham, chief investment officer of Al Frank Investment Management, shares his top sectors and stocks to watch.

Are you looking at any sectors that would appreciate in the sweet spot of the economic recovery?

Well, in our portfolios we’re underweight financials, and we’re there because we’re having a difficult time trusting the numbers.

It’s not that we don’t believe management. That has nothing to do with it. It’s just that it’s hard to know what the next level of reserves will be if you’re a bank.

Have they written off enough? Next quarter, are they going to do 2X instead of 1 1/2 X in terms of their writeoff? So, financials were underweight.

We’re a little bit overweight in technology. I do like a lot of the tech names, especially some of the bigger cap tech names, like a Microsoft (MSFT), believe it or not. I know a lot of people don’t like Microsoft, which makes me very happy, but you have a P/E ratio of ten, you have a great balance sheet, you have a monopolistic business, and you have a nice dividend yield.

Intel (INTL), another name which actually has a 3% yield and a ten P/E. Imagine that, did you ever think you could get Intel at that kind of valuation? Even Cisco—which, of course, has been a dog here of late, is another attractive tech name.

Didn’t they also announce a dividend?

Yes, and that’s the interesting thing. Cisco is now going to be paying a dividend...the yield is not quite as high as Intel’s, but it’s a generous yield between 1.5% and 2%, if my memory services.

So, yeah, absolutely, the technology space, you have companies with fantastic balance sheet loaded with cash. They need to do something with that money—they can either make acquisitions, or they can again initiate dividends.

I’m from the camp that I don’t mind if they pay dividends. I know a lot of investors don’t like it when their tech companies pay out dividends, because then it means they can’t grow as fast as they might have grown in the past.

How about the consumer discretionary area as the economy seems to be picking up?

Well, we do like a couple of names in the consumer space. A name like Whirlpool (WHR).

Again, we’re always focused on valuation, so it’s Whirlpool—which of course, makes washing machines and appliances, and so forth. And it’s very much tied to housing, but they have a very broad international exposure. Right now about 47% of sales is done overseas, and that’s been ratcheting higher and is expected to move up to about 60%. So, substantial business in Latin America.

Oh, by the way, all through this mess in the housing market, they’ve managed to grow earnings. So, you have a P/E ratio today of about eight on Whirlpool with a 2.5% dividend yield.

So, again, there are a lot of opportunities out there in the market. I think focusing on valuation is important—and I don’t care what kind of environment you’re in, a P/E of 8 in my mind is going to be attractive.