Charles Kantor Believes Equities To Be Extremely Undervalued

Charles Kantor, managing director and portfolio manager of the Kantor Group at Neuberger Berman, sat down on CNBC's Squawk Box this morning to talk bullish investment views. "We think stocks are as undervalued today as they were overvalued in 2000, and that's predicated on our view that when you look at the expected earnings growth from the S&P today, we think the market's pricing in about a 1% earnings growth rate," said Kantor. Kantor said that the market is already pricing in at a very low nominal growth rate, and that revenue is challenged, and on average, over time, he's willing to take the over on 1% versus the under. He said that if you believe in the ingenuity of American CEOs to deliver more than 1%, than you would be very attracted to equities right now. He noted that on average, over time, the bottom line number for nominal earnings growth has been from 4-6%. "Earnings and cash flow, earnings and cash flow," Kantor said. He called it a great challenge and opportunity from his standpoint. "You have a trillion and a half dollars of cash sitting on cooperate balance sheet. The question is, does that get reinvested and earn an 8% return or does it earn a cash return? If it earns an 8% return, which would be a minimum, expected return that we would find acceptable, that's another $120 billion of earnings, that's another $13 of earnings per share, that's another 200 points in the S&P," said Kantor. Kantor said that a lot of it is happening already, despite CEOs and average investors remaining skeptical and cautious. "They're unwilling to do bold things, and the tipping point will come with time and with higher stock prices," said Kantor. Right now, Kantor said that they're looking for companies that can actually grow in this market. Like those within the realm of the housing recovery, which according to him is here to stay.