6-month stock outlook: fair sailing

Will your stock portfolio be better off six months from now? At the risk of dredging up a tired campaign slogan, this query was put to several market strategists. Being an optimistic bunch, they gave essentially affirmative replies. But as one put it, ''The problem is getting from here to there.''

The air is already thick with talk of a flat tax, of balanced-budget amendments, of just how tight a grip Paul Volcker intends to keep on the Federal Reserve's purse strings. So, not surpisingly, there was some hedging on just when the famous second leg of this bull market would begin.

* ''The 1,380-to-1,400 mark is very achievable in the first half of 1985,'' says Malcolm C. Wilson, research director at Provident National Bank, Philadelphia. Relying on the record of market cycles over the last 20 years, he figures the bull entered its second phase in August. And once the 1,240 mark is broken again, stocks will continue upward.

* ''We have an excellent chance of getting to 1,500 to 1,700 by the second half of '85,'' opines Thomas Brown, chairman of the investment policy committee at Butcher & Singer, a Philadelphia brokerage.

* ''Over the next four months you'll see analysts lowering earnings, and stock prices will be moving up,'' says John D. Connolly, vice-president of portfolio strategy at the Dean Witter Reynolds brokerage.

Meanwhile, investors don't behave as if they're convinced the outlook is so rosy. There was some dancing in and out of the market this past week, but the Dow Jones industrial average managed to climb 2.32 points, closing Friday at 1, 218.97.

How will President Reagan's actions affect an investor's six-month game plan? A flat tax and a balanced-budget amendment are apparently high on Mr. Reagan's ''must do'' list. But some analysts don't expect these initiatives to reach a decision point until late spring or early summer. In the meantime, ''It's up to the Fed to make sure the economy doesn't go into the tank,'' Mr. Connolly says.

Some of the market's movement may be tied to the plans for reducing the deficit, but during the next six months the greatest influence on the market will come ''primarily from monetary action,'' says Mr. Brown at Butcher & Singer. ''I don't expect to see much change in fiscal policy.''

In fact, on expectations of looser credit from the Federal Reserve Board, several major banks lowered their prime rate to 11.75 percent last week. A $600 million dip in the M-1 measure brought basic figures on money-supply growth near the bottom of the Fed's target range. This fueled further speculation that the Fed must soon relax credit restrictions - if it hasn't already.

''The economy has slowed so much that the Fed is now bringing the interest rates down in a remedial fashion,'' Connolly says. He predicts the low point on rates next year will be reached within three or four months. ''We'll see 8 percent on T-bills, and bonds will decline 100 basis points (one percentage point) or more.''

Brown expects the prime rate to fall to 10.5 percent sometime in the next six months. The three analysts do not agree on how strong the economy will be next year, or on which quarters may shine, but there is still some unity.

Wilson and Connolly pegged real GNP to grow at 3.5 percent next year. Brown looks for 3 to 5 percent growth. Low inflation, about 4 percent, is a forecast they share. And they predict lower interest rates and slimmer corporate earnings.

''Corporate profits were up 20 percent in 1984,'' says Wilson. ''We're looking at a 9.5 percent (after tax) increase in 1985 - that's positive sustainable growth.''

So where is Wilson investing the Provident National Bank's trust money? His portfolio is a textbook blend of 40 percent bonds and 60 percent stocks (with a 10 percent cash reserve). His equity tastes run toward financial services and utilities. Both reflect a strategy based on declining interest rates. He admits that utility stocks may be due for ''a consolidation move,'' but he sees more growth ahead. ''I think there's every reason to believe we're in a deflationary trend. And if you look at the last deflationary period, the 1950s, two sectors outperformed the market: consumer nondurables and utilities.''

Dean Witter's Connolly will play along with a financial services investment. ''I like interest-rate-sensitive stocks, especially the big banks. I think the Argentine debt problem has been cleaned up. And I can't think of a better short-term interest-rate play than savings-and-loan stocks.''

But Connolly has a distinct distaste for utilities. ''A lot of portfolio managers are up to their eyeballs in bonds. They have an insatiable appetite for them. Their portfolios have reached the bond limit, so they're buying up the next best thing - utilities. I think utilities are overbought now.

Instead, he's attracted to technology issues. ''If you think P/E's (price-earnings ratios) are going up and you're looking for growth stocks, that points to technology. I would start with IBM, now selling at 10 times earnings, and move on down the line as far as you're comfortable with the quality.''

At Butcher & Singer, Mr. Brown demurs from naming industry groups. But he recommends shopping selectively, keeping two things in mind: ''Look for good management and earnings visibility.'' The next leg of the bull market will comprise a narrow group of good-quality stocks, he says. ''Not necessarily blue chips, but blue-chip type companies. They can be small but must have a demonstrated record of good management, with growing but predictable earnings.''

Sound advice, narrow rally by April or not. Interest rates

Percent Prime rate 11.75 Discount rate 9.00 Federal funds 9.31 3-Mo. Treasury bills 8.92 6-Mo. Treasury bills 9.40 7-Yr. Treasury notes 11.60 30-Yr. Treasury bonds 11.60 Source: Bank of Boston