Six Stocks Under the Radar
This hasn't been a terribly kind year for stocks, or an easy one for investors to figure out. The markets have been meandering downward since January, and a set of forces well beyond Wall Street's control -- the election, interest rates and oil prices -- have put a premium on finding hidden value in unloved names.
With that in mind, TheStreet.com polled a number of small- and mid-cap fund managers for their top "under-the-radar" picks. These are stocks that might not rank as household names or widely held favorites. But going by what these managers are saying, these companies could possibly make some big noise in the coming year.
Don Hodges, portfolio manager for the $53 million Hodges Fund, says investors can find highly profitable, if nearly anonymous, companies by simply looking at the labels of products they use every day.
"Look at a company like Helen of Troy (HELE)," says Hodges. "They manufacture and distribute hundreds of hair care products, including brand names like Vidal Sassoon, but most people are not aware of the strength of the company behind the various brands."The stock, currently trading around $29, has only recently recovered from a mid-August press report questioning the firm's accounting. That setback pushed the stock below $25 for a short spell. But Hodges says the accounting flap is behind the company, and that the stock is cheap at 10 times projected 2005 earnings. He expects the stock to easily trade through its July 2004 high of $37 over the next 12 to 18 months. Don't stop at the bathroom when searching for under-the-radar stocks, says Hodges. He also suggests a quick rummage through your closets, where you might find a long-forgotten brand in Haggar (HGGR). Hodges says the apparel manufacturer's mere survival -- while a number of its competitors have either merged or gone out of business -- has helped it to add market share and boost pricing flexibility. And he says that "having Wal-Mart (WMT), Kohl's (KSS) and J.C. Penney (JCP) as your top three customers doesn't hurt either."
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