Lord Abbett Bets on Consumer Rebound

NEW YORK (TheStreet) -- Paul Volovich and David Linsen, co-managers of the Lord Abbett Growth Opportunities Fund(LMGAX Quote), say the consumer discretionary sector should benefit from improved profit margins as the economy recovers.

The Lord Abbett Growth Opportunities Fund has gained 1.7% annually, on average, during the past three years, beating 96% of its peers during a volatile period for stocks, according to Morningstar(MORN Quote). This year, the fund is up 37% this year, outperforming two-thirds of its peers.

Welcome to the TheStreet.com's "Fund Manager Five Spot," where America's top mutual fund managers give their best picks during a rapid-fire Q&A.

Are you bullish or bearish?

Volovich: We're bullish on the market. We believe that the market has recovered from the financial crisis and will continue to move higher as the economy grinds its way out of the recession. The economic recovery will strengthen so long as housing prices continue to stabilize, job losses continue to abate, and the wealth effect from the rise in the stock market begins to rebuild consumer confidence.

What is your top stock pick?

Linsen: Our top pick is CarMax(KMX Quote), which sells used cars through a chain of retail stores. The company's superior customer offering and inventory management systems should allow it to increase market share in the used car market. CarMax's return on capital should support a reacceleration in growth, which puts the company in a unique position of expanding square footage in a retail environment in which most others are shrinking. Market share gains can then translate into strong earnings growth.