This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Small Value Funds Sail Along

Stocks in this article: BLUDHURCVSFAXRAILSKYHSCSXJWNWLK

A cyclical holding is FreightCar America (RAIL), which makes railcars that are used to haul coal and other commodities. Sales have collapsed because of the weak economy. But the company holds $11 per share in cash, a big cushion for a stock that trades around $27.

Creatura says that FreightCar dominates its niche and thrives when the economy booms. In 2006, the company earned around $10 a share. Now orders are beginning to recover. "This is a deeply cyclical business that is coming up from the bottom of a cycle," he says.

Creatura also likes Skechers (SKX), which makes casual shoes and clothing. He says that the shares sell for a price-earnings ratio of only 7 because investors worry that earnings could be hurt by changes in fashion. Creatura concedes that some lines could prove to be duds. But he argues that much of the business depends on reliable sales for shoes and other products that customers purchase year in and year out. "At the heart of this company is a reliable consumer staple business," he says.

A top-performing fund is Homestead Small Company (HSCSX), which returned 7.8% annually during the past five years. The fund snapped up deeply depressed shares in the downturn and scored big gains when markets rebounded.

In 2008, portfolio manager Peter Morris bought retailer Nordstrom (JWN) after the shares fell so far that the chain slipped into small-cap territory. Morris sold the shares after they rebounded.

These days Morris holds many boring cyclical companies. A favorite holding is Westlake Chemical (WLK). The recession depressed chemical sales, but Morris says that eventually demand will recover.

RELATED STORIES:

Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.
3 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs