This Day On The Street
Continue to site
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

Small Value Funds Sail Along

A cyclical holding is FreightCar America (RAIL - Get Report), 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 - Get Report) 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 - Get Report). 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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
HURC $30.35 0.00%
JWN $73.36 0.00%
RAIL $20.73 0.00%
SKY $3.28 0.00%
WLK $54.74 0.00%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs