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-Cap Tech Ranks No. 1, Investor Says

NEW YORK ( TheStreet) -- Small-cap stocks, which have outperformed large-company shares, are still cheap, especially in the technology industry, says Andrew Morey, manager of the ASTON/Crosswind Small Cap Growth Fund (ACWDX). He favors stocks such as Kelly Services (KELYA - Get Report) and Knology (KNOL).

The mutual fund, which was started in November, has returned 2% so far this year, according to fund-tracker Morningstar (MORN).

Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.

Are you bullish or bearish?

Morey: We are cautiously optimistic. Our investment philosophy seeks to identify unrecognized growth potential at the individual-company level. The process is 100% bottom-up stock selection, and we seek out companies growing their revenues, expanding their margins, and have the potential to surprise upwards on their estimates. There is also a valuation component to our process, which helps us determine if the growth potential is truly unrecognized. We continue to see strong company-specific fundamentals that meet our valuation criteria.

What is your top stock pick?

Morey: We like Kelly Services, which provides temporary staffing in North America, Europe and the Pacific Rim. Kelly has been benefiting from the economic recovery as temporary staffing usually increases before permanent staffing. Kelly has a strong management team and has been expanding internationally, while also closing down some remote offices that were not profitable. We believe this could help revenue increase and help margins to continue to expand in the future. As some additional upside, there is also a possibility that we may see a secular shift in temporary-staffing rates. Given the economic shocks of the past few years, some companies are using more temporary workers as opposed to hiring back permanent workers. If this continues, Kelly could see its addressable market share grow significantly.

What is your favorite sector?

Morey: As a bottom-up fundamental manager, we do not intentionally overweight or underweight specific sectors. That said, we are currently identifying many individual companies in the technology sector with sound fundamentals that meet our valuation requirements. The strong fundamentals are being driven by unique product offerings and solutions that are well-positioned to benefit from the growth in trends such as e-commerce and cloud computing.

1 of 2

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
Submit an article to us!
SYM TRADE IT LAST %CHG
KELYA $16.74 0.00%
AAPL $125.80 0.00%
FB $77.56 0.00%
GOOG $530.80 0.00%
TSLA $232.95 0.00%

Markets

DOW 17,928.20 -142.20 -0.79%
S&P 500 2,089.46 -25.03 -1.18%
NASDAQ 4,939.3270 -77.6020 -1.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs