NEW YORK ( TheStreet) -- More people are shopping at discount retailers due to the difficult economy and that's translating into sales, says Brian Lazorishak, manager of the Chase Mid-Cap Growth Fund (CHAMX). He owns names including Dollar Tree (DLTR) and PriceSmart (PSMT).
The mutual fund, which garners two of four stars from Morningstar, has returned 28% in the past year, better than 98% of its Morningstar peers. Over the past three years, the fund has gained an average of 2.2% annually, better than two-thirds of its rivals.
Discount retail has become a popular sector, especially for hedge funds. Why do you like Dollar Tree, in particular?
Lazorishak: Dollar Tree is certainly the class of the group. They are executing very well. They have about 4,000 stores nationwide. They are adding refrigeration and freezers in some of these stores and its continuing to boost sales.You also like Carbo Ceramics (CRR), which supplies the shale-drilling industry. How are they affected by this whole "fracking" phenomenon? Lazorishak: Carbo is a big player in fracking, and they have been doing very well with something called proppants. These are small balls made out of ceramics. There are some controversies with the fracking industry right now, but Carbo Ceramics is selling their proppant as fast as they can make them. And we think that is going to continue into the future. One of your largest holdings is Watson Pharmaceuticals (WPI). Is it safe to assume this is a play on Lipitor coming off patent? Lazorishak: Absolutely. That's driving their sales growth and their sales expectations for next year. Watson is a big player in the branded engineering pharmaceuticals. All in all, it's a very attractive company at a great price. You also like PriceSmart. A lot of people call them the Costco of the Caribbean. Tell me about the company. Lazorishak: PriceSmart owns 28 stores in the Caribbean and Latin America. They are opening the 29th here at the end of the month. It's a very strong player. It's been growing over 20% a year and you are getting it for about 20 times forward earnings, which seems attractive. Finally, what's attractive to you about shares of Nu Skin (NUS)? Lazorishak: Nu Skin sells skin-care products and nutritional supplements through a multilevel marketing system similar to Avon. They are experiencing great growth right now in Asia, specifically Japan and China. -- Reported by Gregg Greenberg in New York.
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