Story updated with performance of mid-cap stocks to S&P 500
BOSTON (TheStreet) -- Investment managers have herded Americans into dividend-paying stocks and Treasuries as Europe's debt crisis grips the world. Mark Schultz, in contrast, says now's the time to take advantage of the low prices of companies with plenty of room to grow.
Schultz, manager of the MTB Mid-Cap Growth Fund (AMCRX), says investors are letting fear dictate their decisions. The perception is that some bonds are trading near record highs even as some stocks have been overbought, though investors irrationally continue to buy large-company shares. Schultz, however, says stocks are, on some indicators, at very attractive valuations.
Lufkin Industries (LUFK) Company Profile: Lufkin Industries makes pumping units used to lift oil from wells. Market Cap: $2.1 billion Share Price: $70.87 (Dec. 7) Schultz's View: Schultz says that oil field services is a very good place for investors to be looking for mid-cap stocks of companies with lots of growth. He says he has been hearing from companies that capital expenditure is looking very solid. That has led him to Lufkin, which he says still has a long runway for growth in the U.S. ahead of it. "When oil and now gas wells are drilled, the initial production is brought to the surface by natural pressure," Schultz says. "When the natural pressure of the fields dissipates, the company will deploy artificial lifts to bring the resource to the surface. We expect that Lufkin will benefit as these wells mature and there is a need for the artificial lifts. There is a very strong secular trend because of the number of wells being drilled." Schultz says that the company also sells its products internationally, even though the focus is on the U.S. He adds that the stock's valuation is very reasonable, even as the stock has climbed 13% this year. "It was an undiscovered gem when we first bought it, but we continue to hold it," he says.
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