As evidenced by GM's latest numbers, the auto industry is roaring back and Russell Croft, portfolio manager for the Croft Value Fund (CLVFX ), expects auto parts maker Dana Corp. (DAN) to come along for the ride.
"Dana's new CEO is really focused on margins and we think that's a catalyst for the stock which is already trading cheaply at around seven times next year's earnings," says Croft.
The $331 fund, which garners 3 stars from fund-rater Morningstar has lost 4% in the past year, putting it in Morningstar's 89th percentile for large cap blend funds. Over the past five years, the fund has returned an average of 2% annually, outpacing 90% of its Morningstar rivals.Outside of autos, Croft likes crop irrigation system maker Valmont (VMI), which he sees as a play on rising farmland prices. "With corn prices heading higher, the farmers can afford this equipment and it really helps the productivity of the land," says Croft, adding that the stock trades at a reasonable 15 times forward year earnings despite a 62% year over year jump in earnings. Croft is also bullish on International Paper (IP) as a play on the consolidating containerboard industry. "They have a really strong balance sheet, a 3.5% dividend yield, they buy-back stock and the catalyst here might be the DOJ ruling on the Temple-Inland merger. If that goes through, it's a good push for earnings, but we like the stock either way," says Croft. Finally, Croft likes Ultra Petroleum (UPL), as a contrarian play on lagging natural gas prices. "It's cheap, trading about 10 times earnings and it's a very low cost producer. So even in this environment, it can do well. And despite it being out of favor now, we think natural gas is a very important part of the U.S. energy policy going forward," says Croft. >>To see these stocks in action, visit the 4 Favorite Value Stocks portfolio on Stockpickr.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- 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 + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV