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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Four Laggards From Last Year Ready to Take Off in 2014

NEW YORK (TheStreet) -- To be perfectly Frank, the market is pricey.

"The market has been running ahead of earnings all year and looks quite expensive going into 2014," says Brian Frank, portfolio manager for the Frank Value Fund (FNKCX). The S&P 500, which started 2013 with a trailing 12 month price-to-earnings ratio of 13.5, now sports a 17 multiple, well above the historical average P/E of around 14.5.

Frank's fund is up 39% in this wildly bullish year, a full 9 percentage points better than the benchmark S&P.

Despite his view that stocks in general are priced beyond perfection, however, Frank does have his eye on a few laggards he believes will outperform over the next few years.

"Performant Financial (PFMT) is one of the cheapest stocks in the market due to renewal uncertainty surrounding their two government contracts, student loan collections, and Medicare fraud investigation," says Frank. "Even if they lose one of these contracts, it is still cheap given the growth demographics in either contract."

Performant is barely up 5% in 2013, leaving it far in the dust of better known names and especially huge internet outperformers like Facebook (FB) and Twitter (TWTR). Still, Frank says the stock will benefit going forward because student loans are expanding rapidly and rising interest rates means more defaults even if students lock in rates. He adds that the company's Medicare Fraud is a relatively new program and given all the spending pressure on Medicare, a program that puts money back into the trust "is likely to continue".

Another name Frank is fond of is Liquidity Services (LQDT), which had a terrible 2013 -- down 45% -- as the economy picked up steam over the course of the year.

"They have no significant competitor in liquidations," says Frank. "Their network effect is very powerful so when revenue growth comes back, the company's earnings will grow even faster."

Finally, Frank likes a pair of consumer-based names that also missed the market's rally: Vera Bradley (VRA) and Vitamin Shoppe (VSI).

"There is a bear market in retailers right now which makes for a fertile ground for investing, says Frank. "We like Vera because of its cheap price and growth prospects, and as for Vitamin Shoppe, it has a dedicated customer base that grows as the population ages."

--- Written by Gregg Greenberg

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,985.61 +78.99 0.47%
S&P 500 1,972.83 +9.12 0.46%
NASDAQ 4,419.0340 +27.5710 0.63%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs