NEW YORK (TheStreet) -- The market has recovered significantly over the past two years, so it is not easy finding cheap stocks anymore. But compared with bonds, there are still bargains to be had, says David Rainey, fund manager for the FBR Focus Fund( FBRVX), including such names as O'Reilly Automotive (ORLY) - Get Report and American Tower (AMT) - Get Report.

The $692 million fund, which garners four stars from


(MORN) - Get Report

, is up 17% over the past year, better than two-thirds of its Morningstar peers. Over the past decade, the fund has returned nearly 13% annually, better than 99% of its rivals.

Welcome to

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

Is this market cheap or expensive?


The market is certainly much more expensive than what we saw two years ago. Right now we think it's fairly valued. We look at a number of macro-economic indicators and they all tell us the same thing. But ultimately investors are going to be concerned about the direction of interest rates over the next few years.

One stock you like is American Tower. Why do you like this one?


American Tower has been a holding in the fund for over eight years. It's a business that has been very thoughtful about its capital allocation process. It has a superb management team. They are growing internationally now because of the maturity and cash flow characteristics of the U.S. business. American Tower is right at the wave of the nexus between Internet, media and wireless communications.

Another name you own in the fund is 99 Cents Only Stores( NDN). Tell me about this one.


It's a Southern California-based extreme value retailer. Ninety-nine Cents Only Stores have been a turnaround story for the last couple of years. And in the past nine months they have really begun to turn the business around. They are seeing increased visitation and increased sales. Customers are trading down, and they provide a lot of value for the typical daily food and grocery needs.

Because of the Great Recession, a lot of people are fixing up their cars instead of buying new ones. Is that part of your rationale for buying O'Reilly Automotive?


O'Reilly has been in the fund as well for a number of years. We like the fact that it pursues a dual market strategy. It services the retail clients very well and it also services the professional garage clients. Their unique distribution model and expanding geographic presence also provide them the best service components in the industry. It is reasonably valued and we think has a lot of hidden earnings power.

A newer position in your fund is international insurer AON (AON) - Get Report. Why did you pick this one up?


The price trends in the industry have been down the last few years. We were able to accumulate a new and relatively smaller position in AON over the last six months at around 10 times earnings. We think they are being led by a very able management team that has been turning around and optimizing the business for about five years, and we are very encouraged by what they are doing with Hewitt.


Reported by Gregg Greenberg in New York


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