ROCHESTER, N.Y. (
) -- Lawrence Creatura, manager of the
Federated Clover Small Value Fund
, says he's avoiding precious metals stocks in favor of energy shares, despite gold's recent gains.
The fund, which is rated three stars by
, has risen 31% in the past year, better than about half of its peers. During the past five years, the Federated Clover Small Value Fund has returned an average of 2.1% annually, better than three-quarters of its rivals.
Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks in five fast and furious questions.
Are you bullish or bearish?
I'm optimistic about picking stocks in the small-value space because there are always bargains to be discovered. There's always some sort of localized disaster going on in an industry, which can create opportunities for small-value investors to scoop up stocks at an attractive discount.
What is your top stock pick?
is our top pick because it's a company that's benefiting from a return to normalcy in its business. Its traditional lines are doing well and it also has some standout products in the children's area, like "Twinkle Toes."
There's a new footwear phenomenon called the "wellness category" of which Sketchers is at the forefront. Skechers makes a type of shoe called "Shape Ups" that allow people to lose weight and tone their leg muscles while they walk. The wellness category of shoes is an emerging trend. It's not a cannibalistic item for Skechers because it's an incremental shoe that adds to consumer's footwear collections. The Shape Ups are a higher price point product in a market full of desperate retailers, customers love it and retailers like it. There's a certain freshness in the scarcity of this product and it represents a reinvigoration in the footwear category.
What is your best "under-the-radar" stock pick?
, a ceramics technology company known for producing body armor for law enforcement and military applications, is our sleeper pick. Its ceramics can be used for a variety of emerging applications that don't appear to be fully recognized in the stock price. For example, the company's technology can be used to produce ceramic crucibles for solar-panel production, ceramic cathodes for aluminum melting and ceramic bearings for oil and gas drilling. This company is driving innovation with new businesses emerging from its corporate umbrella.
What's your favorite sector?
Energy is my favorite sector and natural gas within that sector is of particular interest. The energy sector has a nice profile because the future is uncertain. Within energy, natural gas is even more interesting because it's domestically sourced and can help solve our nation's energy independence issue. It's abundant and it's perceived as cleaner.
Which sectors or stocks are you avoiding?
In the short term, I'm avoiding precious metals because they seem a bit ahead of themselves. Although gold has attractive attributes, in today's uncertain environment, the raw momentum of the recent moves seem to indicate that investors may be a bit extended there. Every ounce of gold that's ever been produced still exists today, it's not consumed. While the bull's case remains intact, no tree grows straight to the sky.
-- Reported by Gregg Greenberg in New York
Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.