HP Inc. (HPQ) - Get Report is a profit machine, according to Larry Pitkowsky, portfolio manager for the GoodHaven Fund (GOODX) - Get Report . And that's why he remains bullish on the stock despite concerns over the company's PC and printer businesses.
"It drowns in free cash flow," said Pitkowsky. "It's got a 4% dividend yield and trades at 7.5 times earnings. We think the business will stabilize. We like the people running it and we think the recent concerns which surfaced last quarter are way overdone by the market."
Shares of HP Inc. are relatively flat since the the former HP was split into two companies in November: HP Inc. and Hewlett Packard Enterprise (HPE) - Get Report . The GoodHaven Fund is down 18.5% so far in 2015.
Shares of Staples (SPLS) are down 48% year-to-date and investor skepticism remains high in the wake of the government's decision to block its proposed acquisition of Office Depot (ODP) - Get Report . Pitkowsky, however, is bullish on the stock, saying the company is trading at a tremendous discount.
"We never counted on the deal as far as our thesis on Staples," said Pitkowsky. "But what you have now after the stock has come down so dramatically is a stable business with a 5% dividend yield trading at about 10 times earnings."
Shares of WPX Energy (WPX) - Get Report have lost half their value this year, but that's not stopping the contrarian Pitkowsky from stepping in and buying shares of the driller. He is positive on WPX's new management team -- as well as its asset base -- in the face of hard times in the energy sector.
"You had 11 insiders buy shares at more than twice the current market price over the summer," said Pitkowsky. "And I think in general it's important to look for areas where there is fear, disinterest and where people are running from."
Finally, Pitkowsky is a fan of Walter Investment (WAC) , a mortgage-banking company which has seen its stock drop 21% thus far in 2015, saying it is "misunderstood" when it comes to regulatory risk.
"We think they are moving in a wonderful direction from a corporate governance standpoint," said Pitkowsky.