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Shares of J.C. Penney (JCP) - Get Free Report  have surged over 50% this year as the retailer has gone from death's door to Wall Street darling. Craig Hodges, portfolio manager for the Hodges Small Cap Fund (HDPSX) - Get Free Report , said J.C. Penney is only beginning to hit its stride.

"The turnaround thesis on Penney's remains intact and one month or one quarter is unlikely to derail the company's path over the next few years," said Hodges, adding that the "overall health" of the consumer seems fine, which should give Penney's a boost.

The Hodges Small Cap Fund is up 5% thus far in 2016, according to Morningstar. The $1.4 billion fund has returned an average of 15.5% annually over the past five years, outpacing 68% of its peers in Morningstar's small-cap blend category.

Hodges is also bullish on EnLink Midstream (ENLC) - Get Free Report , which has seen its shares rise 11% thus far in 2016. The natural gas distributor's stock has more than doubled to $17 a share since hitting a $7 low in February and Hodges said it has good coverage for its 6% dividend on top of strong sponsorship support from its parent company Devon Energy (DVN) - Get Free Report .

"EnLink was unfairly treated as a pure MLP and now it is making a comeback," said Hodges. "It pays a 6% dividend and it can easily cover it."

La Quinta (LQ) , down 14% year-to-date, is another one of Hodges' top picks. The hotel operator is expanding its footprint by adding hotels in Latin America, as well as in urban markets where there are high barriers to entry.

"La Quinta has about a quarter of its hotels in Texas so traders treated it like an oil company and sold it off," said Hodges. "But that's not the case. It's trading below replacement cost and expanding internationally."

Finally, Hodges is a fan of American Airlines (AAL) - Get Free Report , even though its stock has fallen over 14% year-to-date in what has been a tough year for airline stocks.

"The airline industry has changed and the market is not recognizing American's impressive performance," said Hodges.