Five Spot: Microsoft, UnitedHealth Undervalued

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Tom Forester, manager of the Forester Value Fund ( FVALX), says health-care company stocks may have the most room to appreciate as concerns about government-led reform fade.

The fund, which gets Morningstar's highest rating of five stars, has fallen 8.4% in the past year, less than 97% of its peers. Over three years, the Forester Value Fund has declined an annual average of 1.5%, compared with 10% for rivals.

Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks in five fast and furious questions.

Are you a bull or a bear?

Forester: We are in a trading range of plus or minus 20%. Longer term, I am bullish. We have had a great run as people have realized that we are not in a depression and consumption is not falling off a cliff. However, consumption will not grow as quickly as expected, and this may lead to disappointment.

What is your top stock pick?

Forester: My top pick is Microsoft ( MSFT). They have their new operating system, Windows 7, coming out in October, and it has been getting strong reviews. They also will have a new version of office next year and their server and corporate products are growing well. It is also trading at a discount to the market.

What is your top beneath-the-radar, or sleeper, stock pick?

Forester: UnitedHealth ( UNH) is a sleeper. There has been a lot of uncertainty with health-care legislation, and this stock should benefit when the dust finally settles. It is only trading for about 8 times earnings, which is about half of the market.

What is your favorite sector?

Forester: Health care for the next few months as investors shake off the fear of health-care legislation. It has stable top lines and very low valuations.

What sector or stock would you avoid?

Forester: Some of the energy stocks are overdone on the upside. They are due for a correction. Many of the drillers, and exploration and production companies are pricing in ever-higher crude oil prices. They may be disappointed.

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.

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