NEW YORK ( TheStreet) -- Malcolm Gissen, co-manager of the Encompass Fund ( ENCPX), says uranium is poised to become the hottest commodity and gold will continue to hit new highs.

The mutual fund has soared 97% this year, better than 99% of its Morningstar small-cap growth-style peers. Over the past year, the Encompass Fund is up 40%, also in the top 1% of its class.

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

Are you bullish or bearish?

Gissen: We are cautious bulls. We see a world economy that has already improved substantially this year, especially in emerging markets. The U.S. economy also appears to be on the threshold of a recovery as evidenced by improving corporate earnings, increased merger and acquisitions activities, and both debt and equity raises of large amounts of money. We believe these upward trends should continue to move the equity markets in an upward direction. However, the obvious problems with unemployment, bad mortgages, and deficit spending at both federal and local levels are what make us cautious bulls.

What is your top stock pick?

Gissen: Uranium Energy Corp. ( UEC) has a good chance of becoming America's next producer of uranium. We anticipate that within the next few months, the company will get their final permits to mine uranium in southern Texas and be in production by the end of next year. Why is this important? Uranium is a key component of nuclear-based energy production, which is growing in popularity as an alternative to using fossil fuels. We think uranium prices are headed higher -- demand has been outstripping supply for the past five to 10 years.

What is your best "sleeper" stock pick?

Gissen: Most of our stock picks are beneath the radar, so here are two: L&L International Holdings ( LLFH) owns companies in Asia that mine coal and supply it to China, which has an insatiable appetite for coal as an energy source. L&L is a U.S. company that meets all SEC guidelines in terms of transparency and reporting. It is well-respected in the Chinese coal industry because of its commitments to worker safety and the environment. L&L is expanding by buying coal-related companies. Revenue and net income are both growing rapidly, and we expect that performance to continue.

Delcath Systems ( DCTH) is the other. Delcath is a health-care company that has developed novel techniques for fighting cancer. The company is in Phase III clinical trials for a drug-delivery system that is capable of transmitting chemotherapy drugs directly to a particular body organ for maximum efficiency. EU approval is expected next summer and FDA approval by the end of 2010.

What is your favorite sector?

Gissen: Gold! Yes, we know it's at an all-time high. But we believe previous highs are irrelevant for four primary reasons.

Demand continues to increase: As China and India, societies that value gold, develop greater personal wealth, there should be increased consumption of gold for jewelry and even as a currency. As investors have sought to invest in gold, investment companies have created gold ETFs, and they have attracted far more money than even their sponsors anticipated. These ETFs buy and store gold bullion, now well into the billions of dollars' worth. This has created a new source of demand.

Geopolitical events. With fears of war breaking out or large-scale tragedies occurring, investors move quickly to buy gold. Investors are weighing the distinct possibility that Israel could bomb Iranian nuclear installations, triggering a Middle East war. Gold prices would be likely to soar should that happen.

Economic news: Government deficit spending is pulling down the value of the dollar and causing investors ranging from individuals to the Chinese government to buy gold. There is also concern that as the dollar loses value and our government debt rises, the American dollar will lose its position as the favored trading currency of the world. That should also increase interest in holding gold.

Sources are declining: Precious metals are non-renewable resources typically found only in remote areas of the globe. Mining and production challenges increase, yet demand continues to rise.

Which industry or stock would you avoid?

Gissen: We would steer clear of airlines. This sector combines cutbacks in service, disgruntled customers and labor issues with rising energy costs, small margins and excessive competition reducing prices even more. Need we say more?

-- 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.