AKRON, Ohio (TheStreet) -- Small-cap stocks, such as children's clothing retailers Gymboree ( GYMB) and Carters (CRI - Get Report), may extend gains because they're in growing industries outside of Europe's debt woes, says Robert Stimpson, manager of the River Oak Discovery Fund (RIVSX - Get Report).

The small-cap growth mutual fund has fallen 4.9% this year after surging 62% in 2009, outperforming all but 2% of its rivals.

Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.

How are small-caps faring during the recovery?

Stimpson: Small-caps have been doing OK. Primarily because of their domestic exposure versus large-caps, which have more exposure to Europe, so they're actually outperforming large-cap stocks year-to-date. Sure, they have been hit the last couple of weeks with problems going on in Europe, but for the most part, they've been outperforming.

One sector you favor is drug distributors, and two companies you're especially keen on are McKesson (MCK) and AmerisourceBergen (ABC).

Stimpson: The drug distributors are more of a defensive sector, being in health care. They also have very high cash balances as a percentage of their market cap -- that gives them a lot of financial flexibility. There's a good backlog coming of generic drugs from former brand names that are coming off patent, such as Lipitor, and the drug distributors get higher margins from the generics, and they're trading at very attractive valuations, at over a 10% free-cash-flow yield.

You're also big on kids clothing retailers like Gymboree and Carters.

Stimpson: It's another area within retail that's a little more defensive, a little more steady spending. Those stocks offer some growth opportunities and attractive valuations. Also, free-cash-flow yields of over 10%. And when you're going to be within the consumer-discretionary space, they avoid some of the issues such as fashion trends and have better growth opportunity because of it.

You're also a fan of Mercadolibre (MELI - Get Report), which is the Latin American eBay (EBAY - Get Report) or Amazon (AMZN - Get Report).

Stimpson: It's more of a high-flying name, but it is a brand name within Latin America. They're one of the most popular Web sites, right behind companies like Google ( GOOG), Yahoo ( YHOO) and Microsoft ( MSFT), so that says a lot to their brand in Latin America, which is still a great growth area for the global economy, trading at a valuation today that is much more attractive than it was, say, six months ago. So it's buying a market leader at a better price.

Oceaneering International (OII - Get Report) is being hit with other oil-services companies. Is now a good time to get into the stock?

Stimpson: Oceaneering International does the sub-sea services, the remote-operated vehicles and other subsea activities and engineering. They've really been dragged down with the rest of the energy group, given the problems in the Gulf of Mexico, but I don't think you throw the baby out with the bath water. It's a good company with specific expertise, which makes them attractive from an acquisition standpoint, and the moratorium on drilling in the Gulf is going to be temporary because of the needs for oil in our economy.

-- Reported by Gregg Greenberg in New York..

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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.