Craig Hodges, the Dallas-based portfolio manager of the Hodges Fund ( HDPMX), says two stocks owned by his fund make terrific substitutes for actual gifts this holiday season with potential upside over the near-term.

Sirius XM ( SIRI)

Holiday Gift Equivalent: A monthly subscription to Sirius satellite radio is $12.95 per month, or nearly 10 shares of Sirius XM, which trade for $1.39.

Hodges' Take: The Hodges Fund's Sirius XM investment has risen 130% this year. "Sirius XM's product has slowly but surely become more accepted. I've noticed it with my peers. I love the financial content and I find myself listening to that. When I'm in a car without it, I ask myself why they don't have it.

"Our theme with Sirius XM is that it's a long-term holding. I don't think it's going to double in a year, but it could be a good long-term 20% or 30% grower per year. The major ingredient is the car companies. You're seeing a resurgence in the automobile industry. That will drive this product for the next few years."

Chico's FAS ( CHS)

Holiday Gift Equivalent: One share of Chico's FAS can be bought for $12.29, while shoppers can select from a seemingly endless number of earring and bracelet designs that cost $13.99 or less.

Hodges' Take: Chico's accounts for 2% of the Hodges Fund as of Sept. 30. While the return on the investment is minus 11% in 2010, Hodges is forecasting a rebound.

"This is one that is in the middle of a resurgence. This is a fallen star and you don't hear about it as much, but they are slowly improving fundamentals under the radar. I think they can earn $1 a share next year, and the Street is looking at 82 cents a share. Chico's stock could trade in the upper-teens. While you wait, you can make a little money with a dividend.

"It's a feast or famine in this business. If you're wrong, especially with women's apparel, you can get pounded. But they have ironed out their inventory situation and they take fewer risks than they used to. I don't know that it'll get hot like it did years ago, but you could see the stock in the $20s a couple of years out."

With more than $325 million in total assets, the Hodges Fund has roughly 40 stock holdings of different market values that Hodges expects will help with a long-term growth strategy. Specifically, Hodges looks for domestic stocks that may currently be out of favor but appear to have turnaround potential.

In addition to Sirius XM and Chico's, the fund has investments in Transocean ( RIG), Wal-Mart ( WMT) and Krispy Kreme Doughnuts ( KKD).

The Hodges Fund has performed well over the past year, beating the market by over 400 basis points, although the fund has a three-year annualized return of minus 12%. Looking at annual returns over the past few years, performance has been lumpy. The Hodges Fund returned 36% in 2009, 8.5% in 2007 and 18% in 2006. However, these gains were offset by a 50% dive in 2008.

"We had a real rough 2008," Hodges says. "But in the 19 years we've been a fund, we've outperformed the market in 16 of those years."

If you liked this article you might like

Market Selloff Survival Strategies: Cramer's 'Mad Money' Recap (Thurs 9/21/17)

Royal Caribbean Cruise Set to Sail Through Caribbean Hurricane Disasters?

Microsoft's New Xbox One X Shows It's Done Trying to Please Everyone

'The Handmaid's Tale' Emmy Win Is Really Big for Netflix

Stocks Dad Would Have Loved, And Why He Was Right