NEW YORK ( TheStreet) -- In a year when many investors expect large-cap stocks to outperform, there are opportunities to make money in smaller companies such as Atwood Oceanics ( ATW), PriceSmart ( PSMT) and Tempur-pedic International ( TPX), says Craig Hodges, manager of the Hodges Small-Cap Fund ( HDPSX).

The mutual fund has returned 45% over the past year, better than 94% of its Morningstar ( MORN) peers. Over the past five years, the Hodges Small-Cap Fund has returned an average of 6.5% annually, better than 60% 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.

Will small-cap stocks outperform large-caps in 2011?

Hodges: I personally think they will, but I would not put it past the large-caps to finally have their year. We have been saying for a long time that the large-caps are the most undervalued part of the market. And I believe they are. That said, there are always opportunities in small-caps. There are always new ventures and, of course, acquisitions as big companies look for ways to fuel their growth.

We have seen some M&A in the drilling business recently with the Ensco (ESV) purchase of Pride International. Is this one of the reasons why you like Atwood Oceanics (ATW)?

Hodges: I would say so. Energy companies have historically been proactive in making acquisitions and a company like Atwood would be a good candidate. You saw the Pride deal so that is a good sign. 2011 will be a good year for the oil-drilling industry, which is still coming off the tragic spill in the Gulf of Mexico. And 2012 is shaping up to be even better because of the shortage in deepwater rigs. Atwood is growing its rig count so it has a lot of upside.

Why would you want to own shares of PriceSmart with all the worry about the strength of the consumer?

Hodges: It's based in San Diego, but the majority of their business is in Latin America and the Caribbean. This is a company that is knocking the cover off the ball. Their same-store sales are running well into the double digits quarter after quarter. It's a company that has little analyst coverage, but it has great management. It was founded by the same people that originated Costco ( COST) so they clearly know the warehousing business.

Another stock in your portfolio is Tempur-pedic. Do you think we need a housing rebound to get people to buy mattresses again?

Hodges: You would think so. But this stock has been moving higher despite the troubles in the housing sector. They have done a tremendous job in marketing. They have bucked the trend. The have a new, softer mattress that are performing very well. Previously they only catered to the hard-mattress crowd, so they have really expanded their market. And when housing finally does recover, we think there will be another leg up in the stock.

You are also a fan of Apple (AAPL) supplier Omnivision (OVTI). This stock has had a nice move up -- can it keep its momentum?

Hodges: We think so. This company makes the optical sensors for the iPhone and there is an expectation that it will also have its components in the iPad. Both of those products have enormous growth potential. But even aside from those huge markets, there are other places for Omnivision's sensors, like in automobiles. So we see a lot of growth ahead for this company, and its stock.

-- Reported by Gregg Greenberg in New York.

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