Barrington Updates Best Stock Picks for 2011

BOSTON (TheStreet) -- Barrington Research has updated its market-beating list of Best Ideas for 2011, which includes stocks such as Sirius XM (SIRI), Imax (IMAX) and others it expects to rise up to 65%.

Investors may not be as familiar with Chicago-based Barrington Research as they are with Morgan Stanley or Credit Suisse, but the firm's Best Ideas List outperformed key benchmarks in 2010, when it was first started.

Barrington's list is updated quarterly and represents analysts' top picks for the coming 12 months. It is currently composed of 15 stocks with an average market value of $1.5 billion and median market cap of $800 million. Since inception on Jan. 1, 2010, Barrington's best stock picks have risen 44.5%, outpacing gains on the S&P 500 (18.9%) and the Russell 2000 (34.9%). That success continued in the first quarter, as the Best Ideas portfolio was up 6.8%, excluding dividends, better than the 5.4% rise on the S&P 500 but below the performance of the Russell 2000 (up 7.6%), on the same basis.

At the top of the portfolio's best performers during the first quarter, Orasure Technologies ( OSUR) rallied 37%, Navistar International ( NAV) jumped nearly 20% and Copart ( CPRT) climbed 16%. On the downside, education stocks Grand Canyon Education ( LOPE) and Bridgepoint Education ( BPI) dropped 26% and 10%, respectively, after a stellar fourth-quarter run.

The latest overhaul sees two additions to the list and one stock banished from the group. Orasure, which had been the best performer during the first quarter, was pulled after the departure of the analyst covering the stock. Barrington said it still maintains an "outperform" rating on Orasure, but that it is removing the stock from its list as a conservative move during the analyst transition period.

The 15 stocks on Barrington's list are arranged below in order of potential upside, based on the firm's 12-month price target and the stock's closing price as of March 31.


Copart ( CPRT)

Company Profile: Copart is a provider of online auctions in the U.S., Canada and the U.K.

Current Share Price: $43.87 (April 11)

Potential Upside from March 31: 3.9% based on a price target of $45

Barrington's Take: Copart again makes Barrington's list, although there isn't as much upside given the 15% rally in shares during the first quarter. Still, Barrington sees value in Copart thanks to brand-awareness initiatives the company has undertaken as well as new business due to a national contract with Allstate ( ALL).

"Despite the gross margin headwind related to the Allstate contract and the potential impact of higher gas prices and miles driven and total losses, we believe CPRT's volume growth in the back half of 2011 will be healthy due to Allstate, as well as increased efforts to penetrate the dealer market for late model used cars," Barrington wrote.

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Sirona Dental Systems ( SIRO)

Company Profile: Sirona Dental Systems makes advanced dental equipment.

Current Share Price: $51.90 (April 11)

Potential Upside from March 31: 9.6% based on a price target of $55.

Barrington's Take: Sirona is the first of two new additions to Barrington's best stock picks list. Analysts say Sirona "offers investors an opportunity to leverage the overall recovering dental industry and rapidly growing high-tech dental-equipment market with a company that has a competitive advantage as the technological leader in the industry."

"We highlight SIRO's ability to grow faster than expectations and believe there could be upside to both our estimates and price target," Barrington analysts wrote.


Navistar International ( NAV)

Company Profile: Navistar produces International brand commercial and military trucks, MaxxForce brand diesel engines, IC Bus brand school and commercial buses, Monaco RV brands of recreational vehicles, and Workhorse brand chassis.

Current Share Price: $67.50 (April 11)

Potential Upside from March 31: 15.4% based on a price target of $80

Barrington's Take: Navistar remains a top pick for Barrington "due to the company's low valuation relative to the expected growth rate in commercial vehicles."

"We believe the combination of NAV's new engine technology (EGR) and dealer focus on the large U.S. trucking fleets will help the company leverage a smaller cost base into higher profits," Barrington wrote. "In short, NAV's commercial vehicle operations are currently profitable at a low level of industry demand. We believe that a more robust 2011 truck recovery combined with stable market share should result in significantly higher operating profits."

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Imax ( IMAX)

Company Profile: Imax is an entertainment-technology company, specializing in motion-picture technologies.

Current Share Price: $30.97 (April 11)

Potential Upside from March 31: 22% based on a price target of $39

Barrington's Take: Imax offers investors "an appealing long-term growth story as management executes its footprint expansion program both domestically and internationally," Barrington analysts wrote. "The surge in 3D film releases bodes well for the future. The increasing popularity of 3D films is complementary to the growth of Imax."


AtriCure ( ATRC)

Company Profile: AtriCure is a medical-device company that makes surgical ablation systems designed to create precise lesions, or scars, in heart tissue.

Current Share Price: $12.67 (April 11)

Potential Upside from March 31: 23% based on a $14 price target

Barrington's Take: The research firm says AtriCure offers investors an "appealing long-term growth story and is trading at an attractive valuation. In our opinion, there are few companies in our medical-device universe that have greater percentage growth opportunities than ATRC, which is why ATRC remains on our Best Ideas List at this point."

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Modine Manufacturing ( MOD)

Company Profile: Modine Manufacturing is engaged in thermal-management technology, serving the vehicular, industrial, commercial, building HVAC (heating, ventilating and air conditioning) and fuel cell markets.

Current Share Price: $16.72 (April 11)

Potential Upside from March 31: 23.9% based on a price target of $20

Barrington's Take: Modine Manufacturing, which was added to Barrington's best picks list in January, "continues to be our favorite small-cap industrial investment." Barrington analysts say the stock is a deep value investment.

"As a result of the combination of a lower cost structure and recovering markets, MOD should have an explosive 2011-2013 EPS growth rate," the firm wrote.


InnerWorkings ( INWK)

Company Profile: InnerWorkings is a provider of managed print services to corporate clients across a range of industries.

Current Share Price: $7.97 (April 11)

Potential Upside from March 31: 35.5% based on a price target of $10

Barrington's Take: InnerWorkings is the second of two additions to Barrington's Best Ideas List as the firm believes "current business momentum is strong and expect solid financial performance in 2011."

"After some refinement of the company's business model, all three primary growth avenues for InnerWorkings (enterprise clients, transactional clients and M&A activity) are expected to contribute meaningfully to financial results in 2011 and beyond," the analysts wrote.

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Echo Global Logistics ( ECHO)

Company Profile: Echo Global Logistics is a provider of technology-enabled business process outsourcing, serving the transportation and logistics needs of its clients.

Current Share Price: $13.32 (April 11)

Potential Upside from March 31: 37.1% based on a price target of $18

Barrington's Take: Barrington analysts are still fans of Echo Global as its "technology offerings are a competitive differentiator that will enable the company to continue gaining share of a large and underpenetrated market opportunity."


U.S. Auto Parts Network ( PRTS)

Company Profile: U.S. Auto Parts Network is a distributor of aftermarket auto parts and accessories. Its products consist of body parts, engine parts, performance parts and accessories.

Current Share Price: $8.01 (April 11)

Potential Upside from March 31: 38% based on a price target of $12

Barrington's Take: U.S. Auto Parts Network was a new addition to Barrington's Best Ideas List in January and remains among the firm's best picks.

" The company represents a solid long-term secular growth story due to the shift to online auto parts sales by consumers, management's efforts to add products and increase conversion rates, potential market share gains and benefits that should accrue from the transformational acquisition of JC Whitney," analysts wrote.

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Grand Canyon Education ( LOPE)

Company Profile: Grand Canyon Education is a regionally accredited provider of online post-secondary education services focused on offering graduate and undergraduate degree programs in its core disciplines of education, business and health care.

Current Share Price: $14.40 (April 11)

Potential Upside from March 31: 44.8% based on a price target of $21

Barrington's Take: Grand Canyon was one of the worst-performing stocks on Barrington's Best Ideas List, dropping more than 25% in the first quarter. Still, analysts are "impressed by its differentiated model (which is perceived favorably by the public), attractive long-term prospects, higher (than average) earnings growth and lower regulatory risk."


Sirius XM Radio ( SIRI)

Company Profile: Sirius XM provides music and talk radio entertainment through satellite transmissions.

Current Share Price: $1.77 (April 11)

Potential Upside from March 31: 46% based on a price target of $2.40

Barrington's Take: The best-performing stock for Barrington carries over into 2011, with the firm noting fundamental improvements for Sirius XM, including trends in auto volumes.

"Fundamental improvements that are underway, including improved, if choppy, trends in auto volumes, provide added opportunities for upside in the stock," Barrington analysts wrote. "One of the most impressive feats in this makeover process has been an ability to move from a 15% borrowing rate to rate levels in the 7-8% area over about a year and a half time span."

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Cabela's ( CAB)

Company Profile: Cabela's is a specialty retailer, and a direct marketer, of hunting, fishing, camping and related outdoor merchandise.

Current Share Price: $25.05 (April 11)

Potential Upside from March 31: 52% based on a price target of $38

Barrington's Take: Cabela's was added to the firm's Best Ideas List in January and Barrington analysts still view the company as an "appealing long-term growth story."

"Cabela's is executing its plan to become the best multi-channel outdoor specialty retail company by the end of 2012," analysts wrote. "We believe Cabela's is poised to gain additional market share from small and mid-sized outdoor products companies as it accelerates its retail store expansion strategy."


Bridgepoint Education ( BPI)

Company Profile: Bridgepoint Education is a regionally accredited provider of post-secondary education services, which includes programs in the disciplines of business, education, psychology, social sciences and health sciences.

Current Share Price: $17.02 (April 11)

Potential Upside from March 31: 57.9% based on a price target of $38

Barrington's Take: The firm says Bridgepoint Education remains a top pick for 2011 for the same reasons Barrington picked the stock in 2010, namely discount valuation, strong fundamentals, experienced management team, a scalable business model and a solid balance sheet.

"Despite certain other competitors in this sector reporting (and/or forecasting) negative new starts growth, BPI continues to post (and forecast) solid enrollment growth," Barrington analysts wrote. "Management expects full-year 2011 new student start growth compared to 2010 levels, despite regulatory changes which are scheduled to take effect during the year as well as internal quality initiatives, which were introduced in 2010 or are scheduled to be introduced in 2011.

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Conceptus ( CPTS)

Company Profile: Conceptus makes the Essure permanent birth control system, an innovative and proprietary medical device for women.

Current Share Price: $14.62 (April 11)

Potential Upside from March 31: 58.9% based on a price target of $23

Barrington's Take: Conceptus, which was added to Barrington's Best Ideas List in January, has faced three major headwinds including competition from Adiana, a change in coverage in France and a weak job market. But Barrington analysts still view the company as an appealing long-term growth story with attractive valuation.

"Growth has been weaker than expected due to a combination of a new competitor in the market, a decrease in patient office visits and the elective nature of permanent sterilization procedures," analysts wrote. "Management expects the competitive and economic headwinds to persist over the near term. However, we expect the company's revenue growth to reaccelerate in the back half of 2011 due to the additional reps added to the sales force in 2010 becoming more productive."


PRGX Global ( PRGX)

Company Profile: PRGX Global provides recovery audit services to businesses and government agencies having numerous payment transactions.

Current Share Price: $6.28 (April 11)

Potential Upside from March 31: 65% based on a price target of $10

Barrington's Take: PRGX Global was a new addition to Barrington's top picks in January. The research firm says PRGX "is no longer a turnaround story but an emerging growth story and we expect 2011 to be even better as management continues to focus on execution."

" The company invested an additional $20 million in the business throughout 2010 and the first half of 2011, which has impacted profitability," Barrington analysts wrote. "However, as we move through 2011, as the elevated level of investment ease and incremental revenues are generated on these initiatives, profitability will expand at an accelerated pace."

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-- Written by Robert Holmes in Boston.

>>To see these stocks in action, visit the Barrington's Updated Best Stock Picks for 2011 portfolio on Stockpickr.

>To contact the writer of this article, click here: Robert Holmes.

>To follow Robert Holmes on Twitter, go to http://twitter.com/RobTheStreet.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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