LKQ ( LKQX) may be in the junk business, but Dan Veru, portfolio manager for the Pyxis Small-Cap Equity Fund ( HSZAX - Get Report), says investors should think twice before throwing its stock away.

"Buying a new fender for a car can cost several thousands of dollars, yet they can procure it from a junk yard at a much lower price if it's in good condition. The auto insurance industry has embraced this concept and these guys have the biggest footprint," says Veru.

The $39 million fund, which garners 3 stars from Morningstar, is up 6.8% over the past 12 months, putting it in the top 5% of Morningstar's small-cap blend category. Over the past five years, the fund has returned an average of 3.3% annually, outpacing 67% of its Morningstar rivals.

Elsewhere, Veru is bullish on specialty testing company Bio-Reference Labs ( BRLI) despite the volatility and controversy in the name. Shares of the company plummeted last fall after rumors circulated about questionable accounting practices but have since recovered. Veru defends the company, saying they have not been able to uncover any truth to the accounting rumors.

"It just reported an outstanding quarter and we expect the company to continue to perform very well," says Veru.

Another stock he likes is Oil States ( OIS - Get Report), which provides temporary housing to drillers in remote regions.

"Obviously you have to put a lot of manpower in these places which are far off the beaten track and you need places for these guys to sleep and eat. And right now with the natural gas boom, that's a great business," says Veru.

Finally, Veru is a fan of household product-maker Jarden ( JAH), because while most people know brand names like Sunbeam and Mr. Coffee, not many people know the quality of the company behind them.

"Jarden is a company with a very diverse portfolio of consumer products. No product accounts for a significant portion of the overall revenue and just through operational excellence this company generates an enormous amount of free cash flow," says Veru.

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