NEW YORK (TheStreet) -- With small-cap stocks leading the way in 2013, TheStreet's Gregg Greenberg spoke to Eric Marshall, portfolio manager of Hodges Small Cap Fund (HDPSX - Get Report), about his top picks.
Marshall said despite the year-to-date bull run in small-cap stocks, many names are still in secular growth trends, thus deserving higher multiples.
Another name he likes is KapStone Paper and Packaging (KS), which is up a whopping 140% in 2013.
Marshall said he likes to find industries -- not just stocks -- that have gone through long periods of consolidation, such as the paper and packaging business. He added that KS has strong pricing power, good management and is a potential acquisition target.
Shoe Carnival (SCVL - Get Report) is also a top pick. Marshall says there could be 800 total stores in a few years, up from the 300 current locations. He concluded the company has solid growth in an industry with little growth.
His last pick was Zale Corp. (ZLC), which is up over 250% year-to-date in the midst of a massive turnaround story.
While the move higher seems excessive, Marshall insisted it was just the beginning and that the stock should have plenty more room to the upside as margins drastically improve and earnings per share increase.
-- Written by Bret Kenwell in Petoskey, Mich.