Canadian Pacific Railway  (CP - Get Report)  dropped its bid to hook up with Norfolk Southern (NSC - Get Report)  last month, but that does not mean Norfolk's shares are unattractive, said Mark DeVaul, portfolio manager for the Hennessy Equity and Income Fund (HEIFX - Get Report) .
"There is a high barrier to entry in the railroad business," said DeVaul. "And while coal has been a drag on profits in recent years, the negative impact is limited."
The Hennessy Equity and Income Fund has returned 1.4% thus far in 2016, according to Morningstar. The $387 million has returned an average of 6.5% annually over the past 10 years, outpacing 90% of its Morningstar category peers. The fund sports a trailing 12-month yield of 83 basis points, according to Morningstar.
DeVaul is also bullish on Shares of BlackRock  (BLK - Get Report) , up 4% year-to-date, because of the success of its ETF products. The asset manager holds a roughly 40% market share in the growing ETF arena. He added that Blackrock generates tremendous cash flow with operating margins close to 40% and boasts a strong balance sheet.
"Blackrock has a good history of returning cash to shareholders via dividends and share repurchase, as well as insider buying," said DeVaul.
Altria (MO - Get Report)  is another one of DeVaul's picks. The cigarette seller's shares are up 11% thus far in 2016, yet he said it still trades at a discount to intrinsic value.
"Altria has pricing power, high margins and high returns on capital," said DeVaul. "It has returned significant cash to shareholders via dividends and buybacks. Plus it has $5 billion in annual operating cash flow with limited capital spending needs."
Finally, DeVaul is a fan of CarMax (KMX - Get Report) , even though the used car seller has lost over a quarter of its market value in the past 12 months. DeVaul said CarMax is exposed to a large and underpenetrated market.  CarMax is the largest retailer of used cars in the U.S., but the company's market share is less than 5% in existing markets.
"The company has plenty of room for growth with its proven model," said DeVaul. "We believe the company has the potential to at least double its store count from its current base of 158 stores."