Shares of Becton, Dickinson (BDX - Get Report) are up more than 12% year to date and 47% in the past two years. Despite the run-up in the stock, and a recent revenue guidance cut, the medical technology provider has more room to run, said Mark Freeman, portfolio manager for the Westwood Income Opportunity Fund (WHGIX - Get Report) .
'We continue to see synergy from the CareFusion acquisition and its exposure to emerging markets is certainly driving the stock,' said Freeman.
Earlier this month, the Franklin Lakes, NJ-based medical technology company reported better-than-expected second-quarter earnings, but lowered its full-year revenue guidance. Becton Dickinson posted adjusted earnings of $2.35 per share, surpassing Wall Street's estimate of $2.21 per share. Revenue came in at $3.2 billion, just short of analysts projected $3.21 billion. During the 2015 second quarter, the company reported earnings of $2.05 per share on revenue of $3.13 billion.
Becton Dickinson now expects its 2016 revenue to increase between 21% and 21.5%, down from its prior estimates of 21.5% and 22%. Adjusted earnings are projected to be in the range of $8.50 and $8.57 per share, while Wall Street expects full-year earnings of $8.55 per share.
The Westwood Income Opportunity Fund is up 6.5% thus far in 2016, according to Morningstar. The $2.4 billion fund has returned an average of 25.3% annually over the past three years. The fund sports a 1.45% trailing 12-month yield, according to Morningstar.
CVS Health Corporation (CVS - Get Report) is another one of Freeman's top stock picks, despite it being flat year to date. He said it is benefiting from its Omnicare acquisition and the rebranding of its in-store Target (TGT - Get Report) pharmacies.
Earlier this month the pharmacy company reported earnings of $1.32 per share, surpassing analysts expected $1.30 per share. Revenue rose 17.6% to $43.73 billion, falling short of analysts projected $44.28 billion.
The company's pharmacy same-store sales were hit by about 355 basis points due to generic drug introductions. During the quarter, the generic dispensing rate increased 85.4% in its Pharmacy Services segment and increased 86.1% in the Retail/LTC segment. CVS Health raised its full-year adjusted earnings guidance to between $5.81 and $5.89 per share from in the range of $5.73 per share to $5.88 per share.
Finally, Freeman is a fan of General Dynamics (GD - Get Report) , up 11%, which had its own second-quarter revenue issues. The maker of Gulfstream jets, tanks and U.S. Navy ships, reported a 2.8% decline in quarterly revenue, hurt by lower sales in its combat systems and aerospace businesses. The company's revenue fell to $7.67 billion in the second quarter from $7.88 billion a year earlier. Net income rose to $758 million, or $2.44 per share, from $752 million, or $2.27 per share, a year earlier.
'General Dynamics is trading at a discount to its peers due to concerns over its business-jet segment, which we do not see as an issue,' said Freeman.