Finding undervalued gems among the thousands of publicly traded small-company stocks is the mission of Skyline Special Equities (symbol SKSEX). Over the past year, the fund’s managers have found diamonds in stocks tied to the housing recovery, a boost in consumer spending and an improving industrial sector.
One big winner was Caesarstone (CSTE), an Israeli maker of quartz countertops. Its stock has soared 110% since Skyline bought it in January. Also helping to boost the fund’s results were Winnebago Industries (WGO), a maker of recreational vehicles, and trucking company Swift Transportation (SWFT). Both stocks have doubled over the past year.
William Fiedler, Michael Maloney and Mark Odegard, who have run Special Equities since 2001, seek undervalued companies with market values of $2.5 billion or less. To ensure cheapness, they buy only if a stock’s price-earnings ratio is at least 20% less than the P/E of the small-company Russell 2000 index. Even then, they’ll invest only if they believe a company can deliver earnings growth regardless of the economic environment. “That helps us avoid value traps,” says Maloney. He and his co-managers establish a price target for every stock they buy, and they sell when a stock reaches that level.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Special Equities holds about six dozen U.S.-traded companies, including a handful based overseas. The fund has a turnover ratio of 47%, suggesting that it holds each stock for an average of two years.
-
Got $1,000? Here Are 20 Ways We'd Spend It This YearWhether you're investing in your future or helping others, $1,000 can be put to a lot of good use. We've rounded up some ways to save, donate or spend it.
-
Winning Investment Strategy: Be the Tortoise AND the HareConsider treating investing like it's both a marathon and a sprint by taking advantage of the powers of time (the tortoise) and compounding (the hare).
-
The 5 Best Actively Managed Fidelity Funds to Buy Nowmutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
-
The 12 Best Bear Market ETFs to Buy NowETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
-
Don't Give Up on the Eurozonemutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
-
Best Bond Funds to BuyInvesting for Income The best bond funds provide investors with income and stability – and are worthy additions to any well-balanced portfolios.
-
Vanguard Global ESG Select Stock Profits from ESG Leadersmutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
-
Kip ETF 20: What's In, What's Out and WhyKip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
-
Do You Have Gun Stocks in Your Funds?ESG Investors looking to make changes amid gun violence can easily divest from gun stocks ... though it's trickier if they own them through funds.
