Value investor likes drug, bank & tech stocks

Published Mon, Feb 9 20157:00 AM EST

Scott Black of Delphi Management has made a living on Wall Street for the last 35 years by being a traditional "bottoms up" stock picker. True to these roots, he has three names for his Squawk Box Platinum Portfolio from three different sectors: drugs, banking and technology. Black's strategy is too find "good businesses" for extremely low multiples. While a macro backdrop doesn't guide his picks, he does expect real GDP growth this year of 2.5 to 3 percent, inflation below 2 percent and S & P 500 earnings growth of about 8 percent. Here are his picks for the Platinum Portfolio . Actavis : Through judicious management and intelligent acquisitions, Actavis' earnings per share have climbed dramatically from $3.04 (2009) to an estimated $13.55 (2014). With the pending acquisition of Allergan, we foresee free cash flow of $8 billion ($19.50/share) and earnings per share of $21 in calendar 2016. We assume the deal will go through. Actavis sells for just 12.3 times 2016's forecast earnings. Management has promised earnings power of $25 per share in 2017. Lam Research : We think the wafer fabrication market will make $34 billion this year vs. $32 billion last year. Lam has $11.50 a share in cash. A 12.5 price-earnings ratio is very good for a tech company. In addition to that cash, Lam has no debt. Customers Bancorp : This is not a consumer bank. Not many quality banks out there are growing their loan portfolio at a 10 percent clip. The bank signed 800 schools/universities with an ATM network, betting 1.2 million students who now deposit with them will stay on after they graduate and get a job. Read More 'Squawk Box' stock pickers bet on small caps, Apple Black sold two of his original positions in the Platinum Portfolio on Friday, Franklin Resources and Sandisk . He kept Actavis. Black dumped Franklin Resources after the asset manager's disappointing earnings at the end of last month. Black now does not believe earnings or money under management will grow enough to justify owning the stock. On Sandisk, Black believes the stock won't go anywhere until 2016, when the company ramps up capacity. Disclaimer

Actavis pharmaceuticals

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Scott Black of Delphi Management has made a living on Wall Street for the last 35 years by being a traditional "bottoms up" stock picker.

True to these roots, he has three names for his Squawk Box Platinum Portfolio from three different sectors: drugs, banking and technology.