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Top 3 cheap stocks for 2014: Pro

Three ridiculously cheap stocks promise strong returns for the coming year, Lyrical Asset Management CIO Andrew Wellington said Monday.

"We go bottom-up, and we look for those stocks that are trading at the biggest discounts that we can find in the market," he said.

On CNBC's "Halftime Report," Wellington revealed his top three stocks for 2014: Goodyear, Western Digital and Suncor.

Ranked the No. 1 long-only equity manager from 2009 to 2011 by eVestment, Wellington oversees $1.6 billion in assets. His fund was up 54 percent last year, net of fees.

(Read more: Jeremy Siegel's bullish market call for 2014)

"Goodyear Tire, in spite of being up, I think, more like 70 percent last year, is still trading at 8½ times next year's earnings," he said. "It's the cheapest stock in our portfolio."

While he liked both Western Digital and Seagate Technology, Wellington had a clear preference.

"We think Western Digital is a better company, and they were trading at comparable valuations, but Seagate would be a great stock, as well, I think. And it's a great business," he said.

(Read more: Dennis Gartman sees continued bull market in Japan)

Up more than 100 percent in 2013, Western Digital was still only trading at 10 times forward earnings, Wellington noted. "I think there's a lot more margin expansion opportunities in the drive stocks."

Wellington said that his portfolio included 34 stocks and that he averaged six trades a year over the past five years.

"Last year we were really busy," he said. "We did eight."

Wellington said that he was generally positive on the stock market.

(Read more: Top 3 tech stocks for 2014: Gene Munster)

"If you had a coin that, every time you flipped it, was heads 75 percent of the time, you'd bet on heads," he said. "And over the last 50 years, the market's been up 75 percent of the time, so our best guess is expect another up year."

Last year's performance shouldn't affect investments, he also said.

"In terms of how much the market was up last year, that doesn't matter," Wellington said. "If you look at the data, you see that there's almost no correlation at all between the returns you got last year and the returns you get the following year. So, that shouldn't be a factor in anyone's decision-making."

And valuation wasn't yet a concern, he added.

While stocks were "10 to 15 percent over value," Wellington said that wasn't enough to have a significant impact on the short term.

"Eventually, that has to get worked out. If valuations in the market were in the 20s on the P/E, that's a significant factor," he said. "But if you're below 20, it's not a big worry."

Lyrical Asset Management is long Goodyear, Western Digital and Suncor.

By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.

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