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Warren Buffett made a fortune investing in boring stocks, and he often advised would-be billionaires to do the same. In fact, finding below-the-radar value plays has been a key strategy on Wall Street since the 1949 tome, The Intelligent Investor, written by Buffett mentor Benjamin Graham. Today on “Street Signs,” Erin Burnett cajoled a few stock picks out of another soft-spoken Midwestern investor, and true to form, they’re companies you’ve probably never heard of.
Elliot Schlang is the managing director at Great Lakes Review, a Cleveland-based research firm that provides investment strategy to institutional clients. Here are his top four picks right now.
First, Schlang likes Applied Industrial Technologies [AIT
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]. AIT is the largest independent distributor of industrial parts in America. The company has benefited from revitalized management over the past few years, and he says they have a terrific balance sheet. Schlang is expecting AIT to jump 37% to $34 from $25, where it sits now.
“If the industrial economy continues firm, I think we’ll see wonderful growth in their business,” Schlang says. “No one product, no one supplier, no one industry is significant to them. They cover the waterfront.”
Another pick is RPM International [RPM
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], a specialty chemicals and coating company -- Day Glo might be its most recognizable brand. For each of the past 30 years the company has increased its dividend; it’s now at just over 3%. And here’s another stat that’s hard to beat: Earnings have risen in 56 of the past 59 years of business.
“They have had exposure to asbestos,” Schlang admits, “but we think that cloud is riding away. We think this stock, at 13 and a half times earnings, is terribly attractive.”
Schlang also likes Rofin Sinar Technologies [RSTI
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]. He says this leader in the industrial laser market is underfollowed and underowned, and has wonderful potential. The company is holding $9 per share in cash at the moment.
Finally, breathing-device maker Respironics [RESP
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] made the cut. According to Schlang, the company has a 50% share of a market that is growing at 15%-20% per year, and the market only has 15% penetration so far. Add to that, earnings have been compounding at 24% annually, consistently over the past five years. “We love it,” Schlang declares.
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