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Spinoffs Look Good In Shaky Year, Manager Says

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Craig Hester acknowledges the economy is likely to keep slowing down through the year ahead, but he thinks the slowdown will stop short of a recession, and he sees promise for investors in the stocks of a couple of firms spun off from troubled giants.

The criteria listed by the president and CIO of Hester Capital Management for investment-worthy companies include earnings growth, good balance sheets, and strong cash flow.

He finds those in Accenture , a management-consulting business spun off from ill-fated Arthur Andersen.

"It's really a company that's more into technological services...they help companies with outsourcing issues, with technology processes, being more efficient and really generating productivity," Hester told CNBC.

Another spinoff is medical-device maker Covidian , formerly part of the troubled conglomerate Tyco.

"The underlying structural changes that have been going on in this company as a stand-alone firm really haven't been appreciated by the marketplace," Hester said. "Tyco had really milked this company for its cash flow to help...service its own debt, and now as a stand-alone company, it's been able to expand the sales force, put more money back in R-and-D, and do some restructuring."

Hester and members of his family own both Accenture and Covidian.

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