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Spinoffs Look Good In Shaky Year, Manager Says

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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