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'BBB' Ratings Mean Grade-A Profit: Manager

Steven Romick's five-star fund invests in all kinds of markets. The portfolio manager of First Pacific Advisors' FPA Crescent fund -- up an average of 12.85 percent per year over the last five years -- says he'd rather look at securities rated BBB than AAA.

"We invest across a company's capital structure," he told CNBC. "We'll buy common stocks, preferred stocks, convertible bonds, subordinated debt, bank debt, anything where we think we can get an equity rate of return."

Romick's first stock pick is Conoco Phillips.

"It's a great company with a lot of upside opportunity, we believe, and it's not priced as if oil's 90 [dollars per barrel], let alone 80, 70 or even 65," he said. "We think this company's not dependent on oil remaining at these levels...to get the return."

He also likes Covidien, a Tyco spin-off that makes and markets medical equipment.

"It's an extremely strong business that owns brand names that many may be aware of, like U. S. Surgical, Mallinckrodt, and others," he said.

"It was well run under Tyco, although the cash flow from the business was not allowed to be re-invested in the business. ...Now they are expanding the sales force, they are investing back in R&D, things they hadn't been doing in the past."

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