Good Firms + Bad Breaks = Best Buys
Computers, gasoline and beer: Essential elements of everyday life, and, according to John Linehan of T. Rowe Price, judicious stock selections.
He might know: Linehan's 4-star T. Rowe Price Value Fund is up an average of 13.1 percent per year over the last five years.
Recommendations:
His top pick is Dell.
"Our strategy is to buy companies that are good companies, but really down and out, and Dell clearly is a company that's down and out," he told CNBC.
"If we look at the valuation, right now the company's trading at decade lows, price-to-earnings, price-to-sales, and we think that's very compelling, and we think there's a few catalysts on the horizon."
He also likes refiner Sunoco.
"Right now, it's facing the double-whammy of decrease in demand for refined products, and at the same time, an increase in crude-oil prices," he said. "Over time, that really can't last."
Linehan also sees a lot of upside in Sunoco's logistics, coke and chemical business.
"Basically, you're getting the refinery business for very attractive valuations," he said.
His third pick is Anheuser-Busch, which he sees as the cheapest of all the large-cap consumer product companies, with little downside threat.
Disclosure:
Linehan owns Dell, Sunoco, and Anheuser-Busch through his fund.
