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Great Expectations for Small Caps

Andrew Fisher
Friday, 20 Jun 2008 | 11:49 AM ET

Dan Veru expects big things from small caps. The executive vice president and co-chief investment officer of Palisade Capital Management says that as the market begins to rebuild confidence, investors will be looking to take on more risk in their portfolios, with small-cap stocks leading the way.

"A frequent mistake people make in periods like this is to focus on large-cap stocks," he told CNBC.

Recommendations:

So what stocks is Veru naming?

"While we're avoiding financials generally, I like...Raymond James Financial, because they don't take the kind of risk that the other banks and brokers have taken," he said. "They are a transaction-oriented company; they don't use their balance sheet to take principal risk in anything."

He also likes Baldor Electric, a manufacturer of electric motors.

"They acquired...the electric-motors business...from Rockwell International, and it's a very exciting growth opportunity for them," he said.

Veru's third choice is Genesee & Wyoming , which operates short-line and regional railroads in the United States, Canada, Australia and the Netherlands.

Market Pulse Check
Making money on dividend plays and small caps, with Jeffrey Saut, Raymond James and Dan Veru, Palisade Capital Management

Disclosures:

Disclosure information for Dan Veru was not immediately available.

Disclaimer

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