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Stock Picker: Think Small Caps, Win Big

Small-cap stocks haven't been making many big headlines lately, but that could be changing, according to Touchstone's Lawrence Creatura. He's found some interesting names for investors.

His four-star Touchstone Diversified Small Cap Fund is up an average of 11.92 percent per year over the last five years.

"That's where the best companies are," he told CNBC about the small-cap space. "The companies are understandable, and investors appreciate that."

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So which stocks does he want investors to understand?

Topping his list is Brown Shoe.

"This is a classic value play," he said. "It's a depressed multiple applied to a depressed earnings profile, and right now, the stock is so inexpensive it's almost like a call option, which goes into the money if consumers return some day to buy shoes, and it seems to be a pretty safe bet that they will."

He also likes United Online, which recently bought FTD.com.

"It's got an ISP dial-up business, which is in decline, and it has an Internet-content business, which is expanding," he explained. "It's a stock going through a transition."

Rounding out his selections is Ceradyne.

"The bulk of the business right now is body-armor vests, but they also make ceramic crucibles, which are used to move polysilica around," he said. "Polysilica is what's used to make solar panels; right now, polysilica is in shortage; what's likely to be in shortage next are these crucibles."

Disclosures:

Disclosure information for Lawrence Creatura was not immediately available.

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