Craig Hodges, co-portfolio manager at The Hodges Fund & Hodges Small Cap Fund, said he is optimistic on small-cap companies and sees the next five years as “outstanding investment time.” He shared his insights on where investors should put their money. (See his stock picks, below.)
“We’re finding a lot of opportunities—we’re bottoms-up investors so we don’t pay attention to a lot of the outside noise,” Hodges told CNBC.
“We look for undiscovered opportunities and a lot of our gains have been in energy and some of the transportation stocks. But we’re seeing a lot of stocks that are uncovered, that the Street isn’t paying attention to, so we’re fairly optimistic.”
Hodges said he likes the energy business, specifically the deep-water drillers.
“Transocean’s our largest position. But in the small cap fund, our largest position is Atwood Oceanics,” he said. “It’s the one area in the energy business that has tremendous earnings. Most of the stocks in that group trade about 5 times earnings and so there’s a lot of good value there.”
Additionally, Hodges said he is excited about the airline and newspaper businesses—sectors that are considered “very, very contrary.”
“At the point of maximum pessimism, that’s when the best buys are made and we see some opportunities there as well,” he said.
Hodges does not own shares of BLC, CAL, GCI, OVTI.