High-Quality Names Are Looking Cheap: Stock Picker

Stocks surged to extend gains on Wednesday, after a U.S. manufacturing report showed surprising strength, and signs emerged of a growing global economy. Craig Hodges, co-portfolio manager at The Hodges Fund, and Kent Croft, chief investment officer and portfolio manager at Croft Value Fund, shared their best plays.

“There is a lot of bad news out there, but it’s priced into the market and we see that as a real opportunity,” Hodges told CNBC.

Hodges said stocks are looking cheap and there are many contrary indicators in the markets signalling investors to get in.

“There are so many high-quality companies you can buy below their growth rates…[but] the CEOs won’t make an optimistic forecast, because there’s no payoff for it,” he said. “So you have to ignore the news and know what you are buying and buy high-quality stocks.”

Croft's View: Go Global

In the meantime, Croft said a double-dip is unlikely to happen.

“We think that corporate balance sheets are in good shape,” he said. “There’s a lot of very high quality selling at a great discount."

"Also, you don’t want to ignore the prospects for a global economic recovery and you want to make [globally oriented stocks] a part of your portfolio, because they can have a very big impact going forward.”


Croft Likes:

Johnson & Johnson



Hodges Likes:



Johnson & Johnson

Maidenform Brands


Kansas City Southern

Scorecard—What They Said:

  • Croft's Previous Appearance on CNBC (Jul. 21, 2010)
  • Hodges' Previous Appearance on CNBC (Aug. 25, 2010)

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