Steady Stocks In a Rough Market

Andrew Fisher

How to keep your portfolio safe in a turbulent market?  Look beyond your nose.

Two market players advise investors to think long-term, reminding that previous downturns were followed by even more powerful upturns.

Market Pulse Check

"Where are we going to go but higher in the next eight to nine months?" asked Neil Hennessy, president and portfolio manager at Hennessy Funds, who has delivered stellar returns in recent years.

"We tend to use the volatility to our benefit," adds Intrepid Capital Funds chief investment officer Mark Travis. "We try to average our way in, and then when we get to a valuation that we think makes sense on a private-market value, we'll sell it."

One stock that Hennessy likes is Airgas. 

"You look at Airgas, which is in the oxygen-nitrogen-helium business, with a price-to-sales ratio of about one dollar for one dollar in sales," he said. 

"You can look for Cal-Maine, which is in the egg business -- I mean, who would have thought that eggs sell?  They're selling about 96 cents on the dollar.  Hennessy also singles out Warnaco Group , an apparel firm that owns or licenses brands, including Calvin Klein, Speedo, Nautica and Ann Cole.

"People are scared of this market," says Hennessy.  "In reality, you should be nibbling and buying into some of these companies that are undervalued."

Travis's selections seem to play into a consumer sector that's scaling down:  Family Dollar Stores, Rent A Center, and Aaron Rents.

"I think in each of those businesses, they're not going away," he explained.  "There's a constant demand for their services, and we can show you, using conservative valuations, how their share price, over time, should be higher."