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An ignored stock has become a tremendous opportunity, portfolio manager says

What do you pay for flat growth?

In a market where investors aren't focused on earnings, opportunity can be found in companies that can grow regardless of the macro backdrop, portfolio manager Stephen DeNichilo said Tuesday.

A perfect example is the often-ignored specialty chemical company Kraton Performance Polymers, up 90 percent year to date, he told CNBC's "Power Lunch. "

In fact, he thinks the stock can still double from here.

"They have the highest margins in the sector and the lowest valuation," said DeNichilo, who manages $9 billion as portfolio manager at Federated Kaufmann Funds.

Traders work on the floor of the New York Stock Exchange.
Michael Nagle | Bloomberg | Getty Images

He said the company has been easy to ignore, given that it has had a lot of drama over the last few years — including a failed merger, high capital expenditures, oil volatility and the purchase of another company that doubled its size.

However, the company said it sees $100 million in cost and sales synergies over the next two years and an incremental $500 million in free cash flow, DeNichilo pointed out.

"I've never seen in my career a company where the management is jumping up and down saying that they have cost synergies out there and the Street is not recognizing it," he said.

Shares of the small-cap company popped after DeNichilo's comments and were up about 6 percent in afternoon trading.

CNBC's Hailey Lee contributed to this report.

Disclosures: Federated Kaufmann Funds owns KRA.