Small Cap Picks: Pipeline, Clinical Research

Size doesn't necessarily matter when it comes to five-star investing. Just ask Frank Sustersic, portfolio manager for Turner Investment Partners.

His small-cap Turner Emerging Growth Fund is up an average of 16.40 percent per year over the last five years. It's currently closed to new investors, but Sustersic is willing to share some of his favorite names.


Some of his favorite stocks are clinical-research organizations, or CROs.

"They help pharmaceutical companies conduct clinical-research trials," he told CNBC. "All of the companies right now have an amazing tailwind...and currently, there is a pretty significant outsourcing trend that's occurring; pharmaceutical and biotech companies are trying to change their cost structure to be more flexible."

Two of those CROs are Parexel and Icon.

"Over the next three to six months, the stocks could need to consolidate a bit," he cautioned, but added, "Over the long-term period of time, I'm still optimistic about these stocks."

Sustersic also likes Ansys.

"Ansys makes (simulation) software used by engineers in product designs," he said. "They have a subscription model, so about 70 percent of their revenue base is recurring via subscription or licensing and maintenance."

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He's also enthusiastic about Willbros Group, a producer of large-diameter pipeline for natural-gas and oil companies.

"They recently got some big contract wins up in Canada," he noted. "They're probably sold out for the next year or so."

Rounding out his list -- and maybe, saving the best for last -- is Deckers Outdoor, maker of the popular UGG brand boots.

"Very controversial, very volatile stock," he said, "It still looks like fantastic visibility going forward."

He said an informal survey of department-store buyers revealed that UGGs was the only apparel or shoe product that really sold well during the last holiday-shopping season.

"If anything, they regretted not ordering more," he said.


Disclosure information for Frank Sustersic was not immediately available.