5-Star Small-Cap Stocks

How does a five-star fund manager play this volatile market? Mark Keeley of Keeley Asset Management does it with health care and energy stocks.

His five-star Keeley Small Cap Value Fund is up an average of 19.66 percent per year over the last five years, and even shows a gain of nearly 3 percent year-to-date.

"We're looking for undervalued stocks, and that takes us across all market caps and industries," he told CNBC. "We're best known for our work in the small-cap space, and we're still finding value in this market."


Among the names in which he's finding value is Pharmerica.

"Pharmerica was spun off last year from Amerisource Bergen," he said. "It's a pharmaceutical outsourcing company...it's definitely a good place to be, and a good way to participate in the changing demographics as it relates to health care."

(What do Shorts say about Pharmerica? Click to find out.)

He also likes Hill-Rom Holdings, a spin-off from Hillenbrand Industries that makes beds and furniture for hospitals.

"They are definitely a vertically-integrated company, as along as you stayed horizontal," he joked. "We see tremendous opportunity in the hospital-bed business."

Continuing on the "horizontal" theme, Keeley likes Superior Well Services, which specializes in the field of horizontal oil-well drilling.

"Horizontal drilling, or pressure drilling...takes older wells, or properties, and using this technology, you can increase your yield, and squeeze a little bit more out of these existing wells," he explained. "With triple-digit oil prices, this technology really makes sense."


Disclosure information for Mark Keeley was not immediately available.