Owens Corning (OC), Youku Tudou Inc (ADR) (YOKU) & More: Tiger Cub John Griffin’s Best Under-the-Radar Picks

In the fourth quarter of 2012, WABCO’s revenue fell by 11% versus a year earlier and this helped bring net income down by 15%. As an auto parts company (with a focus on transmission and braking systems) WABCO is highly dependent on macro demand and so the stock’s beta is 2.3. With the trailing earnings multiple at 15, we think that there are probably better values in the auto space.

Youku Tudou Inc (ADR) (NYSE:YOKU), the Chinese Internet video and advertising company, rounds out our list of Griffin’s small cap picks. Youku Tudou Inc (ADR) (NYSE:YOKU) is unprofitable on a trailing basis, and Wall Street analysts expect it to report net losses this year as well before earning $1.38 per share in 2014 (though there is a very wide range to that forecast, with some analysts predicting continued losses). The stock is down 32% in the last year, likely due to concerns over Chinese macro and worries about accounting fraud at Chinese companies.

As a result we’re not excited about Youku Tudou Inc (ADR) (NYSE:YOKU), and in fact many of Blue Ridge’s small cap stocks seem like they might best be avoided at least for now. Owens Corning (NYSE:OC) has at least some value prospects, though in that case we would prefer to wait for more data given the company’s fairly weak recent performance. Grupo Financiero Santander does look interesting, but given that it is a foreign bank we’re sure many investors will prefer to avoid it and certainly it would be important to dig more deeply into the financials before making any buying decision.

Disclosure: I own no shares of any stocks mentioned in this article.

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