The Small-Cap King’s 5 Best Stock Picks Include The Buckle, Inc. (BKE) and Teradyne, Inc. (TER)

Lincoln Electric Holdings, Inc. (NASDAQ:LECO) is the hedge fund manager’s fourth largest small-cap holding, and is a stock that’s already up more than 9% since the start of the New Year. Lincoln Electric is primarily focused on arc welding products, and the 100+ year-old company is also exciting investors in the automated welding space. The company has seen its earnings grow by an average of nearly 5% a year over the past half-decade, but the Street expects this growth to double over the next five years.

Strong positioning in a continually consolidating industry is a key reason behind analysts’ bullishness, and a projected dividend yield of 1.5% isn’t too shabby either. Shares of Lincoln Electric do trade at industry-average valuation metrics no matter how you slice it, but a market-leader with accelerating growth makes the stock a good addition to most investors’ portfolios.

Last but certainly not least, we have Reliance Steel & Aluminum (NYSE:RS), Royce’s fifth largest small-cap stock pick. Reliance has provided investors with a return (16.2%) nearly thrice that of the metal fabrication industry’s average over the past 12 months, and has also performed quite impressively over the shorter term. The company has beaten the sell-side’s earnings consensus in each of the past five quarters, despite a less-than-stellar economic environment for steel-related companies.

In comparison to its peers, Reliance’s main advantage lies in its commitment to consistent dividend payouts, willingness to engage in M&A expansion—particularly in oil and gas—and its below-average cost structure. At a mere 11 times forward earnings and 0.5 times sales, Reliance offers investors a great way to play a steel rebound, which likely explains Royce’s bullishness. Joining the hedge fund manager in this company is Cliff Asness and David Dreman, among others (see David Dreman’s favorite stock picks).

For more related coverage, continue reading here at Insider Monkey:

Royce & Associates Has Been Buying EnerSys

Why Does Royce Love Molex?

Why Does This Hedge Fund Manager Own Reliance Steel & Aluminum?

Disclosure: I hold no positions in any of the stocks mentioned above

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!