J.C. Penney, AK Steel and Meritor Are Buys Says Royce Fund Manager

AK Steel is benefiting from the continued strength in the North American auto market and tightening capacity, said William Hench, portfolio manager for the Royce Opportunity Fund. Hench is also bullish on shares of Meritor, saying the truck parts manufacturer is seeing a spike in orders due to the rebound in non-residential construction. He added that Meritor's new management has cleaned up its balance sheet following the the financial crisis. Finally, Hench said he is positive on heavily shorted J.C. Penney's stock because the company is winning back its old customers and has enough liquidity to reach profitability.