After a rapid rotation out of high-flying growth stocks and into value names, the bull market's music seemed to stop last week -- save for the faint sound of Martha and the Vandellas' "Nowhere to Run" playing in the background.
But while the selling has spread beyond formerly high flying tech and biotech names, David Winters, manager of the $2.3 billion Wintergreen Advisers funds, says there's still great value in value stocks.
As as "the bloom has come off the rose" of the "most speculative securities" investors are "realizing you'd rather go for the steak than the sizzle," Winters says. "We think there's a lot of steak out there that's available for big discounts: you can get filet mignon for chuck prices."
Winters' favorite cuts of beef (stock) include:
Canadian Natural Resources (CNQ): "They have a great history of growing assets and trades at a massive discount," he says. "The stock is very cheap and they have a bright future."
Union Pacific (UNP): "It's a fabulous franchise and as the economy recovers there will be more train traffic," Winters says, further noting the company is buying back stock and management is "very efficient" with capital.
Berkshire Hathaway (BRK-A): "The size of it makes it harder to have the wild compounding that's existed in the past [but] we think Berkshire will be fine," he says of Warren Buffett's firm.
The aforementioned are classic "value" names but Winters' other favorite is not, at least not in the minds of most investors: Google (GOOGL)
"There was a period of time where you could take the cash - and it's a big pile - deduct from price and you were paying 7 to 8 times [earnings] for Google," he says. "They generate cash, make a product that's universally accepted and [the stock] really is not expensive because you've got this pile of cash and it continues to grow."
Google shares are down about 12% from its 52-week high reached in mid-March. That selloff is probably about broader market weakness vs. concerns about Google's controversial stock split, which gave founders Sergey Brin and Larry Page special voting rights while most investors got new Class C shares, which have zero voting rights at Google's annual shareholder meeting.
"Generally we like one share one vote," says Winters, who is waging a campaign against Coca-Cola's planned executive compensation plan. "We don't like what they've done, we understand what they've done. As long as they continue to run the company well and we feel comfortable we'll own the shares."
Winters, like many other investors, is giving Google's co-founders "the benefit of the doubt" for the moment. "But if they start doing things because they have the high vote-low vote that makes us uncomfortable, the likelihood is we would sell the stock," he says. "They've been very ethical but we're certainly going to watch it."
Good advice from a self-described Google bull ahead of the search giant's earnings after the close on Wednesday,.