Shopping the Bargain Aisle

Ah, the joys of holiday shopping!

Just once wouldn't it be nice to visit a department store in December that isn't overflowing with sharp-elbowed, short-tempered bargain hunters? To find a holiday sale where the merchandise isn't being pawed over and picked at by anxious hordes?

If skipping the local mall sounds OK to you, a number of fund managers say the stock market offers some alternatives. These people see a number of sectors -- asset managers, utilities and supermarkets, to name three -- that have been shut out of the postelection rally. Best of all, many of these stocks can be found on sale and with plenty of inventory available for the discerning shopper.

Barry James, portfolio manager of the Ohio-based Golden Rainbow fund, says utility stocks continue to maintain a low profile on Wall Street despite their recent glowing performance. He calls the group "surprisingly undiscovered" even after this year's 20%-plus rise in the Dow Jones Utility Index.

"Utilities went through so much trashing at the beginning part of the decade with debacles at Enron and PG&E (PCG:NYSE - commentary - research)," says James. "They were not sexy to begin with, and last year's blackout did not help."

Some names that James views as sleepers include Edison International (EIX:NYSE - commentary - research) and DPL (DPL:NYSE - commentary - research), the parent company of Dayton Power and Light.

The utility aisle may not be crowded, but James isn't alone shopping there. John Keeley owns a number of what he calls busted utilities in his Keeley Small-Cap Value fund. And Keeley has long been a pro at finding companies largely ignored by Wall Street. His fund focuses on four categories rarely found in the market's limelight: bankruptcy survivors, spinoffs, savings and loan conversions and companies trading below book value.

Of that foursome, Keeley says S&L conversions have the most potential. Keeley's fund buys shares of newly public S&Ls soon after their mutual-to-stock conversions. Generally, these are small banks that eventually get taken out by regional powerhouses. Two of Keeley's current faves are New Alliance Bank Shares (NABC:Nasdaq - commentary - research), the largest thrift in Connecticut, and Milwaukee-based Bank Mutual (BKMU:Nasdaq - commentary - research)

Source: THE STREET