NEW YORK (Reuters) - Despite record levels in U.S. stocks, pockets of value remain in equities, including energy companies, telecoms and microcap corporations, the head of O‘Shaughnessy Asset Management said on Wednesday.
“There are lots of stocks in the U.S. market that remain very cheap,” Jim O‘Shaughnessy said at the Reuters Global Investment Outlook Summit in New York, saying that they include a number of energy companies.
The shares of many energy companies have slumped sharply as the price of oil has collapsed. Crude prices have sunk more than 24 percent this year.
While investors, in an emotional reaction, often shy away from stocks that have encountered headwinds, O‘Shaughnessy stressed the need to look at measurable factors to evaluate stocks, such as earnings strength and price.
By those factors, he said, “energy is looking really, really cheap.”
That’s led his firm to scoop up shares of such companies as Canadian Oil Sands, Ecopetrol SA, and BP.
Major U.S. stock indexes have hit a series of record highs this year, with the Standard & Poor’s 500 up about 11 percent after a jump of about 30 percent in 2013.
Telecoms also offer solid opportunities, said O‘Shaughnessy.
Among telecoms stocks he has bought recently are AT&T, Deutsche Telekom and CenturyLink Inc.
He also cited microcap stocks - companies with a market capitalization often between $50 million and $200 million - as an opportunity.
“They would do very well for your average investor to get them to diversify away from things like the S&P 500, which has gotten expensive,” he said.
Attractive microcaps, he said, include transportation and logistics company Radiant Logistics Inc; P.A.M. Transportation Services, a truckload dry van carrier that transports commodities in the United States and Canada; and Handy & Harman Ltd, a manufacturer of engineered industrial products.
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Reporting by Luciana Lopez; Editing by Leslie Adler