NEW YORK (CNN/Money) -
With the markets trading in step with developments in the war with Iraq, two money managers recommended stocks based on a recovering U.S. economy following a resolution of the conflict.
Michael Mach, portfolio manager with Eaton Vance, sees value in Washington Mutual.
"We believe they've got double digit growth potential in terms of their earnings over the next three to five years. So we like that earnings outlook," he noted. "We also love the fact that this stock is trading at less than ten times earnings, a big discount to the overall market. I think the fact that it gives investors a current yield of over 3 percent right now is also beneficial."
Mach's second selection is Kimberly Clark. "Two cycles that are important to Kimberly and its competition against Procter & Gamble is the wood pulp cycle and then also the new product cycle," he said. "In both of those cycles, it's been more favorable to Procter & Gamble in recent periods, but those cycles go back and forth. We like to buy Kimberly at these prices in anticipation of those cycles turning, as they always have. As those cycles become more favorable to Kimberly-Clark, we look for its shares to do very well."
| Michael Mach's picks
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Weyerhaeuser rounds out Mach's picks. "It has a strong business franchise, attractive growth prospects and trades at a discount. Like so many of these heavy industrial companies there has not been capacity expansion, just the opposite. There's been a lot of industry capacity consolidation to be taken out. When the economic recovery comes, Weyerhaeuser should do surprisingly well."
Funds under Mach's management own stakes in the companies mentioned.
Shares of Washington Mutual (WM: up $0.31 to $36.35, Research, Estimates) are in a 52-week range of $39.98 to $27.80.
Kimberly-Clark (KMB: up $0.02 to $46.15, Research, Estimates) shares have been between $66.79 and $42.92 in the last year.
Shares of Weyerheauser (WY: down $0.23 to $48.68, Research, Estimates) are in a 52-week range of $68.09 to $37.35.
Jim Glickenhaus, portfolio manager with Glickenhaus & Co., likes the position of Countrywide Financial for a play in the housing sector.
"We're a very long term holder. We've owned it for many years and we continue to own it and we're a very big believer in Countrywide. We're hopeful that they're going to earn well over $8 per share in the coming year and for a stock that's selling at about $60 it's certainly not expensive," he noted. "We think you can buy it here."
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| Pengrowth Energy Trust (PGH)
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| Countrywide Financial (CFC)
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Pengrowth Energy Trust is Glickenhaus' other pick. "As investors want security and they look to yield stocks, this is one I definitely recommend. You own a royalty stream from proven natural gas and proven oil reserves and, in addition to which, for safety, they have hedged a portion of their production at certain prices so that their dividends are not going to vary tremendously. If the stock stays flat and you get this dividend, you'll see that you do very nicely."
Funds under Glickenhaus' management own stakes in the companies mentioned.
Shares of Countrywide Financial (CFC: up $0.24 to $59.54, Research, Estimates) are in a 52-week range of $58.71 to $39.50.
Pengrowth Energy Trusts (PGH: up $0.03 to $9.67, Research, Estimates) shares have been between $17.00 and $8.40 in the last year.
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