(MONEY Magazine) – You can't say we didn't warn you about today's near hysteria for high-tech. In MONEY's July issue, we revealed how many seemingly diversified stock funds had 30% to 70% of assets riding on red-hot chipmakers, software houses and other technology firms. Thus investors in these funds unwittingly could be headed for double-digit losses when Wall Street's ardor for technology stocks cools. Worried? Then check out this alternative--a fund manager whose low-risk, virtually no-tech portfolio has consistently trounced the market average over the past five years, even during the sizzling first seven months of 1995. (For another market-beating growth stock fund, see Fund Watch on page 57.)

Meet David Schafer, 56, founding manager of no-load $120 million Schafer Value (circa 1985), the sole fund from New York City's Schafer Cullen Capital (800-343-0481) with $750 million under its control. The fund's 27% return so far this year has outpaced the S&P 500 index's 22% as well as the average 19% earned by growth and income funds. It even compares well to torrid technology sector funds, which rose an average of 35%. Moreover, Schafer Value returned 16% annually over the past five years, vs. the market's 12% and its peers' 11%. What's equally impressive is that the fund was 27% less risky over the past three years than stock funds overall, according to fund tracker Morningstar.

True to Schafer Value's name, its founder is a 21-year veteran of value investing who tolerates only one technology stock (discussed on the left) in his 38-stock portfolio. "We basically look for larger companies whose growth prospects seem stronger than those of the S&P 500 stocks," explains Schafer. "But we don't get interested unless a stock trades at a big discount to the market's price/earnings multiple." Based on his forecast of 19% profit growth next year for his 38 stocks, his fund's P/E averages only 10.5%, a fat 33% discount to the market's projected 15.7 multiple. Furthermore, "We have to see a stock rising at least 50% within two years before we buy it," says Schafer. How much of his liquid net worth is invested in the fund? All of it, he adds.

Below, Schafer recommends four holdings that figure to be 50% gainers over the next two years. As a group, they are bargain priced at just eight times the earnings he estimates for next year, an awesome 49% discount to the market (see the table on page 163). His four favorites:

Borg-Warner Automotive (ticker symbol: BWA; lately $33; 2% yield). This $1.4 billion (annual sales) Chicago firm was the auto-parts arm of now extinct Borg-Warner Corp., a $4.8 billion leveraged buy-out led by Merrill Lynch in 1987. The giant brokerage and other LBO investors still own 59% of bwa's stock, notes Schafer, thereby discouraging most analysts from following the manufacturer and discovering its thriving niches in an otherwise humdrum field. At the top of his list is the firm's new Torque on Demand four-wheel-drive system introduced this year as standard gear on Explorers, Ford's best-selling rival to Chrysler's Jeeps. Called Control Trac by Ford, the unit senses the road conditions that warrant shifting power from two wheels to four (and vice versa). The unit also boosts BWA's parts content per Explorer by 20% as Ford aims to expand production of the vehicle 29% this year. Schafer says other content-- increasing innovations ensure that BWA can buck an inevitable skid in auto sales. Last year, in fact, revenues rose 24%, nearly triple the 9% sales gain for cars and light trucks in North America. He thinks earnings can vroom about 15% this year and next, turning investors' heads and propelling the stock 50% within 24 months.

Inco Ltd. (N; $34; 1.2%) and Cyprus Amax (CYM; $28; 2.9%). Schafer believes these two mining companies will continue to profit handsomely from industry's growing dependence on the greater strength and rust-resistance of stainless steel. Here's a prime example consumers can appreciate. In order for car makers to offer longer warranties to woo buyers, they have had to increase the amount of stainless steel used per car by 114% over the past five years. World demand for the alloy, up 14% in '94, is expected to rise another 10% in '95 and keep exceeding output for several more years.

Toronto-based Inco (nee International Nickel) is the world's top source of nickel (58% of Inco's $3 billion sales), most of which goes into booming stainless output. So nickel prices have surged 43% to $3.85 a pound in the past year, and Schafer predicts they could rise 30% more over the next couple of years. At the same time, Inco's cost-cutting plan figures to reduce its current $2.75 a pound operating expense almost 20% by 1998. What about $3 billion Cyprus Amax, which is best known for copper and coal? The Englewood, Colo. firm is also the No. 1 miner of molybdenum, an ingredient in stainless and other alloys whose price has jumped more than 65% to $5.75 a pound since early '94. But most investors don't notice because much of CA's moly production occurs in copper mines, where accountants apply proceeds from moly to reduce the extraction cost of copper. Thus in the first quarter of '95, the latest period reported, CA's actual 74 cents a pound cost of copper was slashed 44% to 49 cents, vs. a market price averaging $1.38. The impetus for both stocks to rise 50%, adds Schafer, are projected earnings growth in '96 of 93% for Inco and 25% for Cyprus Amax (on top of a 260% spike this year).

Redman Industries (RDMN; $24; no dividend). Over the past three years, this prosperous but low-profile $558 million Dallas firm has expanded in step with the roughly 20% annual growth of today's $10 billion market for manufactured housing (a.k.a. mobile homes). Living in one may not appeal to you. But more and more low-income families and retirees can't resist the affordable prices averaging $33,500 and 5% down payment in many cases. Schafer particularly loves Redman's meager debt of 29 cents a share, mounting cash of $3.86 a share and projected 15% profit growth over the next three years. Yet the stock trades for just eight times his forecast for calendar '95 earnings, vs. roughly 14 for its industry and better-known rivals like $700 million Champion Enterprises. "If we're right," says Schafer, "the disparity will disappear in Redman's favor over the next two years, giving us a 50% profit on a $36 stock."