Pick: FedEx (FDX)
Michael Cuggino's $17 billion Permanent Portfolio (PRPFX) has a highly unusual mix: 70% of the fund's assets are deployed in cash, U.S. stocks, and bonds. The rest sit in inflation-fighting investments like precious metals. That's because Cuggino focuses on preserving and increasing the real purchasing power of the fund as well as generating positive returns. Permanent Portfolio, which has earned five stars from Morningstar, has averaged 10.2% annual returns over the past decade, trouncing the S&P's 4.1%. Cuggino is relatively bullish on the world economy: He's betting that expansion driven by emerging markets and, to a lesser degree, a tepid U.S. recovery will outweigh Europe's struggles. One way to capitalize is to buy FedEx, which Cuggino calls "a transportation stock tied to increases in economic activity." FedEx is a powerhouse domestically, and it's aggressively beefing up burgeoning international operations. FedEx, Cuggino says, has mastered the art of efficient logistics, which gives it pricing power. And with a trailing P/E of 13.1, compared with 17 for rival UPS (UPS), it's selling at a reasonable price.
--K.B.