Pick: Teleflex (TFX)
Over the past decade Heartland Value Plus (HRVIX) has returned an annualized 9.4%, clobbering the S&P 500's 4.1%, and vaulting into the top percentile of its category, according to Morningstar. Bradford Evans, who has run the fund since 2006, learned value investing from William Nasgovitz, the fund's legendary former manager. Teleflex, a medical devices company with a $2.4 billion market cap, is burdened by its past, in Evans' view. Its stock is priced well below 2007 highs. Evans thinks Teleflex is being tarred for its past as a mini-conglomerate. Five years ago a costly acquisition helped it begin to transform into a specialist in single-use devices, like catheters, used in critical care and surgical procedures. Today Teleflex has paid down debt and trades below competitors, for 13 times estimated 2012 earnings. As Teleflex introduces new products and raises prices, Evans expects its operating margins to climb from the teens to the low 20s. Says Evans: "We think the company is misunderstood."
--A.F.
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