(FORTUNE Magazine) – As a world-class college sailor, Mark Hillman demonstrated a knack for staying calm in rough conditions. He carried that gift over to a career in finance, where he is one of the best--albeit least-known--money managers around. Hillman, who manages just under $100 million for private clients and pension funds, has averaged a stellar 30% annualized return since 1994, vs. 12% for the S&P 500. The 42-year-old has been strong so far in 2004 too: With the market treading water, his $10 million Hillman Aggressive Equity (HCMAX) fund is up 7.6%.

Hillman relies on a series of qualitative and quantitative screens to find battered companies with the potential to return to financial health. (He uses ratios such as price-to-sales and price-to-book to value a stock, then weighs that valuation against the company's projected earnings growth.) He buys the 20 most undervalued stocks on his final list, many of which turn out to be solid companies experiencing a temporary downturn. Over the years the system has led him to such winners as Dell, Qualcomm, and Oracle. More recently he came up big with Motorola, which he bought below $9 a share, and Finlay Enterprises, which he bought below $7. Both had more than doubled when Hillman started selling a few months ago.

So what's Hillman buying now? He points to two stocks he believes are undervalued by at least 25%. At the top of his list is EMC (EMC, $11). The storage hardware and software company saw its business implode after 2000. But second-quarter revenues were up 36%, and profits rose 136%, to $193 million. Annual sales could top $8 billion this year. The stock is still 90% below its peak.

Another downtrodden former tech star getting Hillman's attention: Corning (GLW, $12), which is finally emerging from three years of awful sales performance in the fiber-optic market. The company is benefiting from increased demand from telecoms as well as renewed interest from cable providers. Corning's LCD business is also booming, with sales and profits growing at a 50% annualized pace. At first glance the stock might look pricey--it's trading for more than 100 times its trailing 12-month earnings--but its P/E based on estimated 2004 earnings is just 22. Given the resurgence in Corning's sales, Hillman thinks that estimate could be conservative. --David Rynecki