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This article follows previous articles listing stocks starting with a "G" and "C" that are attractive stocks for 2014. Over the last several years, a lot of the small-cap, growth stocks struggled to achieve market returns. Typically these high beta stocks would outperform the market during strong periods, so Stone Fox Capital is focusing on several lists of these stocks that offer potential high returns.

When reviewing attractively priced stocks for 2014, groups of stocks happened to cluster into ones starting with the same letter. Instead of focusing solely on an industry or specific sector, this list will link far-flung sectors that might not typically attract the same investment crowd. The list of 'S' stocks is SandRidge Energy (SD), Sears Holdings (SHLD), and Silver Bay Realty Trust (SBY).

All of these stocks continue the concept theme where investors can spend hours poring over financials, ratios, or projections and miss the big picture. Do you believe in the focused production growth of the new CEO at SandRidge Energy or the ability of Silver Bay Realty Trust to create value renting single-family homes? The common thread amongst these stocks is attractive valuations for stocks with major catalysts for 2014. In addition, the chart below highlights that the last two years have been horrible for all of these stocks while the Russell 2000 Index has soared over 40%.

(click to enlarge)SHLD Chart

SHLD data by YCharts

SandRidge Energy - Natural Gas Rebound Play

SandRidge Energy is an oil and natural gas exploration firm beaten down 17% over the last two years. The company is the leading producer in the Mississippian play with total production evenly balanced between both petroleum products.

Due to numerous landmark deals including selling off Permian Basin assets and buying Gulf of Mexico assets, the company was difficult to value in the past. Consequently, the stock suffered and the founding CEO was replaced. With natural gas inventories plunging and the recent cold snap, SandRidge Energy along with most E&P stocks will benefit.

Another huge positive is the backing of legendary investor Lee Cooperman at Omega Advisors. He continues to value the stock at over $10 including during the recent appearance on CNBC. Reaching his target during 2014 would provide a solid return for investors at the current price below $6.

Sears Holdings - Asset Play

Sears Holdings continues to be a stock that the bulls and bears have vastly different opinions on the valuation. Bulls follow the investment lead of Bruce Berkowitz of Fairholme Capital Management and the research from Baker Street that suggests the assets, including the real estate, Lands' End, 50% of Sears Canada, are worth more than triple the current price. The bears contend that the massive money losing retail operation will eventually bankrupt the stock.

Ironically, Sears started 2013 off at a similar valuation with the stock in the low $40s. Investors watched the stock soar a couple of times during the year to only see the gains given back. 2014 could finally be the year that investors see the real estate assets unlocked that Baker Street estimate are worth over $10B. See the slide from their research report below:

(click to enlarge)

Silver Bay Realty - Below Replacement Value Single-Family Homes

Silver Bay Realty started 2013 off as one of the hottest stocks due to the excitement over the potential for renting single-family houses. The stock ended the year as one of the biggest disappointments in the stock market by hitting new lows during November. Silver Bay is down 12% since going public.

The stock provides a sleeper situation with the value of the real estate soaring while investors overly focus on the losses caused by the roughly six month period it takes to stabilize a purchased house and rent it. With a reduction in acquiring new houses, 2014 should be the year that investors get to see how the financials stack up without high expenses from rehabilitating new houses.

For investors bullish on the prospects of the sector ignored by the market towards the end of 2013, Silver Bay provides a compelling valuation with the stock trading below the estimated NAV of $19.50 and substantially below the apparent replacement costs of the acquired houses. See the slide from the Q313 earnings presentation below:

(click to enlarge)

Conclusion

These three stocks starting with an S offer huge potential in 2014 based on cheap valuations. The promising catalysts could push the stocks to levels unexpected by most investors. Both Sears Holdings and SandRidge Energy offer stocks trading below asset values according to famed investors in Bruce Berkowitz and Lee Cooperman. In some cases, it might take investor faith or deeper research to understand these values so the stocks could stay at depressed levels. In the case of Silver Bay Realty Trust, investors might need a quarter showing operating income for investors to jump on board with an attractive NAV. Either way, by the end of 2014 investors are more likely to realize value in these stocks than sell them off providing attractive risk/reward scenarios.

Source: Best Stocks For 2014: The Ss