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By Landon Brace

Robert Rodriguez’s FPA Capital Fund has historically outperformed the S&P 500 since the fund's inception. As the brains behind the operation, Mr. Rodriguez has maintained a conservative approach. I determined that he has recently been allocating capital to some of his larger holdings in the tech and natural gas exploration and the production space. He also holds only 0.5% in bonds, all of which are foreign. This means that-- on a historical basis-- this fund manager sees the risk/reward ratio as more favorable to equities. Here is my analysis of his stock picks from a valuation perspective. AGP, OSK, VECO, and NFX could be good buys, while FII is one to avoid.

Amerigroup Corporation (AGP) – This large managed healthcare company serves a significant portion of the Eastern and South Western United States providing healthcare solutions for individuals receiving public assistance. As of September 30, 2011, Mr. Rodriguez held 443,100 shares with an average cost of $53.54. As more and more baby boomers reach retirement age each day, the number of qualified Medicare participants will help to boost Amerigroup’s revenue. With an operating margin of 6.51% compared to competitor Molina Healthcare Inc. (NYSE:MOH) 3.04% operating margin, Amerigroup looks to stand out in the managed healthcare industry. If Amerigroup can increase its modest 7.3% quarterly revenue growth and continue to acquire the growing number of people seeking publicly funded healthcare, we can expect to see continued share appreciation.

Federated Investors (NYSE:FII) – FII is the management company behind the Federated family of money market, fixed income and equity mutual funds. Mr. Rodriguez recently added this new position totalling 678,000 shares to his portfolio at an average cost of $19.31, a far cry from its current yearly low of $15.32. The investment management enterprise boasts an impressive 5.8% dividend yield which is reinforced by a solid cash flow. Although the dividend yield outweighs that of major competitor BlackRock (NYSE:BLK), I can’t help thinking there could be more downside risk in the near future. With the pounding that financials have taken lately, Federated Investors is getting swept up in the sell off. Even with its favorable capital position, I would like to see some reassurance from management-- such as insider purchases-- in order to ease the minds of current and potential investors. For example, as investment banking firm Jefferies (JEF) hits new yearly lows, executives have committed to purchasing large equity positions to prove that there is upside potential. Until I see the same from Federated Investors, I have trouble getting on board.

Veeco Instruments Inc. (NASDAQ:VECO) – VECO manufactures equipment to make light emitting diodes (LEDs) as well as solar cells and hard disk drives. As many have heard, the flooding in Thailand has continued to put pressure on disk drive manufactures ,and has even caused some companies to revise yearly estimates. Although Veeco has other components of its business to fall back on, the LED business has also been under pressure in recent quarters. This can also be seen from competitors Cree Inc.(NASDAQ:CREE) and Applied Materials (NASDAQ:AMAT)-- which are close to yearly lows right along with Veeco, currently at $10.50. Although the share price has slumped since Mr. Rodriguez purchased 225,700 shares at an average cost of $36.10, the fundamentals are hinting at a turnaround coming soon. An impressive operating margin of 30.18% dwarfs competitor Agilent Technologies (NYSE:A), and Veeco’s P/E of 3.23 is cause to add VECO to your watch list.

Oshkosh Corporation (NYSE:OSK) – Ronald Rodriguez already held OSK for his mutual fund but increased holdings by over 116% to 1.24 million shares, purchasing additional shares at an average price of $22.44. Oshkosh is a vehicle manufacture catering mainly to the defense industry, while also producing commercial and emergency vehicles. At $19.43, the company is off its yearly low of $14.07 set on 10/4/2011 while still well below its high of $40.11 set back on 2/4/2011.

The low value of Oshkosh’s shares can be attributed to the frequent news of anticipated cuts to defense spending and cash strapped municipalities. Frankly, the bad news seems to be priced in and with the strong fundamentals, this stock seems poised for greatness. Since Mr. Rodriguez initiated his position slightly higher than the current market, it seems that this would be a valid entry point. The strong operating margin of 6.77% blows away the two closest competitors, Terex (NYSE:TEX) and Federal Signal Corporation (NYSE:FSS), both which come in below 2%. The 18.7% return on equity is further reassurance that the right individuals are in the driver seat to steer Oshkosh in the right direction. Even with cuts in spending, emergency and defense vehicles should remain a top priority and Oshkosh will continue to provide these important goods.

Newfield Exploration Company (NYSE:NFX) – Mr. Rodriguez added to his position in NFX at an average price of $56.15, to bring his total position up to 655,300. Ronald has been widely known for being bullish on energy stocks in the past, and his funds have enjoyed handsome rewards because of it. With the world's need for energy ever increasing, especially in emerging markets, Newfield is an excellent diversified play. As with many energy firms, it has been beaten down due to the overall market and low cost of crude oil. Although, with oil once again topping $100 a barrel, this could be a rather attractive play at these levels.

Newfield currently trades around $40, slightly above its yearly low of $34.42. Quarterly revenue growth of 39.9% outpaces both major competitors Cabot Oil and Gas (NYSE:COG) and Forest Oil Corporation (NYSE:FST) by a landslide. Strong deep water positions should help increase domestic oil growth, while the project in Malaysia that begins later this winter will drive revenue internationally. If you’re looking for a speculative play on the continued rise in energy prices, Newfield Exploration is worth a second look.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Analyzing Robert Rodriguez's 5 New Buy Ideas