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David Dreman is the founder and Chairman of Dreman Value Management LLC, where he also serves as the Chief Investment Officer. Over the last couple of years he has been known to buy stocks whose value was severely affected by the Global Financial Crisis, which most investors would not buy as they were in industries that were highly unpopular among investors. Dreman is currently quite bullish on stocks, especially energy stocks, although he has quite a negative view on nuclear power related stocks. In this article I will analyze five recent stock picks by Dreman, to determine whether they represent solid investment opportunities that will continue to accrue in value and be worthwhile additions to your portfolio.

SPX Corporation (NYSE:SPW)

SPX has a market cap of $3.08 billion and is currently trading at around $60, with a price-to-earnings ratio of 16.78. Its 52-week trading range is $40.66 to $87.13. It reported third-quarter 2011 earnings of $1.39 billion, a slight increase from second-quarter earnings of $1.38 billion. The income statement showed net income in the third quarter of $60.30 million, a substantial increase from second-quarter net income of $31.60 million. It has quarterly revenue growth of 7.7%, a return on equity of 8.62% and pays a dividend with a yield of 1.8%.

One of SPX’s competitors is Emerson Electric Company (NYSE:EMR), which has a market cap of $36.20 billion and is trading at around $49, with a price-to-earnings ratio of 15.02. It has quarterly revenue growth of 12.1%, a return on equity of 24.43% and pays a dividend with a yield of 3.4%. This data indicates that it is outperforming SPX.

Dreman holds 649,986 shares of SPX, buying the entire holding in the third quarter of 2011. The average purchase price per share was $62.76. Based upon the last trading price of $60.38, he has made a return of -3.79%.

SPX’s cash position has declined in the last quarter. Its balance sheet showed $398.10 million in cash for the third quarter, a decrease from $400.60 million cash in the second quarter. The net tangible assets have increased to -$104.80 million in the third quarter 2011, from -$143.30 million in the second quarter. SPX’s quarterly revenue growth of 7.7%, versus an industry average of 11.8%, and a return on equity of 8.62%, versus an industry average of 11.9%, indicates that it is underperforming many of its peers.

The outlook for the diversified machinery industry is cautiously optimistic, primarily due to an increase in economic activity in the manufacturing sector and better than expected manufacturing results. This improvement is in line with recent signs of economic growth despite the overall gloomy economic climate. In addition, the weak US dollar makes US exports more attractive and this bodes well for US based manufacturers such as SPX.

When SPX’s increase in net income and solid performance indicators are taken into account the company is well positioned to take advantage of the positive industry outlook. On this basis I can understand Dreman’s decision to invest in the company and I rate SPX a buy.

Olin Corporation (NYSE:OLN)

Olin has a market cap of $1.44 billion and is trading at around $18, with a price-to-earnings ratio of 6.47. Its 52-week trading range is $16.11 to $27.16. It reported third-quarter 2011 earnings of $550.20 million, an increase from second-quarter earnings of $529.10 million. Third-quarter net income was reported at $47.20 million, an increase from second-quarter net income of $42.10 million. It has quarterly revenue growth of 27.1%, a return on equity of 24.13% and pays a dividend with a yield of 4.5%.

One of Olin’s competitors is Alliant Techsystems Inc (ATK), which has a market cap of $1.88 billion and is trading at around $57, with a price-to-earnings ratio of 6.54. It has quarterly revenue growth of -8.3%, a return on equity of 26.02% and pays a dividend with a yield of 1.5%. Based on these indicators it is underperforming Olin.

Dreman holds 1,579.903 shares of Olin, buying the entire holding in third quarter 2011. The average purchase price per share was $20.21. Based upon the last trading price of $18, he has made a return of -10.94%.

Olin’s balance sheet has improved, reporting $318.30 million in cash for the third quarter 2011, an increase from $276.50 million in the second quarter. Olin’s quarterly revenue growth of 27.1%, versus an industry average of 7.8%, and a return on equity of 24.13%, versus an industry average of 29.7%, indicates that it is outperforming many of its competitors.

The earnings outlook for the specialty chemical industry is cautiously positive. This outlook is primarily being driven by an increase in domestic demand as the economy improves. In addition, many companies in the industry are engaging in efforts to reduce working capital, optimize their supply chains and improve productivity, which should lead to margin benefits. The devalued US dollar also makes US exports more attractive and this should bode well for US-based manufacturers such as Olin. Although it is important to consider that the chemical industry remains heavily exposed to economic cycles and while the global economic recovery appears to be under way, the European sovereign debt crisis and its impact on global growth creates further short-term uncertainty.

Due to Olin’s stronger balance sheet, increased net income, solid performance indicators and attractive dividend yield, I understand Dreman’s decision to invest in the company. In addition, the company appears to be well positioned to take advantage of the positive industry outlook and accordingly, I rate Olin a buy.

Harsco Corporation (NYSE:HSC)

Harsco has a market cap of $1.56 billion and is currently trading at around $19, with a price-to-earnings ratio of 53.11. Its 52-week trading range is $17.77 to $36.78. Third-quarter 2011 earnings of $855.86 million were reported, a decrease from second-quarter earnings of $875.09 million. Third-quarter net income was $32.21 million, a decrease from second-quarter net income of $38.19 million. It has quarterly revenue growth of 13.8%, a return on equity of 2.38% and pays a dividend with a yield of 4.3%.

One of Harsco’s competitors is ThermoGenesis Corp (NASDAQ:KOOL), which has a market cap of $14.73 million and is trading at around $1. It has quarterly revenue growth of -30.6% and a return on equity of -19.96%. Based on this data Dreman holds 1,393,228 shares of Harsco, buying the entire holding in the third quarter of 2011.The average purchase price per share was $25.09. Based upon the last trading price of $19.28, he has made a return of -23.16%.

Harsco’s cash position has improved with the balance sheet showing $106.29 million in cash for the third quarter, an increase from $95.30 million in the second quarter. Net tangible assets have decreased from $658.88 million in the third quarter 2011, to $689.66 million in the second quarter. Harsco’s quarterly revenue growth of -30.6%, versus an industry average of 15.4%, and a return on equity of -19.96%, versus an industry average of 8.9%, indicates that it is underperforming many of its competitors.

The earnings outlook for the steel and iron industry is traditionally linked to demand by the automotive and construction industries, which domestically has been quite subdued due to the recessionary economic climate, high unemployment and declining consumer demand. However, demand for steel and steel products is also being driven by the Chinese economic boom, which when combined with a weak US dollar that makes US exports more attractive to international consumers, bodes well for US based steel manufacturers such as Harsco.

Harsco is currently trading at close to its 52-week low and despite its decreased earnings and net income I believe that at its current price it represents a well priced investment opportunity. I have taken this view based on the company’s stronger balance sheet, attractive dividend yield and the relatively positive industry outlook. Accordingly, I agree with Dreman’s investment in the company and rate Harsco a buy.

Duke Realty Corporation (NYSE:DRE)

Duke Realty has a market cap of $2.76 billion and is trading at around $11. Its 52-week trading range is $9.29 to $15.63. It reported third-quarter 2011 earnings of $361.26 million, a small decrease from second-quarter earnings of $363.07 million. Third-quarter net income was -$16.10 million a decrease from second-quarter net income of -$15.94 million. It has quarterly revenue growth of -2%, a return on equity of 1.17% and pays a dividend with a yield of 6.5%.

One of Duke Realty´s competitors is Liberty Property Trust (LRY), which has a market cap of $3.31 billion and is trading at around $29, with a price-to-earnings ratio of 21.48. It has quarterly revenue growth of -0.2%, a return on equity of 6.11% and pays a dividend with a yield of 6.7%. Based on these indicators it is outperforming Duke Realty.

Dreman holds 2,965,479 shares of Duke Realty, buying 2,685,321 shares in third quarter 2011, which added to the 254,353 shares already held. The average purchase price per share was $12.32. Based upon the last trading price of $10.90, he has made a return of -11.53%.

Duke Realty’s cash position has declined. The balance sheet showed $16.18 million in cash for the third quarter of 2011, a decrease from $117.65 million in the second quarter. The net tangible assets have decreased to $2.71 billion in third-quarter 2011, from $2.89 billion in the second quarter. Duke Realty’s quarterly revenue growth of -2%, versus an industry average of 13.5%, and a return on equity of 1.17%, versus an industry average of 3.6%, indicates that it underperforming many of its competitors in revenue growth but lagging in return on equity.

The earnings outlook for the REIT office industry is positive, despite the challenging economic conditions and market uncertainty. Overall the industry is seen as an attractive investment because REITs generate income, pay an attractive dividend yield and own hard assets. However, due to the current economic outlook many companies have been engaging in cost cutting and downsizing in order to maintain profitability and this has had an effect on the earnings of office REITs.

Due to Duke Realty’s weaker balance sheet combined with its second consecutive quarter net loss and poor performance indicators I do not agree with Dreman’s investment in the company. In addition, Duke is currently paying a dividend with a yield of 6.5% and based on its current performance it is difficult to see how this dividend yield is sustainable. Accordingly, I prefer to take a wait and see approach with the company and rate Duke Realty a hold.

Cooper Tire and Rubber Co (NYSE:CTB)

Cooper Tire and Rubber has a market cap of $797.82 million and it is trading at around $13, with a price-to-earnings ratio of 9.46. Its 52-week trading range is $9.64 to $27.73. It reported third-quarter 2011 earnings of $1.05 billion, a significant increase from second-quarter earnings of $922.21 million. Third-quarter net income was $17.28 million, an increase from second-quarter net income of $11.52 million. It has quarterly revenue growth of 19.3% and a return on equity of 17.16% and pays a dividend with a yield of 3.4%.

One of Cooper Tire and Rubber’s main competitors is Goodyear Tire and Rubber Company (NASDAQ:GT), which has a market cap of $3.13 billion and is trading at around $13, with a price-to-earnings ratio of 23.77. It has quarterly revenue growth of 22.2% and a return on equity of 10.92%. Based on these indicators, it is performing roughly on par with Cooper Tire and Rubber.

Dreman holds 2,639,215 shares of Cooper Tire and Rubber, buying 879,594 shares in the third quarter of 2011, adding to an existing holding of 1,759,621 shares. The average purchase price per share was $19.71. Based upon the last trading price of $12.81, he has made a return of -53.86%.

Cooper Tire and Rubber’s cash position has declined in the last quarter. The balance sheet showed $90.57 million in cash for third-quarter 2011, a decrease from $137.69 million in the second quarter. The net tangible assets have increased to $443.55 million in third-quarter 2011, from $416.16 million in the second quarter. Cooper Tire and Rubber’s quarterly revenue growth of 19.3%, versus an industry average of 0.5%, and a return on equity of 17.16%, versus an industry average of 8.6%, indicates that it is outperforming many of its competitors.

The outlook for the rubber and plastics industry is cautiously positive, with global demand for tires and rubber expected to rise due to signs of a strengthening global economy and the expectation of solid growth in world motor vehicle production.

When the positive industry outlook is considered in conjunction with Cooper Tire and Rubber’s significant increase in earnings and net income in a difficult operating environment, as well as its solid performance indicators, I agree with Dreman’s investment decision. In addition, Cooper Tire and Rubber is trading well below its 52-week high and I believe this presents a buying opportunity. On this basis I rate Cooper Tire and Rubber a buy.

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