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Barron's Roundtable participant Scott Black, founder and president, Delphi Management Inc., weighs in with his 2008 picks.

  • Devon Energy (DVN) - a breakdown of the company's complex array of gas and oil holdings gives it a sum-of-parts worth of $122/share, while it trades at just $90.30. DVN keeps finding and development costs cheap, it knows what it's doing, and it has little concerns of expropriation since international assets are only 10%.

  • ENSCO International (ESV) - its shares' P/E multiple is just 7.6, half the market multiple. It has been buying back shares. ESV's fleet of 45 rigs give it a break-up value of $70.65/share; shares are cheap at $59.

  • Avnet (AVT) - shares are at $31.64, down from almost $45; they can definitely return to $40. The company is pushing to boost its return on total capital to 14% from 12.5% and top-line growth of 9-10%/year. They can gain market share and make acquisitions.

  • Ross Stores (ROST) - the retailer "generates nothing but free cash, and uses it to buy back shares." It says earnings growth of 15-20% over the next five years is "reasonable." Ross plans to move from centralized merchandising to micromanaging its product on a store-to-store basis. Return on total capital should be 25%.

  • Horsehead Holding (ZINC) - the $585M market-cap company did about $552M in sales and $2.80/share earnings in 2007. ZINC has hedged much of its zinc dust production at $1/pound. The company has zero debt and $77M in cash and equivalents.

  • Elron Electronic Industries (ELRN) - the company developed "camera in a pill" technology which captures gastrointestinal images. Taking into account its stakes in other companies, private and public, plus $2.15/share cash, and this $11.50 stock has a break-up value of $16.35. It also has a cryo-therapeutic surgery unit; an insulin-dispensing patch; an Israeli ISP; and a water disinfection company.

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Source: Scott Black Picks 6 Winners for 2008 - Barron's