John Neff: Bargain Hunter

Unloved but promising stocks were just the ticket for Investment guru John Neff. While managing the Windsor Fund for more than 30 years, his conservative approach earned an average 13.7% annual return and beat the market by an average of 3.1% per year. In his article for this week, ¬†Validea CEO John Reese describes this Low P/E Investor’s philosophy and offers some fundamentally solid stock picks.

Scripps Networks Interactive, Inc. (SNI) is a developer of lifestyle-oriented content for linear and interactive video platforms including television and internet brands. Our Neff-based strategy likes the company’s EPS growth of 9.7%, which is fueled by sales, and total return-to-PE of more than double the market average.

Unum Group (UNM) is a provider of disability insurance products in the U.S. and the U.K. Historical EPS growth of 12% and long-term projected EPS growth of 7.8% get high marks under the Neff-based methodology, and average sales growth of 15.1% is more than double the minimum requirement.

Signet Jewelers Ltd. (SIG) is a retailer of jewelry, watches and associated services in the U.S., Canada and the U.K. Our Neff-based stock screen favors the company’s EPS growth rate of 14.3% and projected EPS growth of 40.4% for this year and 17% for the long term.

National General Holdings Corp. (NGHC) is a personal lines insurance holding company that offers products including auto, homeowners, and supplemental health. Sales growth of 41% and total return-to-PE ratio of 1.26 are strong fundamentals under our Neff-based strategy, and healthy free cash flow ($2.73 per share) is a plus.