Shares of Masco surged this summer after the company surprised Wall Street with a strong second quarter performance. Arun Daniel, portfolio manager for the JOHCM U.S. Small Mid Cap Equity fund, said he expects the home improvement and building products maker to build on those gains this fall. ‘While the top line is going to grow only 6%, you are going to see earnings growth in excess of 20%,’ said Daniel. ‘That has not been fully realized yet in the stock and so we believe this will outperform the market.’ Shares of Masco (MAS) are up 21% year-to-date. The JOHCM U.S. Small Mid Cap Equity fund (JODMX) is up 4% so far in 2015. Daniel is also bullish on shares of Signet (SIG), up 5% thus far in 2015, saying the jeweler’s stocks is sparkling compared to that of rival Tiffany & Co., down 24% year-to-date, because it has less exposure to foreign demand and currency changes. ‘Signet has recently acquired Kay Jewelers so there is also a lot of opportunity, low hanging fruit if you will, on integration,’ said Daniel. ‘That is yet being realized by the Street. Over the next two years we are going to see top line improvement and margin expansion combined driving outperformance.’ Ralph Lauren (RL) shares have plummeted 40% in 2015. Nevertheless, Daniel said it is a smart contrarian choice for investors looking for a turnaround story.
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