Hardwood to trading floor: Stocks go Final Four

Sunday - 4/7/2013, 1:44pm EDT

In this Wednesday, March 20, 2013 photo, Atlanta Hawks center Johan Petro hangs onto the netting before an NBA basketball game against the Milwaukee Bucks, in Atlanta. With the sports world laser focused on college hoops, The Associated Press asked half a dozen money managers to come up with their own Final Four of stocks on Friday, April 5, 2013. (AP Photo/David Goldman, File)

CHRISTINA REXRODE
AP Business Writer

NEW YORK (AP) -- March Madness: It's not just for basketball.

The sports world is laser focused on college hoops right now. The annual tournament is near its climax, with just a quartet of teams -- cutely called the Final Four -- slugging it out for the national championship title, which will be decided Monday. And since the stock market is a lot like the tournament, packed as it is with upsets and long shots, we asked half a dozen experts to come up with their own Final Four of stocks.

The answers varied widely, from natural gas and oil wells to Oreos and comfy shoes, but there were a few common themes. The pros wanted stocks that were cheap. That can be a $10 stock or a $100 stock -- what matters is whether the stock price still has room to grow. They scrutinized cash flow and debt levels to get an idea of what a company is really worth, no matter what the market might be saying. They liked stocks that paid dividends, which are cash payouts that companies can give to shareholders each quarter.

They tended to favor companies that have taken a thumping, either in their stock price or reputation. Picks include BP, still under the long shadow of the Gulf oil spill; Apple, which some fear has run out of hit products; and Big Lots, whose former CEO was accused of trading on inside information.

"The ones that are unloved on Wall Street and really beaten up," says Russell Croft, who, like almost everyone we interviewed, described his investment strategy as "contrarian." ''We like to really look at those."

Maybe that's why so many said they'd cheer for Wichita State in the real Final Four on Saturday. Didn't know that Wichita State was in the tournament? Yeah, most fans weren't expecting that either.

Here's more from the coaches' box -- our experts' picks and their opinions about each one. As with basketball brackets, remember: There are no guarantees in stock picking.

John Buckingham

Chief investment officer at Al Frank Asset Management in Aliso Viejo, Calif.

--Apple: It should be able to keep cranking out products that its "rabid base of customers" will want to buy -- unlike, say, the makers of the BlackBerry or the Palm Treo. Cash piles are high and CEO Tim Cook, the successor to Steve Jobs, is finding his footing. "The company is more than just one man."

--Newmont Mining: Even with the price of gold falling this year, it should continue to be profitable. Newmont can still sell gold for more than it costs to extract it, and it also has "substantial reserves" of the precious metal and "a very geographically diverse mix" of mines.

--Deere & Co.: Agriculture should boom as the world population expands, and investing in a company that makes farm equipment seems like a good way to get on board. Think of the gold rush: "The people who sold the picks and shovels made all the money."

--Foot Locker: Sales and revenue should continue to grow because the company has a product that Americans want, and management has been careful to not expand too quickly. "We buy shoes from them. We think it's a good customer experience."

--Hoops: He picks Louisville, the only No. 1 seed still in the tournament. "They win it for Kevin Ware," Buckingham predicts, referring to the sophomore who was injured in Sunday's win over Duke. "They've got karma on their side, they've got the best talent, they've got the best coach."

Matthew Coffina

Editor of the Morningstar StockInvestor newsletter in Chicago

--Baidu: Revenue is still surging for China's most popular search engine, and it still has a corner on the market despite competition from rival Qihoo. The falling share price makes it a good buy. "It's a rapidly growing company priced like an average company."

--C.H. Robinson Worldwide: The truck broker, which connects companies who need to move their stuff with truckers who can move it, has been gaining market share for decades and should continue to do so. Its technology and scale give it a leg up on mom-and-pop competitors.

--National Oilwell Varco: It makes equipment for deep-water oil drilling and horizontal drilling, which is expected to expand in coming years. Companies that run rigs will need to update their equipment. "The more complicated drilling gets, the better it is for National Oilwell Varco."

--Charles Schwab: It's finding a comfortable niche between high-end money management services like Morgan Stanley Smith Barney and Bank of America's Merrill Lynch, and services that are more do-it-yourself like E(asterisk)Trade and TD Ameritrade. Schwab is also good at cross-selling, which means getting each customer to buy multiple products.