Panasonic Shaver Parts

A Look at How Our Picks Outperformed the Market

We believe the market is severely underestimating the long-term growth potential of Apple. Based on our estimates, we think the market is merely pricing in inflation-like expansion beyond the next few years, a view we believe is too conservative. Although the competitive landscape can change on a dime in technology-land, Apple represents a compelling valuation play.

Altria Group ( MO )

There are myriad financial benefits of holding a solid dividend-paying company that is continuously pressured with uncertainty through both the ups and downs of its share price. The reinvested dividends during the troughs of a firm's stock price often find a way of propelling the overall return of that stock to meaningful outperformance when the shares ultimately reach new highs during optimistic times. We believe Altria Group fits this mold and represents a core position on our Best Ideas List.

Ancestry.com ( ACOM )

We think this online family history provider will defy the shorts in a big way. Our estimate of the company's fair value is about $70 per share. Based on short interest, the firm seems to be one of the most hated names on the Nasdaq, and this is not only why we like it. We're expecting some fairly aggressive subscriber growth during the next few years coupled with significant margin expansion. The firm's addressable market is absolutely huge, and the release of the 1940 census next year is perhaps one of the biggest catalysts genealogical research has seen in a decade. We think the firm has earnings power above $4 per share by 2015, and that estimate includes significant marketing and advertising spend.

Astronics ( ATRO )

Astronics, a maker of lighting systems and electrical power systems for the commercial (nearly 60% of revenue) and military and general aviation markets, has been the best performer in our portfolio this past month. The company's electronics products provide in-seat power for passengers and power in-flight entertainment systems (IFE) found on commercial jetliners. Astronics is benefiting from a trend of increasing IFE and in-seat power on new generation aircraft and has a decent position on new builds such as Boeing's ( BA ) 787, Airbus' A380 and A350. Though customer concentration is some risk (Panasonic Avionics Corp. accounts for about 27% of sales), the firm should experience strong growth in the years ahead.

Buffalo Wild Wings ( BWLD )

A restaurant focused on the concept of wings, beer and sports seems like nothing special, but Buffalo Wild Wings certainly has carved out a solid presence in this arena. With each restaurant boasting an extensive multi-media system (projection screens, 50 televisions, etc.), a full bar and open layout, "B-Dubs," as it is commonly known, has become the place of choice for many social chicken-wing lovers. Thanks in part to its widespread appeal, the firm has experienced tremendous growth during the past number of years as revenue has more than doubled since 2006. We think management's estimates for total restaurant penetration are too conservative and believe this name to be a long-term holding.