A low price-earnings ratio also catches his eye. "Considering that the S&P 500 is currently trading at a price-earnings ratio north of 25, I think that companies trading for less than ten times earnings are excellent investments," he says. Aside from D.R. Horton, other stocks that currently trade for less than ten times earnings include managed care provider Oxford Health Plans and Washington Mutual, a savings and loan.

Companies with substantial cash on their balance sheets and little or no debt also hold appeal. Holdings such as networking specialist 3Com and In Focus Systems, a maker of video presentation systems, are technology stocks with plentiful cash and almost no long-term debt.

Stocks that stand to benefit from a strengthening economy represent a final portfolio theme. Companies in this category include building materials manufacturer Lamson & Sessions. Although earnings per share have dropped from year-ago levels due to poor weather conditions and higher material costs, Buckingham believes that the company's good prospects for sales growth, as well as its low price-earnings ratio, make it an attractive stock. Another economic recovery play, oil and petroleum product transportation services provider OMI Corp., should benefit from higher world oil demand in the latter half of the year and low inventories in the United States and Western Europe.

Keeping It Frank

What do you do if you're an investment manager and the person who taught you the ropes passes away? In the case of John Buckingham, you continue investing in small-company value stocks in the tradition of Al Frank, who lost a six-month battle with cancer in the spring of 2002.

Long before his death, Frank had enjoyed a loyal following among investors who swore by his approach to selecting small, off-the-beaten-path companies. Under Buckingham's guidance, the newsletter Frank founded in 1977-originally titled the Pinch Penny Speculator, but which later became The Prudent Speculator-continues dispensing advice to about 6,000 subscribers. Buckingham also heads Al Frank Asset Management, a Laguna Beach, Calif.-based firm with $250 million in assets under management, including $75 million from the nearly six-year-old Al Frank Fund.

Buckingham, who runs the fund with the help of co-manager Jessica Chiaverini, joined the firm in 1987 while he was a 21-year-old senior majoring in computer science at the University of Southern California. When Frank hired him for $8 an hour to help modernize his outdated office computer system, Buckingham seized the opportunity to learn the investment side of the business. He moved through the ranks quickly after Frank let go several senior employees after the 1987 market crash. When Frank moved to New Mexico in 1990, Buckingham added the title of chief portfolio manager to his resume.

More than 18 months after Frank's death, Buckingham, now 38, hesitates to change the name of the firm and the fund. In the Speculator's September edition, he pledges to "continue to diligently preach the Gospel according to Al Frank." The founder's imprint is so strong, he says, that he still fields questions about what Mr. Frank thinks of a particular stock. In some ways, Buckingham probably knows the answer.

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