Ivy Science and Technology
Ticker: ( )
Sector pick: Technology
Ivy Science and Technology (, with $1.5 billion in assets, has trounced the market over the past decade, returning an annualized 11.8%, vs. 7.5% for its category. Manager Zach Shafran has been mixing big tech companies with more contrarian plays since 2001. Pentair, which accounts for 2.2% of the fund's assets, falls into the latter category. Shafran views it as "a story about water on a global basis." Pentair makes filtration devices and pumping systems, and he gushes about markets in the U.S. (as homeowners, hotels, and spas become more efficient with water) and in the developing world (as growing economies fund needed infrastructure). )
Pentair, which had revenue of $3.5 billion in the latest 12 months, recently completed a $4.9 billion merger with the flow-control business of Tyco International. That will make the company more global and more than double sales. "They can expand their product line and reach," Shafran says. At a recent $49, the stock trades at roughly 15 times next year's estimated earnings and has a dividend yield of 1.8%. But Shafran is most excited by Pentair's goal of a 50% increase in annual profits by 2015. Shafran thinks the company can exceed that figure.
Beware of munis priced at bubble levels. They'll always pop in the end.