10 Stock Picks From 10 Great Investors

1. Qualcomm

Todd Alhsten
Parnassus Equity Income

Todd Ahlsten's $3 billion Parnassus Equity Income Fund has returned 5.5% annually over the past decade, trouncing the S&P 500's 0.5% yearly decline in that time.

Ahlsten looks for four qualities in stocks: long-term relevance, a competitive edge, strong
management, and potential double-digit returns. Right now he thinks Qualcomm meets all four. The company licenses technology that enables smartphones to connect to 3G and 4G networks. As demand for the devices increases, Ahlsten says, Qualcomm will reap the benefits.

"They have myriad patents locking up the technology way out into the future," Ahlsten says. "We see long-term, solid returns." The stock is trading near its 52-week bottom, in part because phone prices are falling, but Ahlsten thinks investors overestimate future price cuts.

2. Hartford Financial Serv. Group Pref. conv. shares

Akre Focus Fund

Chuck Akre just launched his own fund, Akre Focus, after leaving FBR Focus, where he returned 12.6% annually from 1996 through 2009.

Akre, who keeps a third of his portfolio in financial services stocks, has a creative idea: convertible preferred shares of the Hartford Financial Services Group. These must be converted into common stock in 2013. Based on a price of $25, they offer a 7.25% yield, and Akre thinks a sizable gain is likely on the conversion. Over three years, he estimates, investors will reap annual returns of 18%.

The Hartford was hit hard during the financial crisis, but Akre thinks it's in good shape after recapitalizing. "It's an interesting, low-risk, decent turnaround play in a market with a lot of uncertainty," he says.

3. Goldman Sachs

Bruce Berkowitz
Fairholme Fund

Bruce Berkowitz opened his Fairholme fund in 1999. Ten years later it had grown to more than $10 billion and gained 13.2% annually, beating 99% of rival funds. Berkowitz was crowned Morningstar's "U.S. stock manager of the decade."

His philosophy is simple: Go anywhere for value -- in stocks, bonds, or cash. Right now he's betting on financial shares, the best of which he thinks will stage a major rally. Berkowitz recommends Goldman Sachs's stock, which fell 24% this year after the SEC filed its fraud case against the bank. Shares now trade at a trailing P/E ratio of just 6 -- less than half their decade-long average -- and Berkowitz doubts the case will crimp earnings in coming years.

"It's a great firm with great people and earnings," he says. "They're under a temporary cloud."

4. Ultimate Software Group

Jeff Cardon
Wasatch Small Cap Growth Fund

Jeff Cardon isn't your typical growth investor. He's not chasing the latest hot stock. Yes, he buys companies with quick growth prospects -- those with earnings that he expects to double in five years -- but those earnings must be stable. His style has delivered outsize returns for Wasatch's Small Cap Growth Fund: 7% a year since 2000, vs. a negative return for its benchmark.

His choice: Ultimate Software Group, whose web-based systems handle payroll and human resources for businesses -- a $10 billion market that is growing. Ultimate is winning market share from rivals Paychex and ADP as companies look for lowercost HR products.

In the next five years, Cardon expects sales to grow 20% annually and profits to double.

"This could be a 10- year growth story," he says.

5. Checkpoint Systems

Dennis Delafield
Delafield Fund

Dennis Delafield, manager of the $850 million Delafield Fund, has beaten 99% of midcap value funds over the past 10 years, returning 12.1% a year while the S&P 500 stalled out.

A recent favorite: Checkpoint, which makes surveillance systems and security tags for retailers. Delafield likes its experienced management team and strong balance sheet, and he thinks that its stock, which is trading at seven times earnings before interest, taxes, depreciation, and amortization, is cheap. Customers such as Wal-Mart are increasingly using the company's tags to protect products like videogames, which they can then display on store floors rather than behind glass cabinets.

"Checkpoint can come close to increasing earnings by 75% over the next two years," he.




6. Omnicare

Brad Evans
Heartland Value Plus fund

Small-cap manager Brad Evans compares his style to "private equity investing in the public markets." That means he seeks battered, less-known stocks that he thinks will revive over time. The strategy works: Evans's $1 billion Heartland Value Plus Fund has returned 11.3% annually over the past decade, crushing the S&P 500's 0.5% loss.

One of his favorite names right now is Omnicare, which distributes drugs to nursing homes and assistedliving facilities. "It's Walgreens for institutional customers," he says. Omnicare has suffered from debt problems and expensive acquisitions, and is now trading at 10 times trailing earnings.

Evans thinks that's a bargain, given its hefty cash flow and growing customer base. As he points out, "The senior population in the U.S. will grow from 39 million in 2009 to 52 million in 2014."

7. Hewlett-Packard

Tom Forester
Forester Value Fund

Tom Forester and his $100 million Forester Value Fund spent years unnoticed. Then came the maelstrom that was 2008, when every single U.S. stock mutual fund lost money -- except Forester's, which eked out a 0.4% gain. The press lavished deserved attention on him.

Forester's cautious strategy of switching to large cash positions when stocks are pricey has steered his fund to a 5.4% average annual return for the past decade. Right now Forester thinks stocks are expensive and he expects more write-offs to drag down future profits.

But one he still likes is Hewlett-Packard. Trading at just 12 times trailing earnings, the tech behemoth will boost profits as companies upgrade their technology in a recovering economy, says Forester. "That's probably got three years of legs to it," he says.

8. Timber

Jeremy Grantham, who oversees $106 billion of institutional money at GMO, is known for his prescient stock calls. For example, at the height of the '90s bull market he warned of a bad decade ahead for U.S. stocks. Now Grantham is cautious again. He expects large-cap U.S. stocks to tread water over the next seven years.

Grantham prefers an alternative: timber. "With the possible exception of U.S. blue chips," he says, "there's really no competition for timber as a safe asset." Grantham expects wood to gain 6% annually for the next seven years. (Timber has actually outperformed the S&P 500 since 1910 and returned more than 7% a year in the past decade.)

One way to invest is through a REIT such as Plum Creek Timber, which has a dividend yield near 5% and a large, diversified forest portfolio.

9. Diageo

David Herro
Oakmark International Fund

Even amid European debt crises, David Herro thinks you should buy global equities, especially undervalued blue chips. Herro has run the $5 billion Oakmark International Fund for 18 years, posting a stunning 10.5% annualized return since 1992, pulverizing the MSCI World index's 4.8% gain.

Herro favors global stocks because he expects growth in emerging markets to offset declines in developed countries. He recommends shares of Diageo, the giant London-based distiller of Smirnoff vodka, Johnnie Walker whisky, and others. Herro thinks the shares, trading at 18 times trailing earnings, are cheap based on long-term trends like the growth of premium liquor sales in both emerging markets (as incomes rise) and Western countries (as aging drinkers switch from beer):

"It's almost the perfect stock."

10. Nektar Therapeutics

Frank Jennings
Oppenheimer Global Opportunities Fund

Under Frank Jennings's guidance, Oppenheimer Global Opportunities Fund has routed the S&P 500 over the past 10 years with a 4% annualized return (vs. --0.5%). But Jennings aspires to bigger gains, and he's willing to take risks to get them. "I am an elephant hunter," he says, "when most [fund managers] are busy poaching rabbits."

One potential elephant: Nektar Therapeutics. Leveraging medicinal polymer chemistry, Nektar's technology is used to modify existing drugs, so they last longer, are less toxic, and generally work better. Nektar sells nine modified drugs, treating cancer, anemia, and immunesystem problems, and has more in the pipeline.

"They may come up with 50 drugs over the next decade," Jennings says, "in which case this stock could go up 10-fold."