Specific Stocks

As a bull market matures growth stocks begin to outperform value stocks. This bull market is 21 months old, middle-aged and ripe for what the pros call "growth at a discount," or growth stocks that are undervalued. Two weeks ago I mentioned a core positon of mine, Koppers Holdings (KOP), which is a railroad/steel mill supplier and it trades at a discount to most railroad and steel stocks. Since I mentioned it KOP exploded and is up by double-digits. Growth stocks should be bought when they are in basing patterns. KOP is roaring well beyond its basing pattern so I am not adding to my position but sitting back and enjoying the ride.
Of more interest is ITT Corporation (ITT). It operates in three spaces: 1) Defense. 2) Giant water pumps for mines, sewage treatment plants, and municipal water supply. 3) Engineered products for railroad rolling stock and cars. ITT has a P/E ratio of 12, as if it were a pure defense company. For the past year analysts have been warning investors to stay away from defense companies like ITT. But a few days ago the analysts have been waking up and saying, "Wait a minute, ITT is levered to mining, railroads, and the coming expansion of emerging market water delivery and treatment facilities, it is undervalued!" What they haven't been saying but should is, "Not all defense companies suck, ITT is the leader in night vision goggles and other Long War gear, not main battle tanks designed to counter a non-existent Soviet threat." In other words all of ITT's businesses are pretty good.