Three unloved stocks to fall for

With stockmarkets riding high, you may be forgiven for thinking there is no value left. But professional investor Stuart Widdowson believes you can still make money by buying value stocks with strong growth potential. Here he picks three that, until now, have been off most investors' radars.

Each week, a professional investor tells MoneyWeek where he'd put his money now. This week: Stuart Widdowson, investment manager at SVG Investment Managers.

The small-cap index has rallied more than 60% since hitting bottom in March 2009. With growth stocks increasingly priced for performance and recovery stocks for perfection, is there any value left? I believe long-term investors can still make attractive risk-adjusted returns by investing in a select number of recovery stocks quality companies valued at modest multiples of underlying and/or growing cash flows, trading at a significant discount to what past merger and acquisition deals within their peer group suggest they're worth. Buying plays where all four drivers of shareholder value are present stable or growing sales, operating margin improvement, degearing and rerating should cut downside risk. The following three stocks are 'unloved'; off investors' radars. But their share prices could at least double in value over the next three years, excluding any sales recovery.

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Stuart Widdowson

Stuart is a professional investor and Managing Partner at Odyssean Capital LLP. Prior to this, Stuart was a fund manager of strategic funds at GVQ Investment Management Limited for just over 10 years and then he spent 6 months as a partner at Harwood Capital to establish a new fund management business. He has been at Odyssean Capital LLP for just over 5 years and he has contributed to MoneyWeek’s share tips.