John Keeley, manager of the $170 million Keeley Small Cap Value Fund, likes being a value guy: “You probably make fewer mistakes than you do in the growth area,” he muses. “There are fewer moving parts.”

Here’s how Keeley, 64, keeps it simple. First, he largely ignores technology and health care stocks. Second, he limits his buying to five kinds of companies: those coming out of bankruptcy, those looking very cheap relative to book value (excess of assets over liabilities), spunoff subsidiaries, utilities, and converted thrifts and mutual insurance companies. These days Keeley’s fund, a Forbes Honor Roll member (see Sept. 20) holds 114 stocks. Not quite half fall into the spinoff category.

It has been a winning formula for Chicagoan Keeley. The University of Chicago business school graduate began his career in 1966 as a financial analyst in the pension department of Standard Oil of Indiana (now part of BP). After three more jobs in the investment business, he founded Keeley Investment Corp. in 1977. Keeley Asset Management, started five years later, now manages $1.2 billion. The Keeley Small Cap Fund has returned 14% annualized since its launch in October 1993, versus 10% for the S&P 500.

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WASHINGTON, D.C. – High energy prices, terrorism angst and wobbly consumer spending make a toxic combination for retailers. Maybe that’s why many retail stocks, down significantly from their 52-week highs, look cheap.

Giants like Wal-Mart Stores, Home Depot, and Lowe’s popped up on our fairly tough stock scan of the retailing sector. Among other criteria, we required that current ratios of price to book value, earnings and sales all stand below their five-year averages.

We also consulted with two money men, and both agreed there are investment opportunities in retail. One is Robert Straus, portfolio manager of the $201 million Icon Consumer Discretionary Fund. Straus thinks fear and uncertainty have soured investors on stocks, particularly small caps, despite recovering earnings.

“We’re seeing a disconnect between economic fundamentals and actual sentiment in the marketplace,” Straus says.

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William sterling has been a big-picture guy on Wall Street for 18 years. Ask the man, a self-described “recovering economist,” about the case for international investing, and he will bend your ear with a barrage of opinions on everything from America’s external accounts to Japanese real estate prices. So how does Sterling, 50, who oversees $5.2 billion as chief investment officer of New York’s Trilogy Advisors, zoom in on a list of stocks? Demographics play a key role.

Demographic information comes with a comforting level of certainty, no matter what the market. If you know the number of 15-year-olds alive today, it’s not too hard to guess how many 25-year-olds will be around a decade hence. “There’s almost nothing else you can say about ten years from now with that amount of confidence,” Sterling says.

Since 1998 Sterling has put that certainty to good use in the CI Global Boomernomics Sector fund, an $814 million portfolio he manages for Canada’s CI Funds. The fund’s mission is to invest in sectors that Sterling believes will be most affected by population trends, especially the aging of the baby boomers, or those born between 1946 and 1964. The fund has returned 6% annualized since its launch, versus 1% for the MSCI World Index.

One way Sterling digs into demography is to identify”longs” and “shorts” via consumption survey data from the U.S. Bureau of Labor Statistics. A sector the numbers favor: medical devices, especially implants and prosthetics. In 2011 the first wave of baby boomers will hit 65, and failing joints will be a big problem for this group.

Other demographic longs are cruise ships, recreational vehicles and low-end real estate. The latter category plays more off the “echo boom,” or the children of the baby boomers, now headed into their twenties. An example of a demographic short would be winter sports. “Not good,” Sterling chuckles. “Fifty-year-olds might like to think they’ll do a lot of skiing, but they’ll probably take a cruise instead.”

Full story at Forbes.com

It’s a big world out there–49,000 stocks trade on overseas markets. You can throw up your hands and have a mutual fund do the picking for you. Or you can be your own portfolio manager. Over the next four pages we provide a jumping-off point for your search. These are 125 foreign stocks that are cheap by at least one of three different classic measures.

Despite the rally in most bourses over the past year, stocks are less expensive than they were five years ago. Since mid-1999 the U.S. and Japanese markets and the Morgan Stanley Capital International EAFE Index of European and Asian stocks are all off between 13% and 22%. Five years ago the average Japanese stock was going for 45 times estimated profits for that fiscal year. Now it costs a mere 16 times expected earnings. A handful of dicier markets have done very well since 1999; both Turkey and Russia would have better than tripled your money in dollar terms.

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Certain events invite contrarian calls on stocks: a war breaking out, a chief executive being named Time magazine’s Person of the Year, and so on. But what about when your favorite stock gets knocked by a government investigation? Buying might not be such a bad idea. Consider the case of ITT Educational Services

In February, ITT Educational Services revealed that the FBI and other federal agents, searching at the company’s Indianapolis headquarters and at several school locations, had seized information relating to the firm’s placement and retention figures, graduation rates, grades, admissions and salaries of graduates.

ITT’s share price, at the time not far from a 52-week high of $61, promptly sunk to below $30. The stock–despite subsequent announcements of an SEC investigation, shareholder lawsuits, and other woes–has recovered to a recent $43. But the company, in Value Line’s words, remains “under a cloud of suspicion.” On Wall Street, 12 of 17 analysts tracked by Thomson First Call rate the stock a “hold” or a “sell.”

To get the contrarian take, we checked in last week with one of the five bulls on the stock, Richard Close, an analyst in Nashville with Jeffries. “I don’t think these guys were doing something to intentionally defraud the government,” he says.

Full story at Forbes.com

As chief U.S. investment strategist at Toronto-based CIBC World Markets, the investment banking and brokerage arm of one of Canada’s largest financial services firms, it’s up to Subodh Kumar to divine the market’s direction and which sectors are likely to lead the way. Also among his duties: boiling down hundreds of stock recommendations from the 100 equity analysts employed by CIBC into a more manageable list of 50 or so top picks.

Kumar doesn’t do the latter job alone. He is joined by five colleagues on a committee that meets each month to manage a list known as the Special Research Series, or SRS. Its mission is to identify timely, undervalued investment ideas from among the stocks rated “sector outperform” by CIBC analysts.

Full story at Forbes.com

Who are the best brokerage analysts? We teamed with StarMine, a San Francisco-based research firm, to find out. Based on StarMine’s extensive analysis of 2003 data, we learned which analysts racked up the biggest gains overall and industry by industry. We also found out who the sharpest shooters were for earnings estimates.

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Flip through regulatory filings for Onyx Pharmaceuticals and you’ll learn that it develops “innovative therapies targeting the molecular mechanisms that cause cancer.” The tiny Richmond, Calif. biotech hasn’t made a dime selling drugs, and red ink is all that lies immediately in the forecast for its bottom line. Still, its proposed drug to treat kidney, liver and other cancers–by blocking certain biochemical signals controlling tumor cell division and the formation of related blood vessels–looks promising. In the past year Onyx shares have rocketed from $7 to a 52-week high of $38.

Finding moon shots like Onyx, which he started buying when it traded in the teens, occupies a good chunk of Kris Jenner’s time. Jenner is manager of the $1.2 billion T. Rowe Price Health Sciences Fund. His qualifications: a summa cum laude bachelor’s degree in chemistry from the University of Illinois, a doctorate in molecular biology from Oxford University and a medical degree from Johns Hopkins. He also completed four years of a surgical residency at Hopkins, where he learned how to keep cool under pressure. “Nothing generates as much emotion as pulsating blood,” he says, recalling the gunshot and stab wounds that found their way into the Baltimore emergency room where he trained.

Jenner, 42, says that his background gives him a much better chance of success than most investors at prospecting for medical outfits, particularly speculative ones whose fate rides on one innovative product. “The complexity or nuances of that evaluation are quite significant,” he says. His investment fever chart bolsters his case. He took over the Health Sciences Fund in January 2000, after a few years as a biotech analyst. For the four years since, it shows a total return of 2.8% annualized, six percentage points higher than the S&P 500.

Jenner says he rarely uses stock screens to find investment ideas; most of the smaller outfits he goes for are off the charts in terms of traditional measures of value. Even Genentech (nyse: DNA – news – people ), a biotech “blue chip” with earnings, sells for a wild 47 times its cash flow (in the sense of net income plus depreciation).

Instead, Jenner bases his decisions on an assessment of the company’s science, the quality of its management and the commercial prospects for its treatments, as well as its valuation.

Full story (reg. required) at Forbes.com