Follow Comments Following Comments Unfollow Comments

Last year was one for stock market record books as index fund buyers added 30% to their nest eggs while many hedge fund managers under performed. Oddly, some of the smartest investment advisors believe that despite the run up, selected equities still look attractive.

T. Rowe Price’s Head of U.S. Equities John Linehan is taking a cautiously bullish approach: “Moving forward, U.S. stocks are unlikely to match their recent strength…On the plus side, corporate health remains strong and valuations are neutral. There are still attractive areas, such as companies that are benefiting from the reindustrialization of America. Market tailwinds and headwinds are now more balanced, so we believe it’s time to be cautious.”

Linehan is essentially saying that 2014 will be a stock picker’s market. His T.Rowe Price Value Fund. for example, holds among its top holdings Irving,TX’s Flowserve Corp.(FLS). a maker of pumps, valves and seals used in a host of industries. It also owns a significant amount of specialty chemical and materials company Celanese Corp (CE) .

As has been Forbes’ tradition over the years, we have gathered a selection of “Best Ideas” from some of our favorite money managers and investment advisors. You’ll find their recommendations below:

Marc Gerstein

Buy: Ballantyne Strong (BTN)

BTN has tons of cash thanks to sales of digital equipment to movie theaters that switched to the new standard. That’s now largely played out and it would have been easy for BTN to blow cash on a “diworsification” acquisition. But instead, BTN made a great accretive purchase: Convergent Corp. with a growth business (digital content for out-of-home advertising, etc.) and an operating profile adjacent to BTN’s network support center that serves digital theaters. This debt-free company still has lots of cash (40% of the stock price) and the stock still has a measly (0.59) price/sales ratio.

Buy: Rite Aid (RAD)

I first recommended Rite Aid in June 2011 at $1.05 and again in January at $1.45. The stock now trades above $5.00 and I still like it. My original investment case remains alive and well. One aspect of this is that the company’s remodeling efforts, emphasizing its new fresh-looking “wellness” format is working. The transition still has a lot of legs left: Only a little more than 1,000 stores have been renovated thus far, out of a total of 4,600. And with more efficient operating practices, cash flows remain very healthy (as was the case even before GAAP net income moved above zero), meaning the company can comfortably pay the interest on its still-considerable debt and refinance as necessary.

Note, too, my investment case had not and still does not assume RAD will surpass or catch up to its main rivals Walgreen’s (WAG) or CVS Caremark (CVS). Instead, I continue to believe that even after RAD’s 2013 rally, the stock’s valuation remains far enough below those of WAG or CVS to enable shareholders to benefit even as RAD’s operations continue to make baby steps toward the levels maintained by the industry leaders. Bear in mind that price/sales is very much influenced by margin, and there is plenty of room for RAD’s operating margin to make progress relative to peers as store-overhaul attracts more revenue and improves overhead-cost coverage.

Buy: Omega Protein (OME)

The stock market has shown itself to be interested in the LOHAS (lifestyle of health and sustainability) through high valuations on such large issues as Whole Foods (WFMI) and Lululemon (LULU), and we’ve done well so far with such recent selections as Gaiam (GAIA) and Primo Water (PRMW). Omega Protein. which catches menhaden, a wild herring-like fish found along the Atlantic and Gulf of Mexico coasts and harvests a variety of protein and oil products, could turn into an intriguing stealth LOHAS play

At present, more than 90% of the business comes from animal feed products produced from OME’s proteins and oils. That, in and of itself, is a nice business given that these ingredients are especially good for swine and fish, which are in high demand given increasing appetites for pork and seafood. But it’s not necessarily a straight-line trend given variations in annual fish catch, product yields derived from the catch, etc. (So far this fishing season, catch has been down but yields are up).

Going forward, however, product for human consumption seems like it’s shaping up as an attractive growth driver as supplement manufacturers increasingly come to appreciate the benefits of fish-based proteins and oils, which contain Omega-3 fatty acids not produced in the body and which therefore must be obtained from food or special supplements. The mundane valuation metrics for shares of this modestly-leveraged, profitable and strong cash-flow generator do not seem to account for this prospect.

Richard Lehmann

Buy: Energy master limited partnerships

Income investors should look to energy related master limited partnerships (MLPs) for income in 2014 and beyond. Such partnerships offer high current income, steady dividend growth, inflation protection and tax deferral to boot. Better yet, they offer long term price appreciation as the domestic energy boom in the U.S. will continue to displace imported oil and gas for years to come.