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Buying stocks that are lagging the market may seem like a questionable strategy, but investors willing to hold on for a couple of years can profit, says Ron Sloan, a mutual fund manager at Invesco.
Sloan is lead manager of the firm’s Charter fund (CHTRX), which invests in large multinational companies and is designed to give investors a more consistent, less volatile ride than the overall market. He also co-manages a portfolio of medium-size companies with the same objective.
Both funds look for opportunities among stocks that have fallen out of favor by assessing whether those companies are in terminal decline, or if they have problems that can be solved.
A company’s revenue growth can provide an important indicator.