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In football, Woody Hayes was well known as an advocate of the ground game that was called “three yards and a cloud of dust,” and old Woody was loath to pass the ball. He went for short runs, not throwing the long bombs.

In investing, for much of the ’90s, lobbing end-zone-to-end-zone passes was the thing to do; “three yards and a cloud of dust” was criticized as being badly out of sync with the times.

That of course has all changed in the last 16 months. Money managers that are thriving are the ones that stuck to their “three yards” strategy.

Growing numbers of tech money managers have either been fired or seen significant monies yanked from them in the last 16 months. More will get the axe before this year is out.

We believe “defensive” investing will continue to be popular for the time being. With that in mind here is a stock that we think may do very well in the coming months.

Ladish (Nasdaq: LDSH) is an old-line subcontractor that makes products for manufacturers of jet engines. Ladish also makes products for helicopters, satellites, industrial and marine turbines. This also includes product for power generators, an area that should be strong in the next few years.

Ladish is a small company located in Cudahy, Wis. Sales last year were around $250 million. The most recent quarter LDSH reported sales of $69 million, a 20-percent gain over the same quarter last year. Lately small-cap stocks have been outperforming the big-cap stocks.

Ladish trades for around 13 times current earnings, so this stock is reasonably priced and averages about 50,000 shares a day in trading volume.

The lion’s share of the revenue (92 percent) comes from jet engine parts, landing gear and aerospace products.

Ladish major customers are names such as Rolls Royce, United Technologies, General Electric, Caterpillar and Volvo. This is definitely a cyclical stock, and investors should be aware of that, however one nice thing is that these types of customers do pay their bills on time.

Ladish recently announced a major plant expansion to meet increasing production demand. It is also noteworthy that Ladish has been buying back their own stock.

One more thing that readers might be interested in knowing is that the Grace Brothers have been aggressive buyers of Ladish recently (they now own almost 30 percent), and they are making noises like they may want to put the company in play.

In the last few years, the stock has traded between the $8 to $16 range. I would advise readers to keep an eye on the $16.50 area. If the stock can break out of this sideways trading range, it would be a signal that things may be heating up.

I believe (but cannot guarantee) that Ladish would bring a premium if a bidder were found. My guess is that it would take $22-24 a share for a buyout to work.

Now, this is pure speculation, but in this market I believe the performance of the “three yards and a cloud of dust” type stocks like Ladish will be the place to be, even if there is no buyout.

I would also like to update you on one group I have mentioned here several times previously, the small bank stocks. While the stock market has seen much turmoil in the tech sector over the last year, the small bank stocks have turned a blind eye to all this and steadily moved higher. In fact, this bull-market in small-bank stocks is one of the better-kept secrets on Wall Street.

One that still looks interesting is East West Bancorp (Nasdaq: EWBC), located in Southern California. EWBC operates 30 branches in this area, and they are probably the strongest (financially speaking) community bank in America.

East West specializes in serving the Asian customer, and there is no doubt they are doing a great job of capturing this niche market.

Look at some of these statistics, and you will see why we are so high on this bank.

In the 2000 Census for California, it was announced that in the last 10 years the statewide population grew by 13.8 percent; however, the Asian population surged over 38 percent during this time. Also important for investors to consider is that average household income in California is $43,000 a year statewide, but, for Asian families, it is around $62,000 a year, meaning the average Asian household income is almost 50 percent more than the state average.

I believe this all adds up to impressive growth for a bank like East West in the coming years.

East West has a super-low loan-loss ratio (0.26 percent of total loans) and that, in turn, says a lot about the people that manage the bank.

Even with the impressive recent rally in the stock, EWBC sells for about 16 times this year’s earnings and for such a fast-growing bank, I would still recommend this stock as a good candidate for purchase under the $27 area.

Remember, do your homework. Don’t buy first and ask questions later. As an investor, your No. 1 obligation to yourself is to get the facts – before you invest your hard-earned money. The two mentioned above are, in my opinion, worth your closer inspection.

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