Barron’s analyst Lawrence Strauss recommended asset manager T. Rowe Price:

a. The 71-year-old firm (ticker: TROW) has no debt; among the industry’s best operating margins, averaging in the mid-40% range; strong fund performance relative to its peers; disciplined management that returns capital to shareholders; and a growing presence in the increasingly important 401(k) and overseas markets.

b. What’s more, it has sidestepped some of the woes afflicting rivals. While most publicly traded asset managers have seen their shares fall by more than 20% this year, T. Rowe is down just 10%.

c. The firm has built relationships with foreign institutional investors, including sovereign wealth funds, and various intermediaries. Outside the U.S., it has avoided the direct retail market, on which local banks have a stranglehold.

d. Central to the company’s success has been its funds’ strong performance. At the end of June, 80% of T. Rowe funds had beaten their Lipper category averages based on three-year returns. For five-year returns, 79% beat their averages, versus 76% for 10-year numbers.

e. As of March 31, it had $1.4 billion in cash and other liquid investments, but no debt.

f. T. Rowe bought back nearly $300 million of its stock in the first quarter, at an average price of just below 50 — arguably a very reasonable price — and last month its board authorized acquiring another 15 million shares. It also sports a decent dividend yield, around 2%.

CONCLUSION:

With its deliberate growth strategy, financial strength and solid performance, T. Rowe Price looks like a good bet — even in a bad market. Because of the recent market turmoil, usually pricey T. Rowe Price shares look like a good deal. The Baltimore asset manager’s upside is at least 10% over the next 12 months.

Track Lawrence’ picks at:

http://www.trackthepros.com/categories.php?category_id=850