Five of the Best: Bargain buys after sell-off

Anthony Cross and Julian Fosh, the managers of the £134m Special Situations fund, highlight five bargain stocks they have snapped up during the volatility of recent weeks.

Liontrust's flagship fund has weathered the recent storm better than its peers, sitting in the top quartile over every time period, but has still booked a loss of 7.5% over the three months to 26 August against a sector average fall of 13.4%, according to Morningstar.

A strict investment process governs the managers' stock selection, which has resulted in them avoiding retail banks, miners and classic consumer stocks long term. This has helped protect the fund against recent market falls, and it is now well placed to thrive in difficult economic conditions by focusing on quality rather than growth stocks, the managers said.

1. Brooks Macdonald - The asset manager has fallen in value by 19.04% from the end of June to its 6 September close, prompting the managers to add to their holding in the company. They believe it can claw back gains through its strong structural processes and culture.

2. Hargreaves Lansdown - The broker is now 20% cheaper than it was at the end of June as a result of continued investor concern over how the retail distribution review (RDR) will impact its business. "We think Hargreaves Lansdown can adjust its pricing," said Cross. "It has strong administration and research capabilities and offers a good service for the end customer. It is also a big buyer of funds, so fund managers will pay for the service. We are not frightened about how RDR will impact this company," he added.

3. Domino Printing - The stock has shed 20% from the end of June. According to Fosh, the company is capitalising on the increase in regulation mandating sell-by dates to be printed on perishable goods, especially in emerging markets, boosting the firm's recurring income.

4. Renishaw - Another engineering company Fosh and Cross see as priced attractively is Renishaw, at nearly 25% cheaper than its price at the end of June. "Renishaw is capitalising on China now trying to manufacture better quality products as quality control regulation increases," said Fosh.

5. Savills - The property services company has dropped 27% in value since 30 June, prompting Cross and Fosh to add to their holding in the firm. They favour its exposure to a mixture of commercial and residential property markets and its strong Far Eastern presence. "Savills was resilient in the last downturn, giving us faith in its ability to current volatility," added Fosh.