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With the National Hockey League playoffs coming to a climax, it's the time of year that brings to mind history's greatest Stanley Cup moments. To be sure, it's debatable which of those great moments is, in fact, the greatest. But one that has to be in the running is Bobby Orr's 1970 Cup-clinching goal - a moment the Boston Bruins recently immortalized with the unveiling of a bronze statue of the Hall of Famer, mid-flight in the famous celebratory leap he made after scoring his historic goal.

Of course, as hockey fans are well aware, Mr. Orr's special place in hockey history goes far beyond that famed goal. A defenceman blessed with tremendous offensive abilities, Mr. Orr was the first - and only - defender to lead the National Hockey League in scoring, redefining his position and paving the way for the likes of Paul Coffey, Brian Leetch, and other great "offensive defencemen" who followed.

So, what does all of this have to do with investing? While on the surface it might seem an odd comparison, Mr. Orr's exceptional combination of offensive firepower and stalwart defence has something of a counterpart in the stock market. To understand how, you have to consider the two main categories into which most investors, commentators and investment companies put stocks: growth and value.

Because they are increasing earnings at a fairly rapid pace (and are expected to continue to do so) growth plays are usually the stocks that catch most investors' eyes - they're the goal scorers of the stock market, if you will. And, as with a great goal scorer, you often (though not always) have to pay a premium to get them.

Value stocks, meanwhile, tend to be large, established companies that, because of real problems, perceived problems or investor apathy, are trading at low levels compared with their earnings, cash flow, or book values. Like a solid defencemen, they often don't come with the attention - or price tag - of a growth stock/goal scorer.



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While most of the investment world splits stocks into one of those two categories, however, "growth" and "value" are not mutually exclusive. In fact, in a 2000 letter to Berkshire Hathaway shareholders, the great investor Warren Buffett wrote that "market commentators and investment managers who glibly refer to 'growth' and 'value' styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component - usually a plus, sometimes a minus - in the value equation."

Mr. Buffett knows that determining "value" isn't as simple as comparing a stock's price to one variable, be it earnings, book value, dividend yield, or some other barometer. He instead analyzes several different factors to determine what he thinks an investment will be worth at some future point - and what he is willing to pay for it now, given the risk that his estimate will prove too high. A high earnings growth rate in and of itself thus doesn't mean a company is a good bet to fare well in the future. "Indeed, growth can destroy value if it requires cash inputs in the early years of a project or enterprise that exceed the discounted value of the cash that those assets will generate in later years," Mr. Buffett explained.

What that also means is that companies can have characteristics typically associated with strong "growth" stocks (that is, rapidly expanding earnings), and usually associated with top "value" plays (cheap shares, high yields, etc.). In fact, while most of my Guru Strategies (each of which is based on the approach of a different investing great, including Mr. Buffett) lean one way or the other in terms of growth/value orientation, most look for both qualities. That is, almost all of the growth-oriented models have at least one value test, and many of the value-oriented models include some type of earnings-growth assessment.

With all of that in mind, I thought it would be interesting to take a look at a couple of stocks that possess the market's equivalent of Mr. Orr's "offensive defenceman" skill set. These stocks have some of the defensive qualities one would typically expect from value plays, as well as the offensive qualities typically associated with growth plays. The result is a pair of solid, well-rounded picks with good upside potential.

Amedisys Inc. : From a typically defensive sector (health care), this home health care and hospice services provider (with a market capitalization of $1.4-billion U.S.) is a favourite of my Joel Greenblatt-inspired value-centric approach, in part because of its impressive 15.2-per-cent earnings yield. It's also been growing earnings per share at a 37.2-per-cent clip over the long run. (I use an average of the three-, four-, and five-year EPS growth rates). It gets approval from my James O'Shaughnessy-based growth model, which likes that the firm has upped EPS in each of the past five years and sells for just 0.91 times sales.

Raytheon Co. : This aerospace and defence giant ($20.2-billion market cap) is also from a typically defensive industry, and has some very value-like qualities - a 0.81 price-to-sales ratio, a dividend yield of close to 3 per cent, and an earnings yield of 15.3 per cent. That last figure is part of what makes it a favourite of my Greenblatt-based model. But Raytheon is also producing some stellar growth - it's increased EPS at a 30-per-cent clip over the long term - which is part of why my Peter Lynch-based model considers it a top-rated "fast-grower."

Disclosure: I'm long Amedisys and Raytheon.

John Reese is founder and CEO of Validea.com and Validea Capital Management, and portfolio manager for the Omega American & International Consensus funds.

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