Their "raw material" (bad loans) is abundant and cheap right now

While he's no fan of financials, he spies opportunities in debt collectors like Asset Acceptance Capital (AACC), which buys charged-off consumer receivables from credit-card companies. While the market is cool to the stock, Evans figures earnings conditions have been improving as delinquencies have climbed. "Anybody looking to invest in Asset Acceptance needs to look at the next one to three years, as demand explodes and nontraditional buyers like hedge funds reduce their exposure," says Evans. "That leaves Asset Acceptance to buy charged-off receivables at much better prices, and the high rates of return work their way through its portfolio." He thinks Asset Acceptance's earnings power is "well over $1." Analysts on average expect the company to earn 77 cents a share this year and 92 cents a share next year. "It's heavily out of favor, and frankly, underfollowed. But they have the wind at their back, and the fundamentals are getting better." Last week, Asset Acceptance's stock traded at 9.99.

David Nierenberg's D3 Family Funds raised its holdings to about 2.92 million shares (9.6%), from the 2.59 million (8.5%) that they had reported owning on March 24.

David Nierenberg's D3 Family Funds raised its holdings to about 2.59 million shares (8.5%), from the 2.28 million (6.9%) reported on March 10.

David Nierenberg's D3 Family Funds reported ownership of 2,280,609 shares (6.9%), after buying them from Jan. 24 to March 7 at $8.39 to $10.38 a share.

Upgraded by Jefferies & Co from Hold to Buy

JK bought at $16.96; 5-star MF CAPS pick; Market Edge Second Opinon "early buy" candidate at $17.09; excellent fundamentals; strong growth prospects