Frank's Four-Pack

08/27/2004 12:00 am EST


Frank Cappiello

Chairman and Managing Director, Montgomery Brothers, Cappiello, LLC

I recently had the pleasure of meeting Frank Cappiello on InterShow's incredible investment conference at sea in the Baltics. It was truly a treat to hear his investment wisdom both on the cruise and in Atlantic City. Here, he offers a four-pack of current favorite investment ideas.

"I don’t know what the market is going to do short term. I do know that over the long term the markets are going to follow the course of two things: earnings and the interest rate environment. On that basis, the way to make money is not try to guess when to get into the market or when to get out, but to buy attractive stocks. Markets go up, but not all stocks go up and markets go down, and not all stocks go down. So you’re really buying a market that has individual stocks. In that light, these are the ones that I think will do reasonably well over the next 12-18 months:

"American International Group (AIG NYSE) is certainly the biggest and probably the best insurance companies out there. It’s had a couple of stumbles and one of the big problems that is holding the stock back in my opinion is the success of the current chairman of the board of the company who is nearing 80 years old doesn’t want to let go.

"I am also recommending an exploration company. Apache (APA NYSE), which is probably the best managed of all oil exploration companies with the best record. In addition, I believe the stock has a pretty good looking technical chart. This is an oil stock but it’s not so much exposed to the price of oil as it is to the desire of other energy companies to now begin to explore for more and more for new reserves.

"Cendant (CD NYSE) is a company that is a conglomeration of corporations. Its operations include rental cars, real estate, and other consumer services. As the consumer continues to thrive and improve, this company will benefit. We have actually had indications that the working week is longer and that wages are up. As a result, workers are working longer because companies have seen increased business and, in addition, they are being paid more. Those are two good signs that the consumer will continue to buy in the future.

"Constellation Brands (STZ NYSE) is an interesting company that is an importer of alcoholic beverages, including the best selling beer in America (Corona) and some of the best Vodka, and so on. It is a curious company and I urge you to look at it. Its technical chart and earnings look attractive relative to what other companies have done in a relatively mundane business."

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