Out-of-Favor Favorite

01/07/2005 12:00 am EST


Gary Alexander

Senior Writer, Navellier & Associates

Last year, Gary Alexander chose The Al Frank Fund as his top pick; it has since returned a market-beating 15%. While he remains a big fan of the fund, he shifts his Top Pick for 2005 to a controversial and out-of-favor play on travel and real estate.

"You can hear shrieks of horror from Wall Street when the name Cendant (CD NYSE) is mentioned, because a lot of very smart people lost a bunch of cash when fraud was discovered in early 1998. The fact that Cendant’s CEO Henry Silverman and his staff uncovered the fraud, deep in the books of their new partner, CUC, Wall Street cut Silverman no slack. Nevertheless, he has stayed on board to right the ship.

"Meanwhile, Wall Street doesn’t understand Cendant. It’s a ‘hybrid’ business, roughly split between two types of real estatemortgage brokers (Coldwell Banker, Century 21, ERA) and motels (Ramada, Days Inn, Super 8, Howard Johnson) and travel-related businesses the motels, and rental cars (Avis, Budget). I bet not one in 100 investors could name America’s largest residential brokerage firm. Yes, it’s Cendant. Meanwhile, Silverman owns eight million shares, so we know he wants the same thing that we want as investors. My minimum target for in 2005 is $30, but I would not be surprised to see it gain 50%, to $35 in 2005."

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