Band's "Bamboo" Bets

02/11/2005 12:00 am EST

Focus:

Richard Band

Editor, Profitable Investing

"Overall, I find as I get older, that I am not demanding instant results," says Richard Band. "As long as I get good, double-digit returns over a three- to five-year period, I’m happy to sit with them." Using the analogy of the Chinese bamboo tree, he offers some favorite, patient ideas.

"Have you ever heard of the Chinese bamboo tree? The first year, you plant it and water it and nothing will grow. In year two, nothing happens. In year three, you do the same thing and nothing happens. Again in year four nothing happens. But in year number five, the Chinese bamboo tree grows 90 feet in six weeks. So that’s the kind of stock I want to own. I don’t really care when it takes off. I’m a patient man, as long as I get my reward in the end.

"Citigroup (C NYSE) really hasn’t done much of anything in the last 12 months, except to pay us dividends. But here, you have a company that has been through some turmoil and scandal, and has cleared itself of those scandals and dismissed those who were responsible. Citigroup has just reported record earnings for 2004 and will likely report a further increase in 2005. I’m glad to own this company. And if the market hasn’t caught up with the value of the stock, that’s okay. It allows me more time to buy shares, and that is what I would urge you to do now. I think this stock is a good value for investors now.

"I’d also be buying American International Group (AIG NYSE), a great worldwide franchise. It’s the largest insurance company in the world. The stock hasn’t done much for the last few years, but earnings have been steadily moving up. They have also put some scandals behind them. I think this is a stock that will do very well for you. And I don’t think you will have to wait five years for your reward.

"A new name, a big company that I think is undervalued in today’s market, is Wal-Mart (WMT NYSE). Everybody loves to hate Wal-Mart. But for the first time in many years, the stock is coming up on my screens as being attractively priced in relation to its earnings growth. I’d also suggest Anheuser-Busch (BUD NYSE). This is another very attractively priced stock, close to its low for the year. It may not do much for the next couple of months, but that’s fine. It will give me time to accumulate shares. You should do the same."

Related Articles on