Best Buyback Buys

02/21/2003 12:00 am EST

Focus:

David Fried

Editor, The Buyback Letter

David Fried maintains a sentiment indicator based on Investors Intelligence, Consensus Index, AAII Index and Market Vane. Readings above 240 indicate market tops, while lows have been marked by readings below 130. The index has just dropped to 127, suggesting that investors can now add funds to their portfolios. Combining this indicator with his buyback picks, his portfolio is up 166.76 % since its inception in January 1996 vs. a 39% gain in the S&P 500. Here are his favorite buys.

"SkyWest (SKYW NASDAQ) has dropped on worries about what the United Airlines restructuring will do to SkyWest’s business. Our best guess is that there will be some margin pressure for SKYWE but that they will continue to be profitable in a difficult environment. With cash and deposits of about $500 million (about $9 a share) you are buying the future income of SkyWest for about $1. OfficeMax (OMX NYSE) turned in a strong 4th quarter. Its sales have gone up for five straight quarters. It has no long term debt and is starting to build cash. Supergen (SUPG NASDAQ ) rose 8.3% to $3.01 after the company received a patent for its injectable version of Orathecin, an anti-cancer compound. The tape has been bad but the news good for Supergen. All three of these companies offer excellent profit potential with limited downside risk from here. If you own these stocks feel free to average down at these prices. If not, then these are excellent entry points."

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