Nancy Zambell: UnTapped Opportunities

02/28/2003 12:00 am EST

Focus:

Nancy Zambell

Editor, Wall Street's Best Investments and Wall Street's Best Dividend Stocks

Nancy Zambell has the uncanny knack of being able to take the highly complex nature of financial analysis and cut it to its core - focusing on just a a few relatively simple but critically important investment factors. She doesn't particularly believe that she can find undervalued opportunities in large-cap stocks that are widely followed by everyone else on Wall Street. As the name of her service implies, her goal is to uncover UnTapped Opportunities.  Here are her latest favorites.
 
"The following five points are the main factors I believe investors should consider when buying a stock:
 
"1. Look for companies that are undiscovered. The criteria we seek in the companies that we will consider buying is less than ten major brokerage analysts following the stock. In addition, we only want a stock that has less than 40% institutional holdings.
 
2. Look for companies whose sales and earnings are growing. We will also only buy a stock with a reasonable P/E -- based on their industry as well as their own historical P/E averages.
 
3. Look for companies with reasonable debt levels -- based on their industry as well as their own historical averages. Just use common sense. Too much debt is too much debt!
 
4. Look for companies with good cash flow.
 
5. Find out what the insiders of the company are doing: how much they are buying, selling, how much do they have left, and what is the historical pattern of buying and selling.
 
"Based on this criteria, here are our current top recommendations:
 
Empire District Electric (EDE NYSE) is a utility operating in parts of Missouri, Kansas, Oklahoma, and Arkansas. The stock currently provide a dividend of 7.2%.
 
Anworth Mortgage Asset  (ANH AMEX) is a REIT that is in the business of investing primarily in mortgage-related assets. It currently provides a dividend of 16.3%.
 
First Charter Corp (FCTR NASDAQ) is the holding company of First Charter Bank, a North Carolina state bank. It currently provide a dividend 4.1%.
 
ICT Group (ICTG NASDAQ) is a global provider of integrated customer relationship management solutions, designed to help its clients identify, acquire, service, measure, and maximize the lifetime value of their customer relationships.
 
Total Entertainment Restaurants (TENT NASDAQ) owns and operates 47 entertainment restaurant locations under the Fox and Hound tradenames, as well as the Bailey's tradenames.
 
Quality Systems - (QSII NASDAQ) markets healthcare information systems that automate medical and dental group practices, physician hospital organizations, community health centers, and medical and dental schools."
 

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