03/11/2005 12:00 am EST
Here, we look at a variety of ideas: Vivian Lewis looks to Eastern Europe; Doug Hughes highlights a favorite banking bet; Jim Collins offers two relative strength favorites; Mark Leibovit looks at a uranium play; and Jessica Chiaverini offers her favorites in the drug sector.
(For more on the advisors cited below, click on their photos.)
"We have found a new stock idea in Eastern Europe," says Vivian Lewis, editor of Global Investing. "Coca Cola HBC (CCH NYSE) is a Greek Coke franchise-holder. In fact, it is one of the largest Coke bottlers on earth, operating in 26 countries. I have hopes for its corporate governance, since Sir Michael Llewellyn-Smith, an old family friend and former Ambassador to Greece, sits on its board. It has been hurt, as all Coke bottlers have, by the ‘Dasani’ water fiasco, when it was found that the water was taken from the tap, and contaminated with metals. A cold summer in Eastern Europe also hurt 2004 sales. Meanwhile, CCH is a a play on the falling dollar since its fixed royalty, advertising, and fees from Coca-Cola are set in greenbacks, but sales are in Euros and related currencies. So if the dollar sinks and sales pick up, profits can rise quite sharply. I consider CCH a bargain."
Doug Hughes, editor of Small Bank Newsletter, looks for fundamentally sound banks, while also considering their potential takeover appeal; his previous recommendation for Hibernia was just bought out at a 90% premium. Here's his latest: "Webster Financial (WBS NYSE) is the largest independent bank in southern New England, with total assets over $17 billion. The bank continues to grow by opening new branches in new markets as well as doing small and medium size acquisitions. They are growing into some very affluent markets in Westchester, NY and Fairfield, CT. Insiders have bought a little stock this month, usually a good sign. We would start to buy it now. They have a book value of almost $30 a share. We look for earnings to approach $3.80+ a share in 2005. We think a p/e of 13 is fair for a $50 price target within one year for an 11% + return, plus the 2% cash dividend and a takeover value near $60. Accumulate under $45 and buy all you can under $43."
"Two of our recent featured stocks are in the energy sector," notes Jim Collins, editor of OTC Insight. "Headwaters (HDWR NASDAQ) is a market leader in enhancing the value of coal used in power generation. The company develops proprietary technology to convert or upgrade fossil fuels into higher-value products and sells chemical reagents that concert coal into a solid alternative fuel (which happens to be eligible for tax credits). In the quarter ended December 31, net income rose 29% amid revenues increased 115%. ATP Oil & Gas (ATPG NASDAQ) acquires and develops offshore natural gas and oil properties, primarily in the Gulf of Mexico and the North Sea. Eleven projects are in development which should help drive a production growth rate of over 50% for 2005. The stock shows a relative strength reading of 99— out of a possible 100."
"Cameco (CCJ NYSE) is engaged in exploring and mining uranium ore," notes Mark Leibovit, editor of the trading service, Volume Reversal Survey. "The company is also a commercial converter of uranium concentrates. Through its subsidiaries, the firm has a 31.6% limited partnership interest in Bruce Power Limited Partnership, which operates a nuclear electricity generating facility in Canada, which has six nuclear reactors at the facility in service. While Cameco continues its principal focus on the nuclear business, it is also engaged in the gold business. One of the Company's subsidiaries has a one-third operating interest in the Kumtor gold mine in the Kyrgyz Republic in Central Asia. Another subsidiary is engaged in developing the Boroo gold mine in Mongolia. Technically, our ‘volume reversal’ projections point to a target in the 53-58 range for our this 'uranium play' favorite. Keep a mental stop around $36.00. CCJ still remains a big picture play for the growing world demand for uranium and the growing world construction of nuclear plants."
"The past few quarters have been quite tumultuous for the pharmaceutical sector," says Jessica Chiaverini, associate editor of The Prudent Speculator and portfolio manager at the Al Frank Funds. "Even so, our long-term philosophy allows us to remain big fans of the group. While the drug sector may not be the indestructible Goliath that it once was, at the same time the industry is certainly not on the verge of collapse. Demand should continue to be strong due to the aging of the baby boom generation, a lengthening of life expectancy, and an increase in chronic diseases. Positive demographics, a new wave of consolidation, potential excess cash from repatriated overseas earnings, and projected industry growth rates in the high single digits are all reasons we contend that there is much value to be found among major drug stocks. We like many companies in the sector, but only Merck (MRK NYSE), Pfizer (PFE NYSE), and Bristol-Myers Squibb (BMY NYSE) are on our buy list. In particular, Merck and Pfizer both have multiple blockbusters, strong balance sheets, high dividend yields, and hordes of cash."