Top Values for a Down Market

08/01/2003 12:00 am EST

Focus:

Gregory Spear

Editor and President, The Spear Report

The Spear Report is a unique and intriguing service. It covers 64 other advisory sources and then ranks specific stocks according to the performance of the sources currently recommending it. Editor Gregory Spear says, "Our goal is to invest along with the best of the best. We look for stocks recommended by multiple successful sources."

"In our latest analysis we got defensive. We wanted to find stocks that have shown resilience in past down markets. We ranked the performance of all our sources according to only the bear market years of 2000, 2001, and 2002. This approach should do well if the market continues downward, as these sources have shown an uncanny ability to make money in a bear market. We then applied a second criteria; the stock must have a PEG ratio (price-to-earnings growth) of one or under. A similar restriction has proven extremely successful this year and is one of the key criteria for a stock to make our Buy List.

"The four stocks that remained after this screen represent an interesting mix of companies that have shown strong growth this year and still have very attractive fundamentals. Meritage Corp. (MTH NYSE) trades at a price to sales ratio of 0.55 and at a PEG of 0.70. Meritage is a designer and builder of single-family homes in Texas, Arizona, California, and Nevada. Fresh Del Monte (FDP NYSE), the well-known marketer of fresh and fresh-cut produce, trades at a price to sales ratio of 0.71 and a PEG of 0.90. Pentair (PNR NYSE), trades at a price to sales ratio of 0.74 and a PEG of 1.00. The company is an industrial manufacturer, which makes power tools and supplies for water treatment. Finally, PMI Group (PMI NYSE) trades at a price to sales ratio of 2.24 and a PEG of 0.70. The company provides of credit enhancement products and lender services that promote home ownership and facilitate mortgage transactions."

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