If you’ve been trading the markets for any length of time you will know the two main emotions ...
The Forbes Roundtable
08/15/2003 12:00 am EST
One of the highlights of each Money Show is the Forbes Roundtable. Hosted by Matt Schifrin, editor of the Forbes Newsletter Group, the panel features a variety of leading financial newsletter advisors, their current market outlooks, and a selection of their top stock picks. Here are excerpts from the latest Roundtable.
(Editor's Note: For more information on any of the advisors below, simply click on their photos. We would also note that a number of interviews of several top advisors can be seen at www.forbes.com.
Dennis Slothower, editor of Stealth Stocks and On the Money notes, "One stock that I particularly like in the income area is Novastar Financial (NFI NYSE) which has come off its highs of over $70 a share. It is providing a yield of over 15%. That's a huge dividend. Earnings were up 122% from a year ago. It sells for 12 times earnings. I see this stock being at $170 within 18 months. In the growth area, I like Hudson City Bancorp (HCBK NASDAQ). It's a good, stable stock that I think could double. In the medical area, I like Conventry Health (CVH NYSE), a rapidly-growing HMO. I think it's a good, solid growth company that everyone who is looking for good, steady returns should own. I also like Odyssey Healthcare (ODSY NASDAQ), in the same group. I think the stock has solid upside potential. UTStarcom (UTSI NASDAQ) has done remarkably well this year by supplying telecom services in China. I think this stock could double or triple over the next couple of years. Finally, I think crude oil is abnormally high and one area that is uniquely postured to benefit from a drop in oil prices would be the airline industry. There are two stocks in particular that I think could double or more over the next year-- Mesa Air Group (MESA NASDAQ) and AirTran Holdings (AAI NYSE)."
John Buckingham is the editor of The Prudent Speculator , a newsletter that focuses on both growth and value. According to The Hulbert Financial Digest, this is the #1 rated newsletter for the past 10, 15, and 20 years. Says John, "There is still tremendous opportunity, but I think it is best to maintain a disciplined investment approach. The idea is to not jump in and out and chase hot strategies. That's really the way you make money over time. We've done extremely well with homebuilding stocks. The p/e growth has been tremendous. You have companies growing earnings at 25% to 30% a year, and trading at single digit p/e ratios. Historically, it had been a cyclical industry, but I don't think that will be the case going forward. We have favorable demographic trends in housing and historically low interest rates. D.R. Horton (DHI NYSE) has grown earnings for 25 years, and it's trading at seven times earnings. I think that's ridiculous. Management claims that they will increase earnings at a rate of 18%-20% for each of the next three years, and that's without any acquisitions. There's still tremendous value left and I think the p/e multiples of homebuilding stocks will expand as people realize they're not as cyclical as they were in the late 1980s." (Buckingham cautions against buying any one recommendation and emphasizes diversification.)
Gregory Spear, editor of The Spear Report , follows some 125 independent stock pick pickers in order to gauge trends and isolate expected top performing stocks. Says Spear, "My system is telling me that the rally is over and that the market will tank at this point. In my mind, this is a forgone conclusion. There are, however, opportunities. We agree with John (Buckingham) that the housing and homebuilding sector still has tremendous potential. We have four homebuilding stocks on our Consensus buy list now-- D. H. Horton (DHI NYSE)--as well as Centex (CTX NYSE), Lennar (LEN NYSE), and NVR (NVR NYSE). These are very, very good buys; they have taken a hit recently and are very good stocks to get into right now."
Jim Collins is the #2 rated newsletter by Mark Hulbert over the past 15 years. He has been investing since 1956 and is editor of Listed Insight and OTC Insight . "We're still buyers. The pattern we have since mid-October has been very strong for small-cap stocks. This is typically what happens when you come out of a slow period in the economy. We have been with the Chinese Internet stocks for about a year and some have gone up five-fold. The stocks we like in that arena are Netease.com (NTES NASDAQ), SINA (SINA NASDAQ), Chinadotcom (CHINA NASDAQ) and Sohu.com (SOHU NASDAQ). We see tremendous growth coming out of China, a market of some 1.2 billion people. GDP is growing much faster in China than here and we still think there is a lot of growth in the Internet there. We still see these companies having 30%, 40%, 50% growth going forward. We're heavily weighted in the technology sector, with Chinese Internet stocks making up a big portion of that."
Vahan Janjigian is the editor of The Forbes Growth Investor and The Forbes Special Situation Survey. "We have just come out with a recommendation for Level 3 Communications (LVLT NASDAQ). The interesting thing about it is that Warren Buffett was a big buyer of the firm's convertibles, which he has recently converted into stock. I'm also very bullish on EMC Corp. (EMC NYSE), which is in the storage technology business. It should do really well as the economy improves. I also like Cisco Systems (CSCO NASDAQ) right now. The stock recently corrected because they were cautious in their outlook. I think this has created a buying opportunity. One other stock--which has nothing to do with technology--is Rite-Aid (RAD NYSE). This is a company that has had some real serious accounting scandals. A number of former executives were sentenced. The company is really making a comeback under new management."
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