Briefly Speaking...

09/17/2004 12:00 am EST

Focus:

Here's a six-pack of ideas. Janet Brown, looks at a fund for a "New Era" while Walter Frank bucks, and Dennis Slothower likes a "dull" insurer. Kevin Kennedy opts for a "clean harbor," Vivian Lewis likes wind power, and Richard Moroney sees a post-hurricane boating play.

(For more on the advisors cited below, please click on their photos.)

Brown, Janet"Energy continues to power top funds like T. Rowe Price New Era (PRNEX), a natural resources fund with 50% of its assets concentrated in the sector," says Janet Brown, editor of NoLoad FundX. "Fund manager Charlie Ober explains, ‘We’re in a sweet spot. Supplies are down and demand is increasing, especially from developing countries like China.’ Ober generally keeps energy exposure to 50% of assets so he can diversify into other resources like paper, metals, and mining companies. This diversification differentiates the fund from its sector fund peers. Few have witnessed as many cycles as Ober, who has been an energy analyst for over 20 years. He’s managed the fund since 1997 making him one of the most tenured natural resource managers in the business. Ober looks for undervalued companies with solid management. There is no redemption fee on the fund, but Price expects investors to hold at least 60 days."

Frank, Walter"It’s been a tough period recently for stocks, and the funds that invest in them," says Walter Frank, editor of The MONEYLETTER. "But while a large majority of equity funds suffered along with the market, a number are bucking the trend. We spoke to four funds that fall into this group. As might be expected, all fall in to the value camp in investing strategy. American Century Equity Income (TWEIX) has a ‘value yield’ strategy that looks for stocks in the cheapest half of the market, with a great deal of emphasis on high dividend yield. T. Rowe Price Capital Appreciation (PRWCX) is flexible with the portfolo’s asset allocation, recently eschewing bonds, believing that higher interest rates will ultimately hurt the category. Boesel expects convertibles to achieve a higher return than bonds with less volatility than equities. RS Contrarian Value (RSCOX) invests in undervalued stocks; they calculate the intrinsic value of a company and require a 50% upside for the positions they hold. Weitz Value (WVALX) looks for companies selling at a substantial discount to the price a rational buyer would pay, and he has a strong sell discipline. It holds a concentrated portfolio of 50-60 companies and is not afraid to hold cash."

Slothower, Dennis "Our latest stock of the month doesn’t really make for sexy, cocktail-party chatter," says Dennis Slothower, editor of Stealth Stocks. "In fact, most people have never even heard of it. Good, that’s just the way I like my stocks. UICI (UCI NYSE) sells health and life insurance to niche markets. It offers a host of insurance products for people who own their own small businesses and find it hard to get insurance. The sales forces are independent contractor agents who primarily sell UICI’s products. The student division sells single school-year coverage of health insurance to college students. I really don’t care how boring an insurance company is, all I care about is how well it does. UICI is a ‘steady-Eddy’ performer, producing a 20% return on equity. The stock is selling at a very modest 10 times earnings, which, given the niche that it services, I find pretty cheap. According to my numbers, this is a stock that should be selling in the high $40s to low $50s over the next three to five years."

Kennedy, Kevin"Clean Harbors (CLHB NASDAQ) is the latest stock to pass our basic screen, showing those characteristics that have been seen in past winning stocks," says Kevin Kennedy, editor of The Coolcat Report. "Clean Harbors provides environmental and hazardous waste management services. With 48 waste management facilities, including nine landfills, five incineration locations and seven wastewater treatment centers, the company provides essential services to more than 30,000 customers, including more than 175 Fortune 500 companies, thousands of smaller private entities and numerous governmental agencies. Headquartered in Massachusetts, Clean Harbors has more than 100 locations strategically positioned throughout North America. The stock has risen from a 52-week low of 3.15 to a recent high of 11.62."

Lewis, Vivian"We have added a new pick to our portfolio, Denmark’s Vestas Wind Systems (VWSYF NASDAQ)," says Vivian Lewis, editor of Global Investing . "The world’s #1 wind power play – with about 37% of the world wind turbine market trades as an unsponsored ADR in the US, and in Denmark (under the symbo VWS), where foreigners can freely buy stock. Vestas specializes in 3-blade large turbine systems which can be installed on land or sea. The firm will grow about 20% per year, according to industry experts. But because of politics, growth will not be a straight line up. The stock has suffered from the lack of US wind investment as the US market is waiting for the tax subsidies which have been delayed. Meanwhile, Size helps, and the market-leading Danish firm now has. Outside of the US, orders have been pouring in, from areas such as Italy, Germany, Australia, Canada, Spain, and Portugal. Vestas was floated in 1998 and half its shareholders are Scandinavians starved for environmental shares. But Danish institutions own 15% and so does Franklin Templeton."

Moroney, RichardFew companies benefit from the devastation of hurricanes. But Richard Moroney, editor of Dow Theory Forecasts, has found one that may - marine engine and boat maker, Brunswick (BC NYSE). " The company’s annualized per-share profit growth of 2% over the last five years does not reflect the company’s potential over the next five years. Per-share profits rose 19% in 2002 and 45% in 2003 as Brunswick reaped the benefits of the economic recovery and a resulting rise in consumer spending on leisure products. Brunswick shares have been strong lately, in part because the company should see sales gains because of hurricanes Charley and Frances, which combined to do more than $10 billion in damage to the state of Florida, in the process destroying many boats. Consensus estimates call for profit growth of 62% this year, 23% next year, and about 16% annually over the next five years. Brunswick should be able to meet or beat those targets through a combination of acquisitions and organic market-share gains. Buy-rated Brunswick trades at 15 times estimated 2004 earnings of $2.68 share."

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