Let your Profits Run

12/31/2004 12:00 am EST

Focus:

Paul Tracy

Editor, The StreetAuthority Market Advisor

To determine his favorites for 2005, Paul Tracy looks to "a strong financial track record, growth catalysts, and a promising future outlook." For his Top Pick selection, he suggests running with an athletic footwear maker that sports all of these traits.

"Saucony (SCNYB NASDAQ) designs and sells footwear and athletic apparel. Thanks to its focus on shoes with highly specialized features, Saucony has garnered a solid reputation and a loyal, almost cult-like following among a core base of devoted running fans. Because this tiny small-cap company is not covered by analysts, Wall Street has yet to catch on to the firm's tremendous growth story. When it does, however, we expect institutional ownership to soar from its current low levels (under 15%). This should be a huge positive for the stock in the years ahead.

"On the valuation front, Saucony trades at a steep discount to larger competitors Nike and Reebok, yet the firm is growing at about twice the rate of these lumbering giants. We think this valuation disparity will narrow in the years ahead as Wall Street finally gives Saucony the exposure and recognition that it deserves. And finally, in late 2004 the company initiated a search for a strategic buyer. Should Saucony eventually get bought out, it would likely be at a significant premium to its current share price. In the meantime, investors have a great opportunity to snap up a stable, fast-growing stock at bargain-basement prices."

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