MANAGING YOUR MONEY / Earning More, Keeping More : PORTFOLIO PICKS : <i> Six successful money managers offer their favorite stock selections.</i>
Trapped by persistently low interest rates, a wretched real estate market and a stalled economy, is it any wonder that investors still view the stock market as one of the few remaining sources of healthy returns?
The market has produced handsome rewards over the last decade. After bouncing back from the 1987 crash, it remains in one of the longest bull runs of this century.
But what goes up must inevitably come down, and stocks are no exception. Many financial experts say there is more money to be made in the coming months, but they are urging caution because choppy financial waters may lie ahead.
If you’re a novice investor, you should probably stick to broadly diversified mutual funds or index funds. They offer an easy way to hedge your bets, because they represent a range of securities selected by professional money managers.
If you’re a more sophisticated, do-it-yourself investor, pay close attention to what these six successful portfolio managers have to say.
CYRIL JAMES
Senior portfolio manager, Northern Trust of California, Los Angeles
With economic growth in the United States stalled and many domestic stocks at or near record highs, James has turned his attention abroad. He particularly likes foreign companies active in information technology and services.
Among his picks are L.M. Ericsson, the Swedish telecommunications manufacturer, which he would continue to buy until it reaches $65 a share; Vodafone Group, a mobile telephone service in Britain, up to $85 a share; Telefonos de Mexico, the Mexican phone company, up to $60; Corporacion Cifra, the Mexican mass retailer, up to $3, and Atlas Copco., a Swedish heavy-equipment maker, up to $20.
BARRIE YOUNG
Portfolio manager, Lipman, Carasso & Young, Century City
Southern Californians should not allow the rotten local economy to cloud their investment judgment, Young says. “We may not be seeing it here, but we are in a moderately growing economy.” She says that continued low interest rates will boost residential real estate and she favors stocks that can benefit from that. She also likes some technology stocks whose products lead the pack in their markets.
Among her favorites for the coming year are Danaher Corp., a maker of hand tools and auto parts, up to $40 a share; Masco Corp., which manufactures carpets and other home improvement items, up to $35, and Sunbeam-Oster Co., maker of consumer and household appliances, up to $23.
Young also likes copier maker Xerox Corp. up to $77 a share; Vodafone Group, the British mobile telephone company, up to $81, and computer maker Hewlett-Packard Co. up to $75.
HEIKO THIEME
Manager of the American Heritage Stock Fund, a no-load mutual fund based in New York
Thieme says the prolonged bull market has some room to run, but predicts an overall market decline of at least 10% fairly soon. “This is not a market for people who wear a pacemaker,” he said.
Thieme’s picks, which he says should be avoided by the faint of heart because many of them are speculative, include Senetek, a London-based start-up whose laboratory developed treatments for male impotence and skin wrinkles, up to $5 a share; Philip Morris Cos., the tobacco and food conglomerate, up to $50; financial services giant Citicorp up to $36, and computer maker International Business Machines Corp. up to $45.
NORMAN L. YU
President of Norman L. Yu & Co., Newport Beach
Yu likes to buy and hold, but he warns against buying and forgetting. He is quick to sell when a company shows signs of weakness.
Yu favors L. M. Ericsson, the Swedish maker of telecommunications equipment, up to $56. He recommends First USA Inc., a credit card issuer, up to $64 a share; health food retailer General Nutrition Inc. up to $48; semiconductor manufacturer Intel Corp. up to $69; Superior Industries International Inc., which makes custom auto accessories, up to $46; beverage maker Snapple Beverage up to $27.50, and telephone service U.S. Long Distance Corp. to $40 a share.
HOWARD GLEICHER
Portfolio manager, Palley-Needelman Asset Management, Newport Beach
With the U.S. economy limping along, Gleicher looks for stocks that are undervalued but whose prospects appear bright due to unique market conditions.
He favors media chain Gannett Co. up to $55 a share because he expects USA Today to begin showing a profit. He likes General Motors Corp. up to $53 because it has excess factory capacity that can be used to advantage in the auto market’s continuing shift from Japanese to U.S. factories.
Another favorite is SmithKline Beecham, a pharmaceutical maker, up to $30. He also likes Swiss food processor Nestle, up to $40, because he expects its purchase of French bottler Perrier to begin paying off.
Other picks are BankAmerica Corp., operator of California’s largest retail bank, up to $50; computer maker Hewlett-Packard Co. up to $80, and Telefonos de Mexico, the Mexican phone company, to $57.
LORI TANNER
Private stock portfolio consultant, Los Angeles
No matter what happens to the economy, Tanner believes there are many companies whose stock prices have yet to reflect either their recent performance or their future prospects.
Among such companies she includes semiconductor manufacturer Intel Corp. up to $80 a share; personal computer software publisher Microsoft Corp. up to $90; Odetics Inc., which makes electronic measuring devices, up to $15; generic drug maker Mylan Laboratories Inc. up to $35; U.S. Healthcare Inc., a health maintenance organization operator, up to $55, and Ford Motor Co., the nation’s second-largest car maker, up to $65.
