OCR Text |
Show Sunday, September 26,2004 DAILY HERALD THE WALL STREET JOURNAL The Weekly Guide to Managing Your Money SDH 20M Dow Jona 6 &mpmyJnc. M Righto Ramed http:sunday.wq.com Find a Home With Letters Where to Scout for Stock Leaders By Gregory Zuckerman telecommunications stocks all have the market so far this year, while the disappointments include technology, media stocks. and health-car- e Can the winning streaks continue, and where will the turnarounds come from during the rest of 2004? Overall, it's been a lackluster year so far. The Dow Jones Industrial Average is down nearly 4 year to date, and the Nasdaq Composite Index has fallen more than Last week, the Dow dropped 2.3, and the Nasdaq slipped 1.6. . But investors focusing on energy stocks have hit a gusher, with the Dow Jones Energy Index up a heady 23 in 2004. It doesn't take more than a drive to the local gasoline pump to figure out why. As oil prices have shot higher, trading near $49 a barrel Friday, companies that produce energy, drill for oil or provide services for the energy business all have climbed. The gains came for companies, of all izes-giant ChevronTexaco (CVX) is up 50 in the past year, while smaller company Veritas DGC (VTS) has jumped 150. For some of the more speculative energy stocks, such as Veritas, the shares now are so expensive that a move lower for oil prices will cause pain for investors. But some investors say that many energy shares aren't yet too pricey, pointing out that as long as oil stays above $30 a barrel, earnings should continue to be robust. "I find the energy sector attrac-- , tive because of its good cash flow and dividend yields," says David Williams, U.S. Trust managing director and portfolio manager of Excelsior Value & Restructuring Fund. He is a fan of Devon Energy Energy, 6. energy-technolog- y energ- y-company (DVN), Consol Energy (CNX) Resources (BR). ton a Roll (or Not) On Stocks in sectors such as energy and construction are having a good year, even though the market is lower overall so far in 2004. Other sectors such as technology and media are still struggling. Here is the performance by category of the Dow Jones US Market Sector Indexes. te this year. Some of the stocks racking up hefty earnings still are out of favor. Dell, for example, is up a stun 3 in the past year, trading at around $35 a share for months. Tech stocks have been hurt by the lackluster performance of the econh prices for many omy. tech shares are a reminder of how overpriced things got in the dotcom bubble a few years ago. "Valuations in tech now are reasonable, to slightly overvalued," says Mr. Ablin. "They will depend on which way the economy goes. If .we still have trouble emerging from a soft spot, technology will continue to have problems." Health-car- e stocks may hold this is a more promise-althosubject of heated debate. These shares are slightly lower this year, .amid continuing worries about the government restricting prices and concerns about a lack of blockbuster new drugs. Pfizer (PFE), for example, is down about 1 in the past year. But David Dreman, manager of . the Scudder Dreman fund, says pharmaceutical distributors such as AmertsourceBorgon (ABC) look attractive, as do Cardinal Hearth (CAH) and Pfizer. AmerisourceBer-ge- n trades at a low multiple of 13 times profit of the past 12 months. "There is some value in lot of them have been knocked down sharply," says Mr. Dreman, a longtime "value" investor. Mr. Ablin also likes health-car- e stocks, saying that they are relatively inexpensive and that investors' bearish attitude toward the sector will change. others are less sure that health is the place to be. "Health-.- ! stocks have suffered from uncertainty and are restrained by the politically charged issue of rising prescription-drucosts," Mr. Williams asserts. Still-hig- ' Energy 23 . 14 Conrtrucfloti 0.9' Retail Goods & Services al -- 0.2 1.1 1.3 Cyclical Goods A Services 8.3 Healthcare -- Telecommunications 7.8 Financial Sendees -- Utilities - insurance Banks 6.7 Basic Resources -- 2.7 4.5 Food A Beverage -- 4.9 3.9 Media -- -- Industrial Goods &Srvices 5T Technology Chemicals Tb Automobiles Source: 11 12 IT ugh Market Data Group WSJ Mr. Ablin adds that these kinds Another winning strategy this of stocks are defensive in nature, year has been to buy stocks paying hefty dividends. That has helped making them suitable as questions shares in the utility, banking and remain about how fast the econtelecommunications sectors, home omy will be able to grow in the ' next to many of the biggest dividend-payeryear. He recommends that investors continue to keep a hefty The big phone company Vedividend-payin- g of rizon Communications (VZ), for exweighting stocks in their portfolios. ample, is up almost 30 in the past Erik Hess of International Stratyear, due in part to the stock's egy and Investment recommends juicy dividend of almost stocks with dividend yields of Changing Tastes such as Sara Lee (SLE), about It's all part of the changing Deluxe (DLX) and SBC Communicataste of investors. In the bull martions (SBC). ket of the late 1990s, dividends were "The economy is modestly slowpasse. Who needed a measly 4 ing down for the remainder of annual dividend when stocks like 2004, and I would expect dividend-payin- g Dell (DELL) and Cisco Systems stocks to perform well, such as Newell Rubbermaid (CSCO) were soaring 4 in a day? But now economic growth is more (NWL)," Mr. Williams says. "U a subdued, investor expectations are company can successfully restrucmore realistic and a 4 dividend ture, it can avoid the economic looks much more attractive. slowdown. Newell is one such com"The only persistent theme that pany that has a solid effort in has worked this year is divi- , place." James Paulsen, chief investdends," says Jack Ablin, chief inment officer at Wells Capita Manvestment officer at Harris Private Bank in Chicago. "Everything is ' agement, notes that industrial and going sideways in the market, transportation stocks have outperformed as investors look for "a nothing is breaking out, so dividends have gotten investors' attenplay on a manufacturing renaistion." sance which is unfolding in the says the U.S. dollar's decline since "has resurrected industrial pricing and reduced price competition, which has restored profitability and expanded industrial activity." A weaker dollar makes U.S. goods more affordable to foreign buyers. Mr. Paulsen believes this trend will expand further next year, in part as continued robust growth in China spurs global demand. Mr. Williams adds that he has been buying economically sensitive stocks, such as industrial and materials companies. These stocks typically don't have the consistency of earnings that growth investors seek, but have been winners nonetheless as the economy rebounds. Construction-matericompany Lafarge North America (LAF) and transportation company Ryder System (R), both up about 30 in the past year, are among his holdings. U.S." He mid-200- 2 s. 4. 4, . Losing Luster g As for the disappointments, tech stocks have gone from darlings of the market to ugly ducklings. The Dow Jones US Technology Index is down more than 12 What sectors do you think are poised to perform well later this year? Write: fcnartsuRdqiOMMLoM keen on home buying a, If you're a neighborhood you knot well, consider taking this , i proactive approach: , , , ', Mail letters to homeowners, In, the area asking them to contact '. you If they might be interested in , selling over the next year or so. ,liy track you.r-T-IP self in the tet-- OF r ter, making It THZWEZX - ... clear that you're not an ;. investor or reatostate professional. a serious buyer, it also helps to get preapproved for a mortgage and mention that in the letter. Then list a phone number and address and wait to see what kind of response you get This strategy is best for those-whare in no rush and since; there is no broker irworvedHkhow-wha- t houses are worth in the area so they don't end up overpaying.' ' Some potential sellers raay.vml-com- e a chance to do a dl Act sale without paying commissionsland going through the hassle of putting I their house on the marke- t- 1 Once you reach a verbal' agreement, the rest of the transaction will be much like any other, That means hiring a real-estalawyer and meeting alt the requirements of your mortgage lender. Using an inquiry letter can be a 'cool way" to go about finding po-- , To indicate you're tentjal homes, says Steve Murray, founder of Real Trends, a Denver-base-d rearestate consulting firm. But "there are risks to being unrep- resented' by a broker, he says. Buyers will need to dig up comparable sales, get an Inspection and appraisal, and check a home's past insurance claims by asking the seller for a Clue, or Comprehensive Loss Underwriting Exchange, report Your lawyer can handle complicated tasks, including doing a title search for claims outstanding against the property, checking tax records and investigating zoning laws. ' By fatty K. Sport ; ' ; INVESTOR'S CALENDAR THIS WEEK .M-r- Car Makers Gamble: In a bid to strengthen sales numbers for September, General Motors is planning a three-da- y sale Tuesday through Thursday that will give buyers interest-free loans for up to six years on most 2004 models. Ford Motor said it will match GM's incentives in Utdh Valley Leadership Conference n lUlUSH BONO: The yield on the note, vtfitcri moves In the opposite direction of the price, Is back down to slightly mom than Treasury Presented THE VALLEY'S MOST IMPORTANT CONFERENCE By: 4. 5.00 A y seminar for Utah Valley's business and civic leaders and community members addressing important issues in our fast one-da- Yield! PROVO ORE! Chamber of Commerce a sale today through Thursday. growing economic community. Patriotic Makeover: Newly designed $50 bills with a "Stars and Stripes" theme go into circulation Tuesday. The new notes will carry images of a waving U.S. flag and a metallic silver-blu- e star. The old bills will still be legal currency. Growth Measured: The final second-quarter gross domestic product figure comes out Wednesday. The 'broadest measure of economic activity, it's already been revised downward to 2.8 from an initial estimate of 3. Earnings Reports Due: After Coca-Col- a issued a profit warning recently, it's time for rival PepsiCo to step up to the plate and deliver its quarterly earnings report on Thursday. Also reporting Thursday is tech firm Research In Motion, maker of the BlackBerry wireless device. Fed Officials Speak In case you haven't had enough Fedspeak after tfie policy meeting last week, Federal Reserve officials have five speeches set for this week too: one every day except Wednesday, and then, two on Friday. The market will be looking for hints about the economic outlook. Untm Rout Senior Editor David Crook , Editor Mirk Tymr Brian L. Cronk News Editor Art Director Trlrphone: (A09) email: iunday03wqj.eom 4300 Route I North South Brunswick, N.J. 08852 William Vice President. E. Casey jr. Special Edit kins at SunddflCC 3 50 i i J i F i M ' i ' J M A J A $ UTAH POWER S 2004 Sourc: Reuters via WSJ atartet data Group , ' NSV LAST WEEK Congress Approves Tax Breaks: Congress approved a $146 billion bill extending tax breaks for married couples with children through 2010. Among the provisions: the $1,000 child tax credit, a larger standard deduction and a higher threshold for exemption from the Thursday, September 30, 2004 7:30 a.m. -- 3:30 p.m. Sponsorship Opportunities Available!) Sundance Comments The best information Conference I've attended. All speakers were excellent! The setting was spectacularl Excellent well planned prog rara Great format! Great investment of time! alternative minimum tax. Qoing Up: The Federal Reserve interest-rat- e raised its short-ter- to 1.75, saytarget a quarter-poin- t ing the economy 'appears to have gained some traction.' Future rate increases will be gradual, according to minutes from the August meeting released last week. Software Denies Fraud: Former Computer Associates Chief Executive Sanjay Kumar pleaded not guilty to federal charges that he orchestrated a widespread accounting fraud and then lied to cover it up. Way Street Earnings Mixed: Morgan Stanley's quarterly net income fell 34 from the year-earliperiod after some heavy bets on rising interest rates turned sour. Bear Steams said net income fell 9.6. Goldman Sachs, on the other hand, saw earnings rise and Lehman Brothers notched a 5.2 gain. discuss the hottest issues Speakers will affecting for 2005. local business today and prepare you Continental breakfast and lunch catered by Sundance are Included. Executive Gift and Prize Donations Needed Contact HaWi f or Donation, and Sponsorship Opportunities: 851.2564 l 2004 Utah Valley Leadership Conference at Sundance if received on or before Registration is $100.00 Please register. . people at $ September 20 or $125,00 ifreceived after September 20. each for the Utah Valley Leadership Conference at Sundance. Name(s) Email address . Business Phone. Fax. 30, Address Cty Zip. (212) btU.caeygkwroiies.com John R. Campbell Advertising Director (203) 868-70- ' Corporate Headquarters 200 Liberty Street New York. N.Y. 10281 Ofpp.il loJJo, Call, Briefly: Crude ofl prices rose to settle at $48.88 a barrel Friday, despite news earlier In the week that the government will consider releasing a 'limited quantity" of crude oil from the U.S. Strategic Petroleum Reserve... Leading conomie Indicators weakened in August amid concern about slack consumer spending and slow wage growth. ,l- Check Enclosed Total Amount MCVisaAmer. Ex. ' I Card No. Exp. Date. Signature Return this form with payment to 51 South University Av, Suite 215, Provo, UT 84601. FAX to This event is limited to 150 participants. Questions? Call Christine at 851-255- 7. 851-25- 67 'i i' ' i'V; X r 1 .'r ':': ? |