Charts Show The Way

Money manager Terry Bedford's stock selections are going in the right direction

Terry Bedford, CEO of Bedford and Associates Research Group in Hamilton, Ontario, has always believed that “the only way to buy a stock is at a discount.” As a contrarian investor, Bedford likes to pick up companies when they are “out of favor, but the fundamentals are excellent.” That strategy has helped him increase his firm’s holdings from $30 million to $50 million over the last year.

Using stock price charts and technical analysis to make his selections, Bedford’s private screening portfolio scored a lucrative 32.87% during the period from Oct. 14, 2002, to Oct. 13, 2003. By comparison, the S&P 500 gained 24.23%.

Last year, Bedford selected Walt Disney (NYSE: DIS), the entertainment empire that includes Disneyland and top film companies such as Miramax, and Touchstone Pictures. Disney stock moved from $16.08 to $21.50, a nifty 33.71% jump: “Disney is a solid company with room to grow to $32.00 over the next 12 months.”

Verizon Communications (NYSE: VZ) stock dropped from $34.71 to $31.88, tagging investors’ portfolios with an 8.15% loss. But Bedford rates the $68 billion telecommunications service provider a “hold,” expecting it to remain in the $30 to $35 range because it is the nation’s No.1 local phone company. “[Verizon is] a dividend play,” he explains. “You’re making 4.79% in dividends to hold on to a good company.”

Stock in SBC Communications (NYSE: SBC), which provides landline telecommunications services, wireless services, text messaging, and Internet services, slipped 3.13%, from $22.40 to $21.70. Still, Bedford argues that SBC is a “buy” since it offers a 5.22% dividend and he “can see [its stock price] increasing into the high $20s, maybe $30.”

Thanks to a diverse array of products ranging from asthma inhalers to Post-it Notes, 3M Co. (NYSE: MMM) rose 28.26%, leaping from a 2-for-1 stock split adjusted $58.10 to $74.52 per share. Bedford recommends that readers sell 3M. He has opted to replace 3M with tried-and-true Johnson & Johnson (NYSE: JNJ) “because it is a good, safe stock and I think the market is going to be a little bit choppy this year. I see a return to stocks that are safer.”

Finally, Bedford’s pick of Xerox Corp. (NYSE: XRX) delighted investors. The $15.8 billion maker of business machines and provider of document management services sky-rocketed from $5.28 to a stupendous $11.28-a whopping 113.64% gain. He says Xerox is “a turnaround story that has a long way to go from here. Since Xerox has a joint venture with photography giant Fuji to provide production publishing and printing for Kinko’s, Bedford’s approach appears to be on solid bedrock.