Follow the leaders

If you can't beat 'em, join 'em in the market, says Paradigm's Russ Ewing

oil exploration companies, Input/Output (NYSE: IO) and Baker Hughes (NYSE: BH). As the folks who spot reserves beneath the ground, exploration companies have been particularly hard hit by low oil prices. Now, Ewing says, indications are that oil prices are firming, and the big refiners are freeing up funds to resume the hunt for new sources.

A second pick is AXA (NYSE: AXA), a French financial services company that operates through a U.S. subsidiary, the Equitable. Ewing likes the fact that AXA Group has a broad reach in insurance, asset management and brokerage services. "There are a lot of things that could happen to the company," says Ewing. In late October, it acquired a 60% interest in the Rosenberg Group, an Orinda, California-based global equity management firm, for $125 million.

He also likes Sysco Corp. (NYSE: SYS), not to be confused with Cisco Systems, the wunderkind of computer networking. Sysco is the largest food distributor around, delivering to hospitals, schools and a variety of other institutions. "They’re a defensive name," says Ewing of why he’s parked a stock not likely to be affected by cylical market trends in his portfolio.

His final selection, Philadelphia electric utility Peco Energy (NYSE: PE), could also qualify as a defensive play. Traditionally, the dependable dividend electric companies provide investors has been a safe haven in times of market uncertainty. It’s all the more attractive now that interest rates have fallen, says Ewing, helping the market appreciate the solid yield utilities offer, and the impending moves across the country to deregulate the electric utility industry.

IN SYNC WITH GREAT MINDS

Company

Exchange: Symbol

Current

Price *

Est. 5 -Yr.

Annual EPS

Growth

P/E

Yield

Input/Output

NYSE: IO

$10.81

18.0%

10.2

0.0%

Baker-Hughes

NYSE: BHI

21.94

16.8

30.9

2.0

AXA Group

NYSE: AXA

57.69

15.6

24.0

1.3

Sysco

NYSE: SYY

26.88

13.1

28.3

1.3

Peco Energy

NYSE: PE

39.75

4.7

19.1

2.5

* As of 11/3/98

EPS growth rates from Zacks Investment Research.

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