Globetrotting The Market

Bill Roach's stocks set off for a journey around the world

The portfolio. This year, it’s been hard to ignore the effect overseas markets can have on perfectly good investment ideas here at home. We’ve all read how Asia’s tiger economies hit the skids and put some nasty taw marks on a lot of U.S. stocks. Not so with Globalt Investments principal owner Bill Roach’s picks in Private Screening (“Around the World at Home,” Moneywise, September 1997).

Roach, you’ll recall, is keen on domestic companies that get a lot of business in overseas markets. And despite the precarious fortunes of many foreign markets this year, Roach’s five picks scored a 42.2% total return, led by a whopping 81% by computer networking giant Cisco Systems and a 58% gain posted by agricultural seed provider Pioneer HiBred International. That’s a far leap ahead of the S&P 500, which ran up a not-too-shabby 25% during the same 12-month period.

The outlook. Roach, who helped steer Globalt’s Growth Fund (800831-9922) to a 16.1% gain so far this year compared to 15.1% for the S&P 500, still likes his five picks, and thinks several are worth buying. Earlier this year, Citicorp announced a merger with Travelers, and Roach thinks the combined companies “are the new definition of a global financial supermarket.” Roach is also high on Cisco. “In terms of infrastructure for the Internet, the company is head and shoulders above its competitors.” Guidant, a maker of special devices for heart patients, is another winner in his eyes.

While he thinks Pioneer Hi-Bred and Avon are good for the long haul, Roach would advise holding off on new purchases, but would buy on any weakness the two stocks might suffer. Pioneer remains a leader in seed production, particularly in corn, where the company enjoys a 42% share of the market. Nevertheless, Roach thinks earnings growth will tail off to the low teens from the 16% rate the company enjoyed over the last few years. Avon, meanwhile, has had trouble shaking investor concerns over its presence in Asia. Roach says that shouldn’t be too much of a problem, but wouldn’t buy more shares unless Avon’s stock price comes down a bit.

Stock (Exchange: Symbol)

Current
Price*

Price of
Recommendation

Total
Return

Current Value
of $1,000
Investment

EST. 5-Year
Annual EPS
Growth**

Cisco Systems (Nasdaq: CSCO) $ 86.88*** $69.00 80.7% 1,807 30%
Pioneer Hi-Bred Intl. (NYSE: PHB) 39.27*** 74.13 58.4 1,584 16
Guidant Corp. (NYSE: GOT) 68.00*** 83.25 62.5 1,625 22
Citicorp (NYSE: CCI) 149.13 123.88 23.2 1,232 12
Avon Products (NYSE: AVP) 78.69 70.88 11.2 1,112 125
* As of 6/23/98.
** EPS growth rates from Zacks Investment Research
*** Reflects stock split
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