Growing With Demand

Steve Singleton's picks met consumer needs and outpaced competitors

Last year, Steve Singleton, senior vice president and director of research at Robert Van Securities, recommended that BLACK ENTERPRISE readers invest in companies that showed signs of accelerated growth. The five stocks he picked from the energy, technology, and retail sectors demonstrate that he knew what he was talking about.

In spite of the many variables that affected the market last year, Singleton’s choices performed well, posting a 21.17% return during the 52-week period from Nov. 4, 2004, to Nov. 3, 2005. He thought the economy over the past year had been “quite robust.” He says: “We did not do too badly because the oil stocks took off. Global demand continues to drive investment into exploration and production activities.”

Such activity spurred Transocean Inc. (NYSE: RIG), a provider of offshore and inland marine contract drilling services for oil and gas wells, to a 76.12% gain, jumping from $35.17 to $61.94. Baker Hughes Inc. (NYSE: BHI), which provides oil field products and services, also enjoyed healthy gains. Its stock price moved from $41.81 to $58.64, a 40.25% increase. “These are two companies that get paid to perform services related to extracting crude and natural gas. It’s no wonder that they performed well in this rising demand market,” Singleton says.

Singleton has observed that the constantly shifting nature of the technology sector has pushed companies such as Google, Yahoo!, and eBay to the forefront. With personal computers being used to disseminate information through innovations such as blogs and podcasts, the Internet has become a major driver for advertising dollars, product sales, and other revenues.

Yahoo! Inc. (Nasdaq: YHOO), one of the world’s premier providers of Internet products and services to businesses and consumers, declined ever so slightly, dropping 0.56% from $37.66 to $37.45. Singleton’s other technology pick, eBay Inc. (Nasdaq: EBAY), which operates an online marketplace where a Web-based community of buyers and sellers conduct business, experienced a 2-for-1 stock split on Feb. 17, 2005. But the stock was still down 17.62%, falling from $50.44 to $41.55. “While company revenues and earnings still grew at brisk rates, these stocks lost some steam because questions have come up about their sustainability, given the outstanding operating performance of Google,” Singleton says.

Starbucks Corp. (NASDAQ: SBUX), also executed a 2-for-1 stock split in late October. The coffee company’s shares rose 7.68% from a split-adjusted price of $27.33 to $29.43. “I chose this stock because of the incredible appeal of the Starbucks experience,” says Singleton, noting that in the last couple of years, Starbucks stores have been able to maintain a 7%-plus sales edge over years past.

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