Growth potential

Dawna Edwards' picks in a turbulent market

Dawna Edwards selects growth companies that dominate their industries. They also have the capacity to contend with market volatility. Out of her five picks, two were rocked by turbulence, while the remaining three rode high on the rugged waves.

Overall, the portfolio from last year’s Private Screening constructed by Edwards, managing director of equity investments at Alpha Capital Management, made strong gains with a positive total return of 15.62%. Its performance beat out that of the $300 million portfolio that her company manages, which dipped .03% vs. -2.66% for the S&P 500.

By far, the top performer was Intel (Nasdaq: INTC), which catapulted the portfolio into the black. Since her recommendation, the chip maker has experienced an astounding ride with a positive total return of 75.97%. Intel, which split 2-for-1 in July, remains a core holding for Edwards.

Cardinal Health (NYSE: CAH), the Dublin, Ohio-based distributor of health aids and pharmaceutical supplies, returned a whopping 28.50% and, by late August, hit a 52-week high of $79.88. Edwards maintains that the stock will sustain its growth because “it’s the only company to offer pharmaceutical and medical/surgical supplies via the Internet, with links to other providers for products they don’t carry, providing a real edge over the competition.”

Meanwhile, St. Louis-based Anheuser- Busch (NYSE: BUD) managed to stay in the black with a total return of 5.05%. With Budweiser as the top-ranked beer in the United States, Anheuser-Busch commands 50% of the domestic market. “It’s ability to raise prices makes the company an attractive choice in an environment where pricing power is limited,” says Edwards. However, Anheuser-Busch remains weak in its penetration of offshore markets, holding only 8% of the world market for beer. Analysts conclude that in order for the beer maker to brew success in such markets as Europe, it must develop strategic partnerships.

The rest of Edwards’ picks are lagging behind last year’s performance. Take Family Dollar Stores (NYSE: FDO). The Matthews, North Carolina-based retail discount chain slipped 9.72% since her recommendation. Edwards attributes the slide to “sluggishness in the retail area, despite four years of margin improvement.” Despite the loss, Family Dollar is going full steam ahead with its ambitious expansion plans: 425 new stores are scheduled to open next year.

Freddie Mac (NYSE: FRE), which plummeted 21.70%, has suffered terribly. It has been shaken by a combination of proposed legislation from Congress and actions by the Federal Reserve.

“Fundamentally,” she says, “the company continues to enjoy solid balance sheet growth, excellent credit, and good expense control.” Going forward, Edwards believes that the Fed’s cease-fire on interest rates will help the stock, but she remains cautious of the uncertain political climate.