Alfred Jackson, a principal at Davis, Hamilton, Jackson & Associates, L.P. in Houston, adamantly tells investors: “Now is not the time to divest. Since no one can ever guess the bottom, and the numbers show we can’t go much lower, why would anyone sell out when they could stock up?” Clearly, the pun is intended.
[With the market down considerably,] the portfolio Jackson selected for BLACK ENTERPRISE last January lost 54.82%. By comparison, the S&P 500 lost 23.15% over the same period.
In spite of the painful purging, Jackson stands by all of his picks, except Enron Corp., which his firm sold early in 2001.
Recommended at $70, Jackson sees Adobe Systems Inc. (Nasdaq: ADBE), the San Jose, California-based Internet and desktop publishing powerhouse, as a bargain at its current $30 price tag. The company has blamed recent problems on an overall weak U.S. economy and a sudden business slowdown in Japan. Since the stock price has already fallen, some analysts think Adobe will rebound to $38.
Jackson sold Enron Corp. (NYSE: ENE), the Houston-based leading buyer and seller of natural gas that he recommended, at $81. His firm pulled out at around $70. “We felt earnings were not going to meet expectations,” he explains. Now under an SEC investigation and trading at $26, Enron’s price represents a 68% discount off investors’ portfolios. Holders of the stock can either sell and write off the tax loss, or hold out for an upswing.
PerkinElmer Inc. (NYSE: PKI), the developer and manufacturer of X-ray machines and other security products, was recommended at $110 a share; today, it’s hovering around $28. Investment pundits suggest new management and cost cutting will help the stock reach the $35 level in 12 months.
Jackson also picked Robert Half International Inc. (NYSE: RHI), the temporary and permanent staff placement firm. The Menlo Park, California-based firm has 330 offices in North America, Europe, and Australia. Jackson reasons that even with an impending recession, there will always be work. He chose the stock at $30; its recent price was $21.
Waters Corp. (NYSE: WAT) is a maker of high-performance liquid instruments used by researchers, scientists, and engineers. The Milford, Massachusetts, firm develops products that help create new drugs, identify the nutritional content of foods, and test the quality of air and water. Lately, Waters has been forming strategic alliances to bolster its smaller divisions. Jackson recommended Waters Corp. at $66. Now selling at “a bargain” $35, long-term lookers expect Waters to scale up to $47.