Rebound Or Relapse?

By Matthew S. Scott

much risk you can take with your housing. Can you extend yourself for a high-priced house because you think it’s going to go up a lot and make a lot of money? Well, if you’re wrong and the economy is bad and you’ve got a high mortgage payment and you can’t make it, you’re in a lot of trouble, especially if that house is not worth what you paid for it. I think it’s very important that investors or individuals look at their housing as one of the basic staples of life and treat housing as much as a staple [of life] and expense as they do as an investment. Think of it as one of the areas for lowering their risk

RANDALL ELEY, The Edgar Lomax Co.

Stock (Exchange: Ticker)

Price at
Recommendation

12-Month
Price Target

Exxon Mobil Corp. (NYSE: XOM)

$36.68

$43.00

Merck & Co. Inc. (NYSE: MRK)

53.72

62.00

Eastman Kodak Co. (NYSE: EK)

28.16

33.00

*AS OF AUGUST 19, 2003 SOURCE: ZACKS.COM; RANDALL ELEY

Exxon Mobil: “When you look at the balance sheet … [and] income statements for the last 10 years, Exxon is a powerhouse. It’s an earnings machine. Their credit rating is much better than most companies. There would have to be a series of the most improbable events [for] Exxon to not be making money and a sufficient return on its investment over the next 10 years.”

Merck: “Here is a company in the healthcare sector where stocks have been generally priced at higher P/E ratios, lower yields and yet Merck is carrying a [dividend] yield of 2.3%. I think that can go up in light of the preference in the most recent tax law being given to dividend returns.”

Eastman Kodak: “We’re not looking for extraordinary growth in the future. It’s just that the stock is so depressed because earnings have been going down. [If] earnings stabilize, you would have a big pop in the price of the stock.”

ISAAC GREEN, Piedmont Investment Advisors

Stock (Exchange: Ticker)

Price at
Recommendation

12-Month
Price Target

Exxon Mobil Corp. (NYSE: XOM)

$36.68

$42.00

Applied Materials, Inc. (Nasdaq: AMAT)

20.08

25.00

AOL Time Warner Inc. (NYSE: AOL)

16.00

25.00

*AS OF AUGUST 19, 2003. SOURCE: ZACKS.COM; ISAAC GREEN

Exxon Mobil: “We think that Exxon Mobil is very high quality, very stable [and] very rich in cash. If oil prices spike and that derails the economy, Exxon Mobil is also a very strong financial company that would weather that storm very well and outperform the market.”

Applied Materials: “It’s the dominant manufacturer of semiconductor equipment. They produce the equipment that other companies use to manufacture chips. This is a blue-chip name within the technology sector that makes a backbone product and, as confidence in technology builds, we think Applied Materials will participate quite nicely.”

AOL Time Warner: “We think that AOL Time Warner is a company that has great franchises, both on the media and entertainment side, and substantial

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