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Last year, Henry Jackson, chairman of Owings Mills, Maryland-based Banneker Capital Management, offered BLACK ENTERPRISE readers a portfolio of small and mid-cap growth stocks that he felt were “reasonably priced.” Jackson remains chairman of Banneker Capital, but had to step down from his portfolio management duties last year because of health reasons. Kellie Thomas, president of retirement services, helped us revisit the portfolio Jackson provided. The Select Opportunity Portfolio holds stocks with market values between $100 million and $4 billion and Thomas characterizes it as “very diversified.” At the time of this article, it still held a portion of the stocks that follow.
The five selections that Jackson recommended turned out to be smart performers. Over the 52-week period from Aug. 19, 2004 to Aug. 18, 2005, Jackson’s exclusive picks experienced a 27.73% gain. By contrast, the Russell 2000 Index, which tracks small cap stocks, rose 21.17% and the Dow Jones Industrial Average rose 5.12%.
Mueller Industries (NYSE: MLI), which makes metal and plastic fittings used in plumbing, heating, air conditioning, and refrigeration units, grew 11.42%, from $23.72 to $26.43 per share. That growth included a one-time special dividend of $15 a share, awarded Oct. 27, 2004. “[Mueller] has been a great pick for us and continues to be a strong performer,” says Thomas.
Integra Life Sciences (NASDAQ: IART), a biotechnology company that manufactures products used in reconstructive surgery and neurosurgery, inched down 0.84%, from $33.50 a share to $33.22. Thomas is confident the company will increase revenues by growing its customer base, which will, in turn, raise its stock price. In the six months ending June 30, the company’s net income had increased by $1 million from the previous year.
Shares of Global Payments (NYSE: GPN), an electronic transaction processing company, became so pricey that Banneker decided to sell about 80% of the firm’s stake in the company. Its stock went up 51.36%, from $43.79 to $66.28 per share. “Once the stock hit our price target [of $50] and went above it, we had to take a serious look at taking gains off the table,” says Thomas. “We are a growth company, but we want growth at a reasonable pace.”
Banneker still likes Orbotech (NASDAQ: ORBK), a supplier of high-speed automated optical inspection systems that identify defects in varied electronic systems. The company does a significant amount of business in and derives about 70% of its sales from Asia. Thomas says Orbotech gives Banneker’s portfolio some international exposure.
Banneker Capital sold about half its position in Orbotech after its stock reached the target price of $24. The stock rose 37.86%, from $17.75 to $24.47.
Banneker Capital also sold its position in Laureate Education (NASDAQ: LAUR), which grew 38.85%, from $30.99 to $43.03 per share. The company, which offers Internet degree programs, blasted past its $44 price target to a high of $50.51 on July 11, 2005, but has since come back down. Banneker took profits before the stock retreated. “We have a strong sell discipline,” says Thomas. “We just want to lock on to gains
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