Charts Show The Way

Terry Bedford, CEO of Bedford and Associates Research Group in Hamilton, Ontario, has always believed that “the only way to buy a stock is at a discount.” As a contrarian investor, Bedford likes to pick up companies when they are “out of favor, but the fundamentals are excellent.” That strategy has helped him increase his firm’s holdings from $30 million to $50 million over the last year.

Using stock price charts and technical analysis to make his selections, Bedford’s private screening portfolio scored a lucrative 32.87% during the period from Oct. 14, 2002, to Oct. 13, 2003. By comparison, the S&P 500 gained 24.23%.

Last year, Bedford selected Walt Disney (NYSE: DIS), the entertainment empire that includes Disneyland and top film companies such as Miramax, and Touchstone Pictures. Disney stock moved from $16.08 to $21.50, a nifty 33.71% jump: “Disney is a solid company with room to grow to $32.00 over the next 12 months.”

Verizon Communications (NYSE: VZ) stock dropped from $34.71 to $31.88, tagging investors’ portfolios with an 8.15% loss. But Bedford rates the $68 billion telecommunications service provider a “hold,” expecting it to remain in the $30 to $35 range because it is the nation’s No.1 local phone company. “[Verizon is] a dividend play,” he explains. “You’re making 4.79% in dividends to hold on to a good company.”

Stock in SBC Communications (NYSE: SBC), which provides landline telecommunications services, wireless services, text messaging, and Internet services, slipped 3.13%, from $22.40 to $21.70. Still, Bedford argues that SBC is a “buy” since it offers a 5.22% dividend and he “can see [its stock price] increasing into the high $20s, maybe $30.”

Thanks to a diverse array of products ranging from asthma inhalers to Post-it Notes, 3M Co. (NYSE: MMM) rose 28.26%, leaping from a 2-for-1 stock split adjusted $58.10 to $74.52 per share. Bedford recommends that readers sell 3M. He has opted to replace 3M with tried-and-true Johnson & Johnson (NYSE: JNJ) “because it is a good, safe stock and I think the market is going to be a little bit choppy this year. I see a return to stocks that are safer.”

Finally, Bedford’s pick of Xerox Corp. (NYSE: XRX) delighted investors. The $15.8 billion maker of business machines and provider of document management services sky-rocketed from $5.28 to a stupendous $11.28-a whopping 113.64% gain. He says Xerox is “a turnaround story that has a long way to go from here. Since Xerox has a joint venture with photography giant Fuji to provide production publishing and printing for Kinko’s, Bedford’s approach appears to be on solid bedrock.