Nathan L. Lewis, head of the Equity Research Group at Jackson Securities Inc. (JSI) in Atlanta, says following trends in the minority community can make you rich. JSI’s equity research group focuses on publicly traded companies that actively pursue the minority marketplace, are minority-owned, or are southeast-based large- and mid-cap companies. “We look at each company and try to understand the variables that drive its business,” says Lewis. “Our goals are to provide superior research and to understand the minority market and southeast region better than anyone else.”
Jackson Securities, (No. 5 on the 2001 BE INVESTMENT BANKS list with $29.4 billion in total assets), provides investment banking and brokerage services for institutional clients throughout the United States. Lewis says the firm uses a “‘bottom-up’ fundamental analysis that seeks out companies from our universe that have at least one or more catalysts for growth.” Those catalysts could include new products, demographic trends, proprietary products, increased market share, or a change in cost structure.
Lewis also reasons that focusing on companies owned and managed by minorities can be profitable “because those companies will target minority investors and consumers; and since minority consumers are the fastest growing in the United States, firms that serve them should outperform their peers.” Emphasizing the strengths of minority markets and the companies that serve them, Lewis’ Private Screening selections this month are as follows:
Radio One Inc. (Nasdaq: ROIA) is a leading radio broadcaster that focuses on the urban marketplace. The company (No. 17 on the 2001 BE INDUSTRIAL/SERVICE 100 list with $177.2 million in sales) is a niche player that outperforms others in its market and is well positioned for long-term growth. Lewis expects the stock to move from $16.98 to $22 over the next 18 months.
Another minority-owned company Lewis likes is Univision Communications Inc. (NYSE: UVN), a major supplier of Spanish-language programming. Over the past five years, it has aired more than 90% of the 20 most widely watched programs among Hispanic households. He expects the stock to perform well over the long-term because of the demographic trends in the Hispanic market. The stock could move from $35.70 to $39 in 18 months.
Switching his focus from minority-owned companies to southeast-based firms that pursue minority markets, Lewis chooses the world’s largest soft drink company, Coca-Cola Co. (NYSE: KO). He sees Coke as an innovator creating new products and feels it has significant opportunities in the international market. Lewis likes Coke’s 1.59% dividend yield, which is slightly above money market rates. The stock could move from $45.40 to $50 over the next 18 months.
Sara Lee Corp. (NYSE: SLE), a global manufacturer and distributor of consumer goods, also pursues minority markets. It recently centralized some of its functions in an effort to consolidate its operations and minimize costs. Lewis says the stock’s 2.76% dividend makes it a good defensive play during this down market. He expects the stock to move from $21.73 to $26 in 18 months.
Nathan Lewis’ Private Screening Picks
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