The Value Of Market Positioning

Stock market uncertainties, terrorist attacks, the ongoing war in Iraq, higher oil prices, and rising interest rates have caused money managers like Anthony G. Epps, CFP, MSFS to consider a range of factors when developing investment plans for his clients.

Epps, CEO of A.G. Epps Financial Group, says he must first find out his clients’ goals, the time horizon under which they’d like to achieve those goals, and their risk tolerance before he can even consider investing their money in the stock market. “Because there are so many fears about how the stock market will perform, our job is to help clients gain financial clarity about how they can best protect and grow their investments,” he says.

A.G. Epps Financial manages $32 million in equities for clients that include small and medium-size family-owned businesses, large institutions, and high net-worth individuals. The company partners with other financial management firms, such as Rothschild Asset Management, Independent Portfolio Consultants, Brinker Capital Management, Babson Capital Management L.L.C., and New York Life Investment Management, to provide financial instruments for 401(k)s, IRAs, and pension funds. “Our process is to sit down with our money managers and examine each company’s financial statements, debt-to-earnings ratios, positions in their market segment, and their management team,” Epps explains. “We are always trying to find companies that we think are undervalued, meaning they have solid revenues, sound market positions, and have been able to manage debt effectively.”

Two of Epps’ stock selections are benefiting handsomely from market positioning: Exxon Mobil Corp. (NYSE: XOM) and Occidental Petroleum Corp. (NYSE: OXY), two companies involved in the exploration, production, and sale of crude oil and natural gas. Both companies are profiting from the national shortage of oil. “These stocks will do well because they are benefiting from the worldwide demand for the product, especially in growing economies like China,” says Epps.

Epps believes Procter & Gamble (NYSE: PG), a company that manufactures and markets everything from home care and beauty products to snacks and beverages, presents a great opportunity. “We believe the company is undervalued and it has not performed to our expectations since its merger with Gillette,” says Epps. “But that’s about to change because it has a greater market share [than its competitors] and continues to produce quality products.”

Epps also likes Johnson & Johnson (NYSE: JNJ), a company that develops medical devices and manufactures childcare, skin care, and women’s healthcare products. “This company has enjoyed an annual earnings increase of 19.4%, and we think the company’s sound management and quality products will enable it to continue to grow,” says Epps.

Apple Computer Inc. (NASDAQ: AAPL), a technology company that designs, manufactures, and markets personal computers and related software, peripherals, and personal computing and communications solutions, is Epps’ final selection. “I love Apple Computer,” says Epps with a smile. “Apple has surprised analysts, especially with their iPod sales, which grew beyond all expectations.”