In the year since he selected a portfolio of five stocks for BLACK ENTERPRISE, Larry Folmar, president and chief executive officer of Southfield, Michigan-based Folmar Financial Group Inc., maintains that the U.S. economy has been extremely volatile. Contributing factors include the threats to American industry’s competitiveness due to new technology and the rise of global powerhouses like China and India. “I don’t see any great leaps in the economy just yet,” says Folmar. “It’s not in the recessionary stage, but it’s not in a great expansion phase either. I think the economy is in a holding pattern.”
Despite these uncertainties, Folmar’s portfolio garnered a 20.30% return during the 52-week period from March 31, 2005, to March 31, 2006. By contrast, the S&P 500 gained 10.14%, and the Dow Jones jumped 6.16%
Among Folmar’s selections, Ford Motor Co. (NYSE: F) was hardest hit, plummeting 24.70%, from $10.69 to $8.05. The auto manufacturer announced it would cut 30,000 jobs and close 14 facilities by 2012. This year, the company also expects to restructure operations to the tune of $1 billion. “It’s no longer the Big Three [Ford, Chrysler, and GM], it’s the big six or maybe even seven,” says Folmar. “Ford has not been able to stop the tide of consumers buying Japanese cars like Toyota and Honda, and its recently announced its long-term strategy won’t see results any time soon.”
Financial services firm Eaton Vance Corp. (NYSE: EV) had better luck. The asset management firm enjoyed a healthy gain of 17.63%, moving from $23.03 to $27.09 during the year. “That’s real growth,” Folmar says, adding, “There has been a positive focus on financial stocks, and Eaton Vance was somewhat of a beneficiary of that.”
Suncor Energy Inc. (NYSE: SU), the Alberta, Canada company that explores, produces, and markets crude oil and natural gas, realized significant returns, thanks to a booming industry. Its stock jumped 95.5%, from $40.06 to $78.30. “Picking this stock was perfect timing,” he says. “Suncor got caught up in the favorably high demand for oil.”
Technology bellwether Microsoft Corp. (NASDAQ: MSFT) achieved solid gains during the year, increasing 14.05%, from $23.78 to $27.12. The stock, however, lost ground in April after Microsoft announced that it would delay the release of the Windows Vista desktop operating system until after Christmas, 2006. “I still believe Microsoft’s best days are ahead of them,” Folmar says. “They are still a sleeping giant, and when they release Windows Vista, they’ll benefit from increased sales.”
The performance of Folmar’s last pick, Pfizer Inc. (NYSE: PFE), was flat: its stock dropped 0.95%, from $25.20 to $24.96. He maintained that the pharmaceutical giant has yet to recover from revenue losses due to expiring patents of its most lucrative drugs. Folmar says Pfizer, like other pharmaceutical companies, has been the victim of drug safety fears. But he strongly believes the stock will rebound: “I still think that Pfizer has a good, long-term appreciation potential in the marketplace.”