Higher interest rates, a slowdown in the real estate market, and rising energy and raw material prices confirmed reservations among investors about stock market performance. In the face of such uncertainty, Silas Myers, senior vice president, analyst, and portfolio manager at Roxbury Capital Management, L.L.C., recommended companies that would hold their competitive advantage. Myers’ stock picks withstood much of the market’s woes and outperformed the S&P 500.
Myers chose four stocks, which over the 52-week period from May 26, 2005 to May 26, 2006, produced a total return of 9.49%. By contrast, the S&P 500 realized a total return of 8.9% during the same period.
His top performer, Fisher Scientific International Inc. (NYSE: FSH), the worldwide scientific research and clinical laboratory products company, posted a gain of 18.81%, increasing from $62.35 to $74.08. “The stock traded as high as $82.05 in May 2006 when the company announced its intent to merge with Thermo Electron Corp., rising 31.6% over its May 2005 price,” says Myers. “We continue to hold a substantial position in this company and believe the value created by the merger will lead to a higher stock price in the future.”
First American Corp. (NYSE: FAF), the provider of title and specialty insurance as well as mortgage, property, and credit information, also improved its position, increasing from $37.91 to $42.49, a gain of 12.1%. A slowdown in the housing market, however, led to a slight pullback in shares of First American. “Despite this, we continue to hold a position in this stock and believe it is substantially undervalued at these levels,” Myers says.
The performance of Tiffany & Co. (NYSE: TIF) was less than robust. Its stock price moved from $30.87 to $32.82, a 6.32% gain. Renowned for its jewelry, china, crystal, and accessories, the retailer showed promise when its stock increased to $43.80 a share last November. But Tiffany was unable to sustain its performance. “Although problems in its Japanese operations subsided and some store sales comparables improved both domestically and internationally, we exited this stock at $39.74,” says Myers.
Shares of broadband cable provider Comcast Corp. (NASDAQ: CMCSA) were marked by a flat performance, increasing slightly from $32.04 to $32.28 — a gain of 0.75%. “We sold our entire position in Comcast in October 2005 at $28.59 due to fears of a more competitive pricing environment between high-speed data versus DSL and increased competition in video from DirectTV and EchoStar,” explains Myers. Comcast has improved its position and the competitive environment has fared better since the company sold its shares. As such, Comcast is one to watch.
