Double Your Money?
BusinessWeek asked market experts to pick stocks that could double in price over the next few years. Pushing for those returns brings higher risk, though, so view their ideas as a starting point for further research.
• Aegean Marine Petroleum Network (ANW), which operates ships that act as floating gas stations, is a favorite of Michelle Stevens of the Transamerica Small/Mid-Cap Value Fund. New regulations requiring double-hulled refueling vessels should benefit Aegean, she says.
• Ansys, (ANSS) an application software company, gets the nod from William Van Keulen of Carnick & Co. Its simulation software helps design engineers create products. Van Keulen likes that a big chunk of its revenues are international.
• Chicago Bridge & Iron is a pick of Thyra Zerhusen of the Aston/Optimum Mid Cap Fund (ABMIX). Most of its business is related to infrastructure required by the energy industry. It's had some problems in the past year, but Zerhusen says the stock "way over-corrected."
• Thompson Creek Metals (TC) is the top choice of Robert Auer at Auer Growth Fund (AUERX). Thompson mines molybdenum, which is in demand by the world's nuclear industry.
Mr. Value Stocks
For more than 20 years, Robert Schaeffer has been scouting out stocks for Becker Capital Management, where he manages money for private accounts as well as for the top-ranked Becker Value Equity Fund (BVEFX). BusinessWeek's Lauren Young asked Schaeffer about his most recent buys—Federal Express (FDX) and Starwood Hotels & Resorts Worldwide (HOT).
Why is FedEx a good value now?
Mom-and-pop truckers are under a lot of pressure because of fuel costs, and that's helping FedEx, which is picking up market share as well as pricing power. FedEx benefits from exceedingly low business inventories nationwide. If a big order comes in, there's a good chance a customer needs it delivered immediately by air. And who are you gonna call? FedEx. It's a great international play because of the developing markets it serves.
What about Starwood? Isn't it bad to own hotel operators during an economic slowdown?
Most hotel chains are big domestic plays. What is different about Starwood is that about half of the company's profits come from international sources. In some places they own the properties, and in others they get management and franchise fees. There is a decent backlog of franchised hotels under construction for which Starwood will act as the hotel operator. Also, international economies have been stronger than the U.S. economy. In select markets, foreign tourism to the U.S. has been robust, so Starwood benefits from the weakness in the dollar, too.
Beware the Clean Sweep into Lower Yields
As the credit crunch squeezes Wall Street, brokerages are squeezing every last penny out of customers. An increasing number of brokerages are, unless a client says otherwise, sweeping customers' stray cash from dividends and other payments not into money-market funds but into their much lower-yielding cousins, bank deposit accounts. Only 4 out of 20 brokerages sweep money into the higher-yielding money funds, according to a Bankrate.com survey. The bank sweep accounts had an average yield of 0.56%, compared with 2.47% for a typical money fund. The lowest yield offered: 0.25%. But once you move all your money out of the sweep account and into, say, a money-market fund, future cash automatically goes into that fund. (A money fund won't be quite as liquid as a bank sweep account—you'll need to take an extra step and trade out of the fund to get your cash.) Consumers are starting to pay more attention to rates on stray cash: Class action suits were filed against a number of Wall Street titans earlier this year for allegedly deceptive cash-sweep programs.