For Pitney Bowes, A Stamp Of Approval

What's the best way to ride out today's volatile markets? Stick to companies with brand names and sound fundamentals, says Jerome Heppelmann, a stockpicker at Liberty Ridge Capital. He scouts for companies with leading-edge products that have a dominant market share, a steady stream of earnings, and free cash flow, and pay hefty dividends. One such: Pitney Bowes (PBI ) (PBI), usually seen as a ho-hum stock. It isn't, says Heppelmann. On May 25, Pitney's new mail screening system won the U.S. Homeland Security Dept.'s blessing to detect such biohazards as anthrax. Heppelmann figures analysts will now jack up their estimates. Pitney, with a healthy 3.1% dividend yield, has not missed a quarterly estimate for four years and has been buying back shares. It has 80% of the U.S. market for mail meter systems. Standard & Poor's (MHP ) rates it a buy and expects gross margins to remain around 55%. It forecasts 2006 earnings of $2.87, vs. last year's $2.27. Now at 40, Pitney should hit 50 in 12 months, says S&P.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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