Five Stocks Shine in Dreary Year

"At one point, they had over $100 million in debt with a 9% or 10% coupon; that was down to about $70 million at the start of the year, and it's now down to $20 million," Lewis said, adding that the firm is also paying a much lower interest rate. "They got out of a business that was hurting them and fixed their textile services business, which should grow nicely over the next few years."

Lewis, who owns Angelica but has not done any investment banking for the firm, said he expects earnings to grow by 18% next year after a projected 547% jump in profit this year.

Copy This

Another stock that has shown remarkable strength in 2002 has been Imagistics, a seller of fax and copy machines that went public in December of last year. Shares have surged 55% year to date. In March, Imagistics said it would buy back $30 million worth of stock, and increased its authorization to $58 million in October.

Although the business of selling and renting copiers is highly competitive, Imagistics has an advantage because it buys machines cheaply from Asia instead of manufacturing them. Also, the company is a large generator of free cash flow, a stock-watcher said, but cautioned that while the company is profitable, it may not see much growth.

Indeed, analysts expect sales to be flat next year, although earnings should continue to grow amid share buybacks.

Among larger-cap names, Halliburton and Providian were among the best performers in 2002 after devastating losses the year before. Halliburton skidded 63% in 2001, while Providian lost about 94%.

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Houston-based Halliburton jumped 51.5% this year, as the company took steps to settle some 30,000 lawsuits from plaintiffs who claim the firm exposed them to asbestos. Despite the progress on this front, Halliburton remains under investigation by the Securities and Exchange Commission for its accounting practices, and analysts aren't convinced that the stock price will continue its ascent.

Lehman Brothers analyst James Crandall recently downgraded Halliburton, saying that global exploration and production spending would be "disappointing" next year and that considerable risks remain with respect to the asbestos litigation.

Providian, which lends money to customers with poor credit histories, faces an equally uncertain future after surging 78% this year. While the company has spent the past year improving the credit profile of its customers, some analysts say the firm continues to face high credit losses.

"The new management team came in late last year and has basically been building up the business from scratch," said Richard McCaffery, an analyst at Morningstar. "But they're now in a position where they have to compete with the best players in the industry, and whether they can do that remains to be seen."

For the S&P 500 as a whole, just 143 stocks advanced this year, with just four stocks posting gains of 50% or more. On the S&P's small-cap index, some 237 stocks advanced, with 30 components climbing 50% or more.

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