Column Sends Sirius Backers Into Orbit

Hey Modelman: In recent columns, you have asked for reader suggestions for stocks that trade at $10 or $20, or pay good dividends. How about one that does both -- the new, post-bankruptcy telecom MCI Worldcom, now just called MCI (MCIP), which trades for $20 and pays a 7.9% dividend?

Modelman: The valuation and business prospects of MCI are very interesting, especially because the majority opinion of the company's prospects is still so highly negative. Its largest independent shareholder is vulture investor and Mexican billionaire Carlos Slim Helu. Its institutional holders are a who's-who of special-situation hedge funds, turnaround funds and value funds, including the one run by Kmart (KMRT) chief Eddie Lampert.

Run by former Compaq honcho Michael Capellas, MCI has beat earnings expectations handily so far due to successful cost cuts and appears on track to be prettied up to attract a suitor. It looks good to make my $24 one-year objective, especially with the 7.9% head start.

Here is a list of other $10 and $20 stocks that were nominated by readers:

Acambis (ACAM), from John Sniegowski: "This company invested quite a bit in 2004, and the earnings were not there to fully support it. As a result, the price of the stock now is a good value. They are in a good position to expand sales this year. They need a couple of their vaccinations to pass testing and be approved (West Nile, yellow fever, Japanese encephalitis). The vaccinations under development are applicable across the world, so you can say that their product is well-diversified."

Northwest Pipe (NWPX), from Dave DiCerbo: "I've owned this stock a long time and rode it from $17 to $8 and back to where it is now. Backlog continues to increase. Water transmission was up over $100 million in backlog after the third quarter, whereas it used to be much lower just a year ago. Orders are strong. They're cutting costs. Expecting earnings of at least $2 per share next year and tangible book value of $17.90. This is money in the bag."

Cepheid (CPHD), from Paul Dominguez: They are working with Northrop Grumman (NOC) to detect anthrax in the U.S. mail, and deploying units nationwide. Their automated DNA analysis system reduces the time to get DNA results from days to less than an hour. They have been getting licenses all year from different medical research companies to use their technologies with their DNA machine and have received licenses for export from the U.S. State Department. Their system will eventually work in hospitals and police labs all over the world, making DNA analysis human-error proof and extremely quick.

Candela (CLZR), from Narinder Thakral: Candela is a "concept" stock, a company that makes aesthetic dermatology lasers. It has good growth ahead, what with baby boomers so concerned with the appearance of their aging skin.

I'll track all of these over the next year and report back.

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider Acambis, Candela, Cepheid and Northwest Pipe to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

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