Fantasy Baseball's Lessons for Investors

For much of the group, revenues are down and margins are squeezed as builders demand better pricing in the weak environment. The best company in the group right now is Ameron International (AMN Quote). The company operates in several segments of the building materials marketplace. It makes lighting poles, construction products and fiberglass composite pipe for the petroleum and marine shipping industry. The pipe group in particular has been strong in recent years as demand for the corrosion-resistant pipe has grown in the offshore drilling and oceangoing tankers market. The company recently reported sales that were ahead of estimates, jumping more than 24% for the quarter, but earnings were short of expectations as margins contracted in the quarter.

There are several indications that bode well for the company and its stock price going forward. First, the Board of Directors just announced a 20% increase the dividend . Second, and perhaps most important, it is the market leader for steel and water pipes in the western part of the U.S. The parched Western half of the country will be spending billions to update and expand water infrastructure for decades to come, and Ameron is well positioned to benefit. The company also recently entered the wind tower market and will benefit from increasing demand for clean energy.

Spending in Ameron's markets will continue to be stagnant until the economy recovers, but when it does, this company is perfectly positioned. The company has a rock-solid balance sheet that will allow it to survive the hard times and be a market leader when the cycle changes.

Property Management

Another beleaguered group and one of the Value Line universe's worst-performing sectors is the property management group. This industry has been hit by an economic perfect storm. The subprime meltdown and ensuing credit crunch have caused the group to lose more than 20% of its market value this year as investors fled the real estate stocks.

One stock that has held up very well and has bright prospects going forward, though, is WP Carey (WPC Quote). Earnings were actually up slightly in 2007 while its competitors lost money. The company has good access to credit and commercial financing even in the current difficult climate because of its solid operations.

Earnings expectations and estimates are increasing for WP Carey as well. Value Line estimates that they will grow earnings at a solid 10% rate for the next five years. The company increased assets under management by better than 15%, and occupancy rates remain high.

The company has a strong balance sheet that will ensure it makes it through this cycle in the property market and remains an industry leader. The company pays a healthy dividend with a yield in excess of 6.5% and is expected to increase it by 7% annually.

It remains to be seen how this approach works for The Vultures fantasy baseball team. It has been, however, a very good way to find stocks that can be industry and stock market leaders when the economic cycle changes, turning their industry groups into darlings of Wall Street instead of dogs.

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