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Mike McGervey of McGervey Wealth Management takes a value approach with a growth objective. "We are traditionally seeking securities that have demonstrated strong earnings and sales growth, are amongst strong industry groups, and are also leading their industries in price performance," he says. "As such, it is typically more difficult to find a bargain."
McGervey says his shopping list of bargains includes
First Cash Financial Services(FCFS),
Radiant Systems(RADS). These stocks are strong growth contenders but have valuations more comparable to those of value stocks, he says.
His best bargain for Black Friday, though, is
TRW Automotive(TRW). Michigan-based TRW supplies automotive systems, modules and components to global car original equipment manufacturers and related aftermarkets, which has made the stock an attractive bet for investors looking to play the recent initial public offering by
The stock currently trades at $48, more than double the share price at the end of 2009. Even so, McGervey says TRW's financial and valuation metrics are attractive to both bargain- and growth-hunters.
He notes that TRW's price-to-earnings and price-to-sales ratios are 7.9 and 0.41, respectively, which are below the market average. In addition, the PEG ratio, which measures value relative to growth, is 1.53. That is an indication that investors aren't paying a massive premium for long-term growth.
"That's not bad for a growth stock that has been on the run," McGervey says. "The stock has recently pulled back off its 52-week high by about 8%, creating an incentive buy opportunity which may still be available on Friday."
-- Written by Robert Holmes in Boston.
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