Starting SlowWhen a year starts off as slow as this one has for this group of stocks, you have to remind yourself that it isn't always the rabbit that wins the race. In fact, with our basket of stocks that's skewed toward the larger end of the capitalization spectrum, patience is a virtue. With that said, Pfizer's ( PFE) decline of more than 5% is a bit troubling. I still like this major pharma's drug portfolio, and notwithstanding continued concerns over Celebrex and some of the company's other advertising campaigns, this stock should find a way to rebound over the course of the year. Of course, that's assuming there is no other major revelation that might question the company's way of doing business.
Energy!The one company that has posted gains this early in the year is Superior Energy Services ( SPN), an integrated energy services company with a focus on the Gulf of Mexico. From this company's deep relationship with El Paso ( EP) to its ability to provide an integrated suite of workover and stimulation services to other E&P companies in the Gulf of Mexico, I like Superior's growth potential in 2005. Most estimates call for the company to earn about 90 cents in the coming year; I think results should be north of $1 per share. If that is true, the stock should rise to $20 or better in the course of the next 12 months. That result doesn't include positive surprises from SPN Resources, the company's acquire-and-develop subsidiary that has a number of opportunities for new production and revenue in the coming year. If SPN Resources can click on all cylinders, earnings could push $1.05 to $1.10 a share (run rate) in the next 12 to 18 months, providing more upside for the shares. The short-term risk here is a pullback in commodity prices that would cause psychology to shift in the short term. But as I said
The Readers SpeakAs with last year, the fifth stock in the portfolio this year comes from the readers. After nearly 100 unique suggestions, the most recommended stock (this is a democracy after all) was Microsoft ( MSFT). Those of you who recommended it did so because you think the technology space will begin to show signs of life in 2005, and Microsoft is a major name in the group. While I'm not convinced everyone who likes the name understands the dynamic differences between hardware and software companies, we'll make it work. I, too, think Microsoft is interesting in 2005. While we are probably a year from a meaningful new product cycle, anticipation of new products combined with the cash position of the company makes it a benign play at worst for the portfolio. Of course, it also gives me a reason to dig into the company a little deeper.
|Company/Ticker||Current Price||Price on Dec. 31, 2003||Change||Current Yield|
|Equity Office Properties (EOP:NYSE)||$28.29||29.12||-2.85%||7.07%|
|Superior Energy Services (SPN:NYSE)||$15.45||15.41||0.26%||0.00%|
|US Bancorp (USB:NYSE)||$30.25||31.32||-3.42%||3.97%|
|Unweighted Average Return||-1.81%||2.25%|
|Source: TSC Research|