To obtain the best possible investment return for his clients, Graceful Grady, president of Atlanta-based financial management firm Grady Financial, practices both conservative and aggressive investment strategies.
When evaluating stocks for his portfolio, Grady uses four key measures. He tracks the company’s balance sheet, carefully monitoring net income, cost of operations, and debt; he looks at whether a company’s key officers believe in the firm enough to buy its stock; he pays attention to news announcements that could swing a stock’s price sharply up or down; and he watches the sale volume of a stock to determine market interest and whether the stock is easy to buy or sell. Grady also
keeps a close eye on the economy as it relates to consumer spending: “Looking ahead, we are going to have an increase in interest rates and that will affect consumer and corporate spending negatively.”Grady is confident that consumers will continue to buy services from Comcast Corp. (Nasdaq: CMCSA), which develops and operates broadband communications networks and provides high-speed Internet, video, and phone services over cable networks. He thinks Comcast has an edge over competitors because its customers can enjoy a greater variety of services, often at a reduced rate. The company also offers phone service over the Internet, which should boost company revenues. “I think more people are going to get comfortable with using Voice over IP services, which will allow them to save some dollars,” Grady says.
If Grady is right about the growth of Voice over IP, then Sonus Networks Inc. (Nasdaq: SONS), a firm that provides voice infrastructure products, is sure to benefit. Sonus manufactures the hardware and software that public network providers use to supply voice and data communications services to their subscribers. “I like this company because its products are used to build the Voice over IP infrastructure and they have contracts with major telecom clients,” says Grady.
Onl
ine shopping is also a trend Grady thinks will flourish, and eBay Inc. (Nasdaq: EBAY), the online auction site, is in a good position to capitalize on that. He says the company, which auctions cars, collectibles, consumer electronics, and a host of other miscellaneous items over the Internet, will bounce back from the disappointment of missing analyst’s earnings estimates in January when its stock price fell 13% in one day. “The company is managed very efficiently and it has an effective supply chain that cuts costs,” says Grady.Another company Grady thinks will outperform the market is Motorola Inc. (NYSE: MOT). Motorola may be best known for its cell phones and two-way radios, but it also provides wireless infrastructure equipment and network switching systems. Grady says Motorola’s new product offerings, including its
ultra-thin RAZR V3 cell phone with digital camera, MPEG 4 video playback, and Bluetooth wireless technology, should drive company sales. “This is an excellent cell phone that I think is a one-of-a-kind product on the market,” he says. “It has advanced features that I think consumers will want to buy.”Grady’s last selection is General Electric Co. (NYSE: GE), which develops and markets financial services and a wide range of products, including major appliances, lighting, and industrial automation products. “They have a history of performance, a strong global presence, and they are a leader in almost every market that they compete in,” says Grady.
GRACEFUL GRADY Stock Picks
|
Company (Exchange: Symbol) |
Price* |
12 to 18 Month Price Target |
P/E on Projected2004 Earnings |
Est. 5-Yr. Annual EPSGrowth Rate |
Why Stock Will Outperform |
| Comcast Corp. (Nasdaq: CMCSA) |
$31.60 |
$36.00 |
78 |
15% |
Comcast’s service offerings and Voice over IP services should boost company revenues. |
| Sonus Networks Inc. (Nasdaq: SONS) |
$6.13 |
$8.00 |
165 |
32% |
Voice over IP infrastructures are built with Sonus’ products and company has major telecom contracts. |
| eBay Inc. (Nasdaq: EBAY) |
$77.93 |
$100.00 |
72 |
35% |
eBay is managed efficiently and has a good supply chain. Online auction shopping should stay popular. |
| Motorola Inc. (NYSE: MOT) |
$15.99 |
$20.00 |
17 |
12% |
Motorola’s RAZR V3 cell phone has advanced features that should drive consumer spending. |
| General Electric Co. (NYSE: GE) |
$36.28 |
$41.00 |
23 |
11% |
GE has a strong global presence and is a leader in nearly every one of its markets. |