January 2005
Bulls Ayes
By Frank Maley
Here's how our stock pickers hope to beef up their portfolios in '05.
Alexander B. Miles
Senior portfolio manager
WealthTrust Advisors Inc., Charlotte
Bank of America Corp.
BofA continues to provide steady price appreciation bolstered by a reliable income stream. At 11 times 2005 earnings estimates, the stock has been trading at a 10% discount to its peer-group multiple of 12.2 times, and BofA is poised for double-digit earnings growth in 2005. The equity markets should reward improvements from the FleetBoston merger as the company shifts cost savings to high-growth businesses. Recent disappointing earnings, resulting from challenging capital-markets and mortgage-banking environments this summer, provide a reasonable entry point for buying this well-diversified bank with one of the highest dividend yields — 4% — in its sector.
Lance Inc.
The Charlotte-based snack maker and distributor is in the midst of a turnaround as the company refines its delivery routes and eliminates unprofitable vending machines. Lance’s private-label business continues to grow as a primary beneficiary of the company’s relationship with Wal-Mart. Although there are margin and revenue risks associated with higher commodity prices and Lance’s dependence on one major customer for nonbranded sales, the firm should see additional growth in its Lance and Cape Cod brands, while also generating positive cash flow and continuing to pay down debt. Lance’s outsized 4% dividend yield remains secure.
TriPath Imaging Inc.
TriPath Imaging, which has its headquarters in Burlington, develops solutions leading to the early detection and clinical manage-ment of cancer, including detection, diagnosis, staging and treatment. All the firm’s revenue is generated through its cervical-cancer-screening products, which maintain a 10% to 15% share of the domestic Pap smear market. TriPath supplies the three largest commercial diagnostic-lab-operating companies in the country. For investors willing to assume more speculative risk, TriPath offers compelling upside growth poten- tial as current and future revenue-gen- erating products navigate the U.S. Food and Drug Administration’s regulatory approval process.
Disclaimer
Specific companies mentioned were done so for illustrative purpose only. Individual portfolios may vary in their holdings over time and in relation to other portfolios. The opinions expressed are subject to change from time to time and do not constitute a recommendation to purchase or sell any security nor to engage in a particular investment strategy.