Rebuilding a powerful portfolio - finance - Brief Article

Black Enterprise, July, 2001 by Marie Evans

Larry Folmar believes tech stocks could make a strong comeback

Despite enduring a stock market that could conjure nightmares for macabre master Edgar Allan Poe, it may well be time for investors to reenter, retool, and reposition themselves in the stock market. "Technology stocks are poised for a comeback and at these prices everyone should buy back a significant position," advises Larry E. Folmar, president and chief investment advisor of the Folmar Financial Group, a Southfield, Michigan-based investment firm. Sound risky? Folmar believes investors should take some calculated chances--they shouldn't be reckless, but definitely aggressive. The roundup Folmar gives for this Private Screening can produce a comforting yield if investment pundits' target prices are on par. What follows are his top five picks.

Ford Motor Co. (NYSE: F) is the world's second-largest automaker. "It's always been a good company to hold," says Folmar. "Although the automotive industry is facing challenges, Ford will emerge a victor." Another plus: When interest rates decline, auto stocks typically benefit. Furthermore, Ford is currently in the middle of a $5 billion buyback which always impresses investors. Lastly, Ford offers investors a higher dividend yield (3.9%) than its counterparts. Add that to the present dividend, and stockholders should gain about 11%.

Oracle Corp. (Nasdaq: ORCL), the $10.1 billion giant, is in a battle to unseat Microsoft from the throne. At a low of $16 in early May, the No. 2 software developer for information management could realize significant earnings growth. "Besides, it's a good new economy stock ... and we're in a new economy," says Folmar about the Redwood City, California-based tech titan.

Delphi Automotive Systems Corp. (NYSE: DPH) hails as the world's No. 1 auto parts supplier. This company makes virtually everything mechanical or electrical that goes into cars, ranging from brakes to engines. The $29.1 billion Troy, Michigan-based firm is a bargain stock at $14.61 (as of April 20), says Folmar.

Cisco Systems (Nasdaq: CSCO) is a household name now, and at $17 it's within the household budget. This $19 billion San Jose, California-based firm controls more than 66% of the global market for routers and switches that link networks and power the Internet. Expect demand to be robust for the firm's Internet-access products.

Pfizer Inc. (NYSE: PFE) makes Viagra, which is a favorite among aging baby boomers and some recreational users. The drug remains the company's big winner. Aside from it's treatment for impotency, the $29.6 billion pharmaceutical mammoth has other concentrations including new drugs for schizophrenia and cardiovascular disease.

And, another plus for Pfizer's schizophrenia drug, Geoden, is that unlike its peers, is already on the market and doesn't make patients put on excess weight. Consumer brands like Visine, Listerine, BenGay, and Certs will likely continue to boost profits.

Folmar's comeback kids

Company                           12-Month       P/E on Projected
Exchange: Symbol       Price(*)   Price Target     2001 Earnings

Ford Motor Co.           $29.70       $35              11.0%
NYSE: F

Oracle                    19.75        28              39.0
Nasdaq: ORE

Delphi Auto. Systems      14.61        17              19.2
NYSE: DPH

Cisco Systems             19.15        30              42.5
Nasdaq: CSCO

Pfizer                    40.76        56              33.2
NYSE: PFE
                       Est. 5-Yr.
Company                Annual EPS
Exchange: Symbol       Growth        Why Stock Will Outperform

Ford Motor Co.             6.9%      * Pundits predict it's in a better
NYSE: F                                position to weather any
                                       downturns in the auto industry.
                                       Recent buybacks will bolster
                                       stock price.

Oracle                     22.9      * Should continue to do well in
Nasdaq: ORE                            Web-based applications market.

Delphi Auto. Systems        8.2      * Expansion should bode well for
NYSE: DPH                              future earnings.

Cisco Systems              30.2      * Controls two-thirds of the
Nasdaq: CSCO                           global market in its category.

Pfizer                     22.0      * Supply and demand. Recent FDA
NYSE: PFE                              approvals for new drags are
                                       expected.

(*) As of 4/20/01. Prices are adjusted for stock splits and dividends.

Source: Larry E. Folmar, The Folmar Financial Group; Zacks Investment
Research; Yahoo! Finance.