Georgia's a peach for profits: The Malachi Group's Porter Bingham says Georgia companies are ripe for a run - Private Screening - Southern Company

Black Enterprise, Feb, 2004 by Nicole Lewis

Porter Bingham, president and CEO of The Malachi Group (TMG), believes that focusing on Georgia-based companies can offer attractive opportunities for investors. TMG is an Atlanta-based investment banking firm operating in several business areas including domestic and international equity, sales and trading, corporate stock repurchases, public and corporate finance, and research.

According to Bingham, Georgia has steadily gained popularity as a place where companies like The Home Depot and Coca-Cola have sparked investor interest. "Because we are in Georgia, we know the management at these companies, and we think our knowledge of these firms will add value to the portfolio managers that follow companies in Georgia."

When selecting stocks, Bingham says his firm looks at market capitalization, the number of shares outstanding, the annual and daily trading volume, and price to earnings multiples. A history of good revenue performance and positive earnings growth are critical as well.

National trends are also important to the company's analysis. Currently, Bingham says the economy is affected by the war on terrorism, low interest rates, moderate inflation, and higher oil prices. These issues present a unique set of circumstances that require different models of evaluation. "I think our perspective must become much more short-term," Bingham says. "We have to get some history behind the current set of circumstances in order to measure the new bends in the market. We've just gone through a good earnings season for most companies but the market still has some convincing to do."

The Malachi Group is confident that the following companies will outperform over the next 12 months:

The Home Depot Inc. (NYSE: HD), a company that sells an assortment of building materials and lawn and garden products, has reacted well to stiff competition from companies like Lowe's Companies Inc. "[Home Depot] has made an adjustment from a bottom-up management style to a more disciplined top-down management approach. They are working very hard at strengthening their customer service, inventory selection, and the technology that supports their business model. These changes will position them for the next level of efficiency."

Beazer Homes USA (NYSE: BZH), which builds single family homes in the Southeast, Southwest, Central, and Mid-Atlantic regions of the U.S., has successfully executed a policy of conservative land ownership, paying special attention to cost controls. "In the short-term, the continued softness in mortgage rates will add strength to their ability to grow their business," explains Bingham.

As homeownership continues to rise, Haverty Furniture Companies Inc. (NYSE: HVT), a retail distributor of home furnishings, should also benefit. "It, s geographical reach, extensive product mix, modern showroom stores, and state-of-the-art distribution facilities give it a strong competitive advantage," Bingham says.

And gingham's last pick. Southern Company (NYSE: SO), is one of the largest electric utility companies in the U.S. The company provides electricity to Alabama, Georgia, Florida, and Mississippi-areas Bingham says are among the fastest growing regions in the U.S. Aside from its strong balance sheet and an astute management learn, Bingham believes the company's relationship with regulatory agencies will bode well for Southern Company's future growth.

The Malachi Group Inc. has an investment banking relationship with Southern Company and has been engaged in the underwriting of the company's debt and equity securities throughout the past 12 months. The Malachi Group expects to participate in future underwritings.

Porter Bingham's
Private Screening Picks

Company                              12- to 18-Month   P/E on Projected
(Exchange Symbol)        Price *       Price Target      2004 Earnings

Home Depot               $35.53           $35                19.4%
NYSE: HD

Southern Company         $29.97           $35                15.7%
NYSE: SO

Breazer Homes USA        $92.81          $107                 7.0%
NYSE: BZH

Haverty Furniture Cos.   $21.14           $22                 18.5%
NYSE: HVT

                         Est. 5-Yr.
Company                  Annual EPS
(Exchange Symbol)        Growth Rate   Why Stock Will Outperform

Home Depot                 14.1%       HO has a strong financial
NYSE: HD                               position and has rapidly
                                       strengthened customer service,
                                       inventory management, and
                                       technology.

Southern Company            4.6%       SO has the dominant market share
NYSE: SO                               in the Southeast utilities mar-
                                       ket and produces relatively
                                       predictable revenues and
                                       earnings.

Breazer Homes USA          14.5%       BZHT has a keen focus on cost
NYSE: BZH                              control, and it has translated
                                       into margin expansion and steady
                                       earnings growth.

Haverty Furniture Cos.     11.9%       HVT has benefited from above
NYSE: HVT                              average population growth and
                                       new home sales. Private-label
                                       merchandise accounts for 30%
                                       of sales.

* AS OF OCTOBER 24, 2003. SOURCE: THE MALACHI GROUP'S EQUITY RESEARCH,
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