A solid recovery: F. Douglass Lewis Jr. focused on value stocks to produce positive returns.

Selecting companies that were ripe for growth once the economy began picking up steam was the strategy behind the stock picks given to us by F. Douglass Lewis Jr., president of Washington. D.C.-based FDL Financial Services. The four companies in the exclusive portfolio he offered BLACK ENTERPISE readers last June were outperforming nicely until the market began retracting at the start of 2004. Even with the market's skittishness. Douglass' selections managed a handsome gain of 24.01% during the 52-week period March 21, 2003, to March 19, 2004. By comparison, the Dow Jones Industrial Average rose 19.53% and the S&P 500 gained 23.88%, respectively, over the same period.

"I'm a value investor who looks for low-priced stocks that have good earnings and are increasing in market share," says Lewis, a 14-year industry veteran whose firm manages more than $30 million for institutional investors and high net worth clients. His emphasis on earnings growth, strong management, and low company debt produced three out of four picks in positive territory.

As Lewis predicted, shares of Altria Group Inc. (NYSE: MO) blossomed due to strong international sales of tobacco products and the dominance of its Kraft Foods Inc. subsidiary in the U.S. Once a generous 7% dividend was also factored in, the company's stock price rose 64.92%, going from $33.15 to $54.67. Since the company has had a nice jump in price, Lewis suggests that readers "take profits, unless they want to hold on to the dividend." He sets a price target for Altria at $60 and notes, "Investors have started to realize the tree value of the company."

Lewis says Microsoft Corp. (Nasdaq: MSFT) screams "buy" even though it never seemed to get the long term boost he was expecting. Peaking in November, partly due to product sales this past Christmas season, momentum quickly tailed off after the New Year. Even the company's $43 billion in reserve cash couldn't halt a 6.78% slide as shares went from $26.42 to $24.63. "Still, the company is fantastic," says Lewis. "The fundamentals and management are really good--very solid. Microsoft should reach $35 [per share] over the next 12 months."

Perhaps the biggest question concerning the company's fortunes is whether Bill Gates will do a stock buyback to push shares higher. Says Lewis, "With the cash the company has, they're in a good position to either buy back stock or make an acquisition."

First Data Corp. (NYSE: FDC), which provides payment, merchant, and card issuing services, as well as high-volume information processing for Western Union and other financial institutions, didn't exactly surge the way Lewis thought it would. The company came in below the 15% growth rate he forecasted, posting a 10.11% gain a year after Lewis' recommendation. The stock price increased from $37.87 to $41.70 a share, and Lewis is still optimistic about its future growth. "There's a lot of room to grow here; a $50 target is reasonable for the patient investor," he says.

But Lewis intends to continue riding motorcycle manufacturer Harley-Davidson Inc. (NYSE: HDI), whose products were still in high demand, even as the economy took a pause at the start of 2004. Since his recommendation, the company experienced an impressive 27.80% gain, moving from $40.86 to $52.22 per share. Lewis' assessment that Harley-Davidson is "a fantastic company with a very strong brand name. [It is also] one of the few companies where there is actually more demand than supply" certainly holds up. He sets a price target at $60.

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