Fundamental gains: exploiting mispriced growth opportunities paid off for Tedd Alexander.Discipline over emotion" is the creed at Baltimore-based Credo Capital Management L.L.C. Its analysis of a company's fundamentals is supported by its own proprietary software called ABACUS, which is used to identify mid-cap stocks that exhibit an above-average potential for price appreciation. This investment approach proved auspicious for Credo's president, Tedd M. Alexander III. The portfolio of five stocks he recommended to BLACK ENTERPRISE gained 21% during the 52-week period ending, Dec 21, 2006 (see "Rely on the Analysis," March 2006). In contrast, the S&P 500 grew 12.3% during the same time period. "Our investment philosophy is based on identifying and exploiting mispriced growth opportunities, and 2006 was a good environment for stock pickers," says Alexander. Celgene (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CELG), a Summit, N.J.-based biotech company that develops cancer treatments and drugs for inflammatory diseases, was a stellar performer. Investors were rewarded with a 2-for-1 stock split in February, and shares doubled in value on a split-adjusted basis. Alexander says that growth opportunities for Revlimid, the company's treatment for multiple myeloma multiple myeloma A malignant proliferation of abnormal plasma cells that populate the marrow-containing bones of the body. The affected plasma cells produce myeloma protein, a monoclonal antibody that replaces normal antibodies in the blood, thereby increasing susceptibility , expanded and led investors to place an even higher valuation on earnings than he had anticipated. Alexander says that he maintains a favorable outlook for the company. Legg Mason (NYSE NYSE See: New York Stock Exchange : LM), the Baltimore-based investment management firm, proved to be a disappointment. After climbing some 70% in 2005, shares declined 20.1%. Alexander sold Legg Mason shares when the stock was trading between $125 and $135 per share due to market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. constraints in the firm's investment process. Smith International (NYSE: SII SII Servicio de Impuestos Internos (Chile) SII Seiko Instruments, Inc. SII Strong Interest Inventory SII Standards Institution of Israel SII Securities and Investment Institute (UK) ), a provider of off and gas equipment and services, benefited from surging oil prices in the first half of 2006 and a resumption of oil field and drilling activity, particularly in the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east . But the stock climb was anything but a straight trajectory--shares of the Houston-based company vacillated between $36 and $46 per share. Alexander says that he's increased his firm's 12- to 18-month price target to $52 per share. Synopsys (NASDAQ: SNPS SNPS Space Nuclear Power System ), based in Mountain View, California For the census-designated place, see Mountain View, Contra Costa County, California. For other places called "Mountain View", see . Mountain View is a city in Santa Clara County, in the U.S. state of California. The city gets its name from the views of the Santa Cruz Mountains. , is a leading provider of semiconductor design software. Though shares appreciated by 30%, they did not reach Alexander's original per-share target price of $31. Alexander remains bullish still and has increased his 12- to 18-month price target for SNPS to $34. Tractor Supply (NASDAQ: TSCO TSCO top secret control officer (US DoD) TSCO target selection confusion of the operator (US DoD) TSCO Trade Security Controls Office (Defense Logistics Agency) TSCO Time Since Complete Overhaul ), a specialty retailer of farm and ranch supplies, saw shares decline by 18%. Yet Alexander cites annual same-store sales growth in the low double digits and continued improvement in operating margins as possible foundations for earnings per share growth of 20%. He's adjusted his price target from $71 to $60 per share. [GRAPHIC OMITTED] TOTAL RETURN: 20.95% CURRENT VALUE OF $5,000 INVESTMENT: $6,047.31 NASDAQ CELG CURRENT VALUE OF $1,000 INVESTMENT: $2,009.19 NYSE LM CURRENT VALUE OF $1,000 INVESTMENT: $799.56 NYSE SII CURRENT VALUE OF $1,000 INVESTMENT: $1,116.88 NASDAQ SNPS CURRENT VALUE OF $1,000 INVESTMENT: $1,302.48 NASDAQ TSCO CURRENT VALUE OF $1,000 INVESTMENT: $819.20 "TOTAL RETURN REFLECTS STOCK APPRECIATION AND INCLUDES STOCK SPLITS AND DIVIDENDS. SOURCE: YAHOO! FINANCE |
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