Peach state slow to ripen ... Porter Bingham's focus on Georgia-based companies needs more time to bear fruit.

Last year, when BLACK ENTERPRISE invited Porter Bingham, president and CEO of The Malachi Group, to provide an exclusive portfolio of stocks for our readers, he had Georgia on his mind. He suggested that his Atlanta-based firm had a keen understanding of companies that were based in Georgia that would help add value to our readers' portfolios.

Bingham's four selections resulted in a 2.59% return during the 52-week period from Oct. 24, 2003 to Oct. 22, 2004, a portfolio outcome that might have been better were it not for the poor performance of Haverty Furniture Companies Inc. (NYSE: HVT), which lost a hefty 19.33%. By contrast, the S&P 500 Index rose 6.50% and the Dow Jones Industrial Average inched up 1.83% during the same 52-week period.

The Malachi Group's stock selection process, which includes looking at market caps, number of outstanding shares, trading volume, and positive earnings growth, seemed to work well for Bingham's three other stock picks, which grew by more than 9% each. "Overall, our picks are up a couple of points, so we outperformed the Dow," says Bingham. "In terms of the Southeastern theme, our thesis is right: we just think that the story has not played out yet.... We could have picked other Southeastern companies that would have underperformed substantially. However, the companies that we picked were probably the best of the best, and we stick by these recommendations."

Unfortunately, Haverty Furniture wasn't the best choice. The retail distributor of home furnishings failed to capitalize on the influx of new residents to Georgia and resulting new home sales, as Bingham had surmised: "Even though home sales were going up, it appears people weren't necessarily rushing to furnish them, so the sector had a bad year." Shares of Haverty dropped from $20.85 to $16.82.

New home sales did benefit Home Depot Inc, (NYSE: HD). The building materials and lawn and garden products merchandiser was Bingham's best performer. Company shares rose 10% from $35.30 to $39.17. Its strong cash position also helped it perform well. "Home Depot's home improvement, do-it-yourself focus is what provides [the company] with an opportunity to continue to out-leverage Kmart, Sears, and any other competitor in the marketplace," says Bingham.

Beazer Homes USA Inc. (NYSE: BZH), a company that builds single-family homes in the Southeast, Southwest, and Central and Mid-Atlantic regions of the U.S., is another company tied to the home-buying market. It definitely benefited from Georgia's population growth last year. Beazer Homes' stock price appreciated like the homes it sells, jumping from $92.55 to $101.28--a 9.43% increase.

And finally, Bingham's selection of the Southern Company Inc, (NYSE: SO) also delivered a sizeable return. The company is one of the largest electric utilities in the United States, serving Alabama, Georgia, Florida, and Mississippi. It had a strong balance sheet even before energy prices began to rise, which led to its stock price increasing from $28.59 to $31.25 per share, a 9.30% jump. "The company's performance could have been even stronger, save some of the [antitrust] regulatory issues that they wrestled with throughout the course of the year," says Bingham. "[Management] is definitely on top of their business, and they recognize problems and solve them fast."

PORTER BINGHAM

Portfolio Performance

PORTFOLIO PERFORMANCE: 2.59%

CURRENT VALUE OF $4,000 INVESTMENT: $4,103.71

NYSE BZH

10-24-03    $92.55
10-22-04   $101.28

TOTAL RETURN: 9.43%
CURRENT VALUE OF $1000 INVESTMENT: $1,094.33

NYSE HVT

10-24-03    $2.85
10-22-04   $16.82

TOTAL RETURN: -19.33%
CURRENT VALUE OF $1000 INVESTMENT: $806.71

NYSE HD

10-24-03   $35.30
10-22-04   $39.17

TOTAL RETURN: 10.93%
CURRENT VALUE OF $1000 INVESTMENT: $1,109.63

NYSE SO

10-24-03   $28.59
10-22-04   $31.25

TOTAL RETURN: 9.30%
CURRENT VALUE OF $1000 INVESTMENT: $1,093.04

* TOTAL RETURN REFLECTS STOCK APPRECIATION AND INCLUDES
STOCK SPLITS AND DIVIDENDS.

SOURCE: PIEDMONT INVESTMENT ADVISORS; YAHOO! FINANCE

Note: Table made from line graph.