Select Shares Double in Value Despite Market Decline.

In 1969, a fellow named Ira Cobleigh published a book titled "Happiness Is a Stock That Doubles in a Year."

If his title holds true, at least some investors are happy today.

Despite a rough year for the stock market, 147 stocks with a current market value of $500 million or more doubled in the 12 months through May 25, according to Bloomberg data. Over that span, the Standard & Poor's 500 Index declined 7.2 percent and the Nasdaq Composite Index fell nearly 30 percent.

Some of the stocks were expensive even before they doubled and a lot are expensive today. Remarkably, though, 19 still sell for only 5 to 15 times earnings - a very reasonable price.

Cheapest in the batch is OMI Corp., a Stamford, Conn., company that operates a fleet of about 25 oil tankers. OMI stock sells for only 5 times the past four quarters' earnings, and a little less than 5 times this year's estimated earnings.

Brokerage analysts are projecting slow earnings growth for OMI, about 4 percent a year. I think they may be underestimating it. The U.S. depends heavily on oil from abroad, and oil use tends to grow each year, even during recessions.

Oil tankers

Nearly one third of the world's tankers are more than 20 years old, so many will have to be scrapped over the next few years, which should lead to higher charter rates for those that remain.

My clients don't own OMI, but some of them own Teekay Shipping Corp., which is in the same business and has somewhat similar fundamentals. Teekay, up 57 percent in the past year, has a debt-to-equity ratio of about 73 percent vs. OMI's 124 percent. It, too, sells for 5 times earnings.

Second cheapest among the double-your-money stocks is Ryland Group Inc., a home builder and mortgage banker with headquarters in Calabasas. Ryland shares sell for 7 times recent earnings and less than 7 times estimated 2001 earnings.

I don't own Ryland but we do own Del Webb Corp. in portfolios at Dreman Value Management, where I am a managing director. At about 8 times earnings, Del Webb is the fourth-cheapest stock in the group. It, too, is a homebuilder, and has recently attracted a takeover offer from Pulte Corp.

Third cheapest is Loews Corp., a New York company controlled by the Tisch family. Loews owns most of CNA Financial Corp., half of Diamond Offshore Drilling Inc. and all of Lorillard Inc., the tobacco company. I've recommended Loews in this column on several occasions since November 1998, and I own it for clients.

Even after rising 116 percent in the past year, Loews stock sells for about 8 times earnings, 1.2 times book value and 0.6 times revenue. The legal risk from the tobacco operation is real but tolerable, in my opinion. It also accounts for the stock being so cheap.

The fifth-cheapest stock in the group is Mitchell Energy & Development Corp., an oil and gas exploration and production firm with headquarters in The Woodlands, Texas. The company enjoyed a 33 percent return on capital in 2000 and the stock sells for less than 9 times recent earnings.

Some exceptions

Stocks like these, which have doubled and yet still appear cheap, are definitely the exceptions. As a rule, I'd hesitate to buy a stock that has doubled in 12 months. They are generally expensive.

A dozen of the 147 stocks that doubled in the past year now sell for 100 times earnings or more. Another 16 sport P/E ratios of 50 to 100.

There are 26 stocks in the group that have no P/E ratio. In many cases that's because recent earnings are negative. In some cases, the stocks are so new that the company doesn't yet have a four-quarter earnings history.

The stock with the highest P/E, a biopharmaceutical company in Piscataway, N.J., called Enzon Inc., fetches 454 times recent earnings.

The biggest gainers in the group were Emex Corp., up 593 percent; Scios Inc.,.up 514 percent; and Serologicals Corp., up 499 percent. These stocks are so far from my normal playing field -- deep value stocks -- that I have never before researched them.

Emex, based in New York, develops oil and gas properties and is also involved in fuel-cell research. It has posted losses for nine consecutive quarters, and sells for 197 times book value (corporate net worth per share) and 4,462 times revenue. It strikes me as a potential short sale.

Scios, based in Sunnyvale, Calif., is a bio-pharmaceutical company developing a variety of drugs, including one to treat congestive heart failure. It has posted losses for 11 quarters in a row, has debt equal to 255 percent of stockholders' equity, and has seen some insider selling recently. This, too, strikes me as a potential short.

Serologicals, based in Norcross, Ga., appears on much sounder footing, though it is too expensive for a cheapskate like me. It has almost no debt, sells for 32 times earnings, and has shown a profit in 19 of the past 20 quarters. The company sells human antibodies and other products to major health care companies.

Now let's return to the premise that happiness is a stock that doubles in a year. Frankly, I doubt it. It seems to me that happiness is a port folio that rises 20 percent a year.

It's not that I object to king-sized gains when they happen to occur. But it's still the average result that really counts.

John Dorfman is a columnist for Bloomberg News.

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