The power of diversification.Electronics retailer's stock helps Hamilton Lewis' portfolio finish up for the year The portfolio: There's a good reason why investment pros keep harping on diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. : safety. Take Hamilton Lewis' Private Screening portfolio from December 1997. Over the past year, while the market buffeted tech stocks and healthcare issues like the ones Lewis (888-373-2082) chose, the Houston money manager finished the year up 14% thanks to Best Buy, a maker of retail consumer electronics. Best Buy, which went through a 2-for-1 split in May, rocketed well over 200% for the year. The outlook: As frustrating frus·trate tr.v. frus·trat·ed, frus·trat·ing, frus·trates 1. a. To prevent from accomplishing a purpose or fulfilling a desire; thwart: as it might be, Lewis says he'd recommend holding on to three of his four other picks. At one point during the year, United Health Care raced up to $75 a share, when the company was reported to be in merger talks with HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, giant Humana. The deal fell through, and United plunged to the $30-per-share range. The company remains a takeover candidate in Lewis' eyes. Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. equipment maker DSC (1) (Digital Signal Controller) A microcontroller and DSP combined on the same chip. It adds the interrupt-driven capabilities normally associated with a microcontroller to a DSP, which typically functions as a continuous process. See microcontroller and DSP. was recently snapped up by the French firm Alcatel. Lewis likes the industry and says stay put in DSC for future gains. Lewis believes Apex should turn around as soon as technology gets a better break in the market. The one stock Lewis would jostle is C-Cube. Instead, with the market likely to undergo some volatility in the near future, Lewis recommends buying into Gillette (NYSE NYSE See: New York Stock Exchange : G), a stock that--despite falling from a high of $62 to $42 this year--has a solid position in its consumer markets.
Current Price at
Stock (Exchange: Symbol) Price(*) Recommendation
Apex PC (Nasdaq: APEX) $18.75 $39.25
C-Cube Microsystems (Nasdaq: CUBE) 16.63 29.13
DSC Communications (Nasdaq:DIGI) 26.63(**) 27.75
United Healthcare (NYSE:UNH) 39.25 51.38
Best Buy Electronics (NYSE: BBY) 47.50 12.09(***)
Portfolio Average
Current Value
Total of $1,000
Stock (Exchange: Symbol) Return Investment
Apex PC (Nasdaq: APEX) - 52.2% $ 478
C-Cube MiCrosystems (Nasdaq: CUBE) - 42.9 571
DSC Communications (Nasdaq:DIGI) - 4.0 960
United Healthcare (NYSE:UNH) - 23.6 764
Best Buy Electronics (NYSE: BBY) 292.9 2,929
Portfolio Average 14.0% $5,702
Est. 5-Year
Annual
Stock (Exchange: Symbol) EPS Growth(**)
Apex PC (Nasdaq: APEX) 35.0%
C-Cube MiCrosystems (Nasdaq: CUBE) 26.3%
DSC Communications (Nasdaq:DIGI) 20.5%
United Healthcare (NYSE:UNH) 17.6%
Best Buy Electronics (NYSE: BBY) 21.7%
Portfolio Average
(*) As of 9/24/98. (**) Price reflects merger. (***) Price reflects stock split. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. from Zacks Investment Research Zacks Investment Research A firm that compiles earnings estimates and brokerage firm investment recommendations for thousands of publicly traded firms. . |
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