Value added.Bill Thomason looks for fast-growing but inexpensive stocks For Bill Thomason, value manager and contrarian, bad news for a stock means a buying opportunity. Thomason, president and chief investment officer of Thomason Capital Management L.L.C. in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , searches for stocks with good growth prospects that have recently suffered "temporary glitches"--an earnings shortfall or unsuccessful product launch--leading other investors to sell their shares. These stocks could be revived by, say, a change in management or the sale of an unprofitable division. "I'm looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. growth-oriented stocks but at a value," those that have the potential to grow 15% to 20% a year, says Thomason. He also searches for stocks that are inexpensive relative to their sectors. Of course, with 60% of the $10 million Thomason Capital/SRI Equity Fund he manages invested in high-flying technology stocks, finding cheap stocks with tremendous growth potential is easy. Thomason's combination of gut instinct and fundamental analysis, aided by his healthy position in tech stocks, has helped boost his fund's year-to-date return to 26.57% as of October 29. Global Crossing (Nasdaq: GBLX GBLX Global Crossing Ltd. (stock symbol) ) fits Thomason's criteria. The stock of the Hamilton, Bermuda, provider of long distance and global Internet services has been hammered recently. He likes the Web hosting Making a Web site available on the Internet. Many ISPs host a few personal Web pages for an individual at no additional cost above the monthly service fee, but the address is subordinate to the ISP; for example, www.friendlyisp.com/pat_smith. business GBLX will obtain as a result of its acquisition of Frontier Communications. Further, Global Crossing is building its main business--undersea communications cables--through acquisitions and strategic alliances in Latin America and Asia. He also likes Informix Corp. (Nasdaq: IFMX IFMX Informix Corporation ), a Menlo Park, California Menlo Park is a city in San Mateo County, California in the United States of America. It is located at latitude 37°29' North, longitude 122°9' East. Menlo Park had 30,785 inhabitants as of the 2000 U.S. Census. , provider of relational database management software for government and business. The company recently entered into a deal with Red Hat Inc. (Nasdaq: RHAT RHAT Red Hat (stock symbol) RHAT Rainwater Harvesting Association of Tanzania RHAT Register Hba Attributes ) to provide software for its Linux operating system, a potential rival to Microsoft Corp.'s (Nasdaq: MSFT MSFT Microsoft (stock symbol) MSFT Movimento Sociale Fiamma Tricolore (Italy) MSFT Multi-Stage Fitness Test MSFT Master of Science in Family Therapy MSFT Macalester Students for Fair Trade ) Windows' OS. Chiron Corp. (Nasdaq: CHIR CHIR Chiricahua National Monument (US National Park Service) ), a biotechnology firm in Emeryville, California, is a riskier play, Thomason admits, since its fortunes rise and fall with how successful its new drugs are, which are in the early development stage. Still, the company could use its $1.5 billion in free cash flow to buy another biotech or pharmaceutical firm with drugs that are closer to hitting the market. Thomason's last two picks are in the financial services arena--both of which should benefit from the recently passed Financial Services Modernization Act. Allstate Corp. (NYSE NYSE See: New York Stock Exchange : ALL), a Northbrook, Illinois, insurance firm, was recently hurt by hurricane- and disaster-related claims, but could either be an acquirer or takeover target Takeover target A company that is the object of a takeover attempt, friendly or hostile. takeover target See target company. . And Citigroup (NYSE: C), the New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. financial services giant, stands to benefit greatly from its acquisition of San Francisco investment bank Hambrecht & Quist Group, a powerhouse in underwriting high-flying technology and Internet stocks.
Thomason's Temporarily Troubled Stocks
P/E on
12-Month Projected Est. 5-Yr.
Company Price 1999 Annual EPS
Exchange: Symbol Price(*) Target Earnings Growth
Allstate Corp. $28.06 $60 7.4 9.8%
NYSE: ALL
Chiron Corp. 34.13 55 12.7 24.7
Nasdaq: CHIR
Citigroup 56.50 100 24.6 13.7
NYSE: C
Global Crossing 45.44 70 N/A 45.0
Nasdaq: GBLX
Informix Corp. 12.50 25 N/A 15.0
Nasdaq: IFMX
Company
Exchange: Symbol Why Stock Will Outperform
Allstate Corp. * Insurance firm could become an acquirer or
NYSE: ALL acquiree as industry consolidates more
rapidly in the wake of financial services
overhaul
Chiron Corp. * Biotech firm could get boost from strong
Nasdaq: CHIR vaccine sales and a growing drug pipeline
Citigroup * Financial services giant's acquisition of
NYSE: C Hambrecht & Quist could build up its presence
in high-tech investment banking deals
Global Crossing * Undersea cable business, providing Internet
Nasdaq: GBLX and other communications services, expanding
in Asia and Latin America
Informix Corp. * Deal with Red Hat to provide software for
Nasdaq: IFMX its Linux operating system could spur shares
(*) Closing price as of 11/19/99 Source: Bill Thomason Capital Management; Yahoo! Finance. |
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