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During his nine-year tenure at Robert Van Securities Inc., Senior Vice President and Director of Research Steven Singleton has been through many ups and downs with the stock market. The Oakland, California-based firm executes domestic, taxable, fixed-income trades as well as domestic and international equity trades for institutional clients and high-net-worth individuals. To deal with market uncertainty, Singleton uses a complex database system called ELROI, a proprietary research product that sifts through the expenditures, earnings, and net profits of more than 4,000 stocks. He and his team concentrate on finding companies that show signs of accelerated growth.
Singleton has honed in on fast-growing Internet businesses and oil-industry-related companies to make up his exclusive portfolio of stock picks for BLACK ENTERPRISE readers. Like many analysts, he believes oil-related stocks will outperform the market over the next 12 to 18 months. “Alternative energy could be the next technological revolution, similar to the technology boom of the last two decades, but it’s still uncertain as to whether we will see progress made in this new growth area in the near term,” says Singleton. “That said, with demand for domestic fuel sources high and reserves low, we continue to like oil services stocks.”
Singleton is optimistic about offshore oil drilling contractor Transocean Inc. (NYSE: RIG) and Baker Hughes Inc. (NYSE: BHI), a company that provides products and services to the global petroleum market. He thinks that both value stocks will thrive on current oil demand. “The real play in oil stocks will be to focus on those companies that provide drilling or servicing because [their] goal will be to increase inventory as demand increases,” says Singleton.
Two Internet companies Singleton says are continuing to show profits are Yahoo! Inc. (Nasdaq: YHOO), and eBay Inc. (Nasdaq: EBAY). Yahoo!, one of the world’s premier providers of Internet products and services, and eBay, an online marketplace, have both endured the technology boom and bust and are now concentrating on growing their businesses in foreign markets. The two companies have benefited from the shakeout in the Internet space, which left them greater market share and better growth projections.
Singleton says both companies are aggressively expanding their business models in Europe, Asia, and Latin America, where there is still room for Internet growth. “I think it has taken investors some time to understand and embrace the true growth potential of these companies,” he says. “After building an effective Internet structure in the U.S., these companies are realizing that their next big opportunity is overseas. Both Yahoo! and eBay are doing a lot of work, particularly in China, where there are five times as many people as there are here in the U.S.”
And the last company Singleton thinks has excellent prospects for growth is Starbucks Corp. (Nasdaq: SBUX), a company that purchases, roasts, and markets whole bean coffees in the U.S., Britain, Canada, Australia, and Thailand. Its practice of placing stores where there is heavy foot traffic, as well as its ability to tap into consumers’ desire for a “coffee drinking experience,” is