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James E. Nevels, chairman and CEO of the Swarthmore Group in West Chester, Pennsylvania, believes his stock picks from last year will give him peace of mind this year. “We’re in a difficult environment, but I see recovery by the second quarter of 2002,” forecasts the portfolio manager who manages more than $1.2 billion for 400 wealthy clients. As the economy moved into recession, the exclusive portfolio Nevels crafted for BLACK ENTERPRISE suffered a 19.02% loss vs. a loss of 14.79% by the S&P 500 for the same period.
Nevels intends to stick with his firm’s approach to picking stocks, which is concentrating on earnings growth.
American International Group (NYSE: AIG) “is a great company, and, with Federal Reserve rate cuts passing through, it should continue to thrive,” says Nevels. He expects an upswing in the $82.56 stock price AIG posted in November to $110 within 12 months. Why? Nevels cites AIG’s CEO Maurice “Hank” Greenberg’s remarks: “Demand for property-casualty insurance has soared as the risk of terrorism has become a widespread and grave concern.”
Although EMC Corp. (NYSE: EMC), the leading data storage company, took an ugly tumble from $84.25 in November 2000 to $17.85, Nevels says the company is a “hold” because “management is excellent at cutting costs.” He asserts that, in 12 months, EMC should double in price and reach $30 because the Hopkinton, Massachusetts-based firm recently agreed to share its technology in a venture with Compaq.
Nevels still likes Citigroup (NYSE: C) because “they’re masters of controlling costs, diversifying well, and continuing to maintain a low exposure on the credit side,” he says. He also says the New York-based banking titan was still a bargain at $50.55 in November even with a 6.56% gain over the previous 12 months. Considering the varied financial services it provides, Nevels expects Citigroup to rocket to $70 in 12 months.
Nevels believes the world’s largest manufacturer of medical devices, Medtronic (NYSE: MDT), will power to profits on the strength of its pacemakers and other cardiac implants that treat heart disorders. Medtronic lost 17.77% since it was recommended, at $44.04, and Nevels forecasts a $60 high for the Minneapolis-based conglomerate over the next 12 months.
Nevels still likes Tyco International (NYSE: TYC) because its stock price edged up 5.83% to $59.40 fro $56.12, and because of the firm’s marketing of Visionics Corp.’s face-recognition system, which will be a highly sought security enhancement in the wake of the September 11 terrorist attacks. Nevels projects the stock price will rise to around $75 over the next 12 months