Perhaps my most off-the-beaten path pick is Southern Peru Copper, a mining company based in Lima, Peru, whose shares are traded on the New York Stock Exchange. Copper prices have fallen steeply, as they always do in economic slowdowns. Earnings for this year are expected to come in at 41 cents a share, down from US$1.16 in 2000. The stock is down 29 percent and sells for 11 times earnings.
Crane Co, based in Stamford, Connecticut, makes vending machines, airplane brakes, pumps, valves and other industrial goods. It earned a 21 percent return on equity last year. This fiscal year (ending in January), analysts expect earnings to dip to $1.68 a share from US$1.75 last year. The stock is down 24 percent through yesterday. It offers a 3.7 percent yield and trades at 12 times earnings.
Robert Mondavi, from Oakville, California, makes wine under the Robert Mondavi name and other labels. Over the past five years it has shown 12 percent earnings growth and 16 percent sales growth. Revenue and earnings tumbled in the third quarter, in large part because restaurants and hotels ordered less wine after the Sept. 11 terrorist attacks.
I think the stock, at 12 times earnings, looks well positioned for a bounce.
Reebok, from Canton, Massachusetts, is a fashion-conscious athletic shoemaker. It also makes casual shoes under the Rockport brand. Its earnings have risen eight straight quarters (on a year-over-year basis) yet the stock is down 25 percent this year and sells for 12 times earnings.
Bandag, based in Muscatine, Iowa, makes equipment for retreading tires and also sells new and retread tires. A more prosaic business may not exist on this planet, yet the stock quadrupled between 1985 and 1991.
But since the end of 1994, it has fallen to about US$26 from US$60.
With a dividend yield of 4.7 percent, debt only 24 percent of equity and a price-earnings ratio of 13, I think Bandag should show some gains next year.
John Dorfman, president of Dorfman Investments in Boston, is a columnist for Bloomberg News. The opinions expressed are his own.
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