Peggy Farley, president and CEO of Ascent/Meredith Asset Management, sees small-cap stocks continuing their bull run for six months at least. Stocks with market caps under $1 billion did well for Farley, whose small-cap portfolio gained 50% in 2003.
In 2004, she is betting on oil-and-gas drillers and some fallen techs. Heading her list: Oil States International (OIS), a provider of specialty products and services to drilling companies worldwide, and ADC Telecom (ADCT
), a global supplier of broadband network gear that delivers high-speed Net, data, video, and voice services to consumers. Both are near their 52-week highs. Farley says Oil States will gain strongly from the recovery she sees in U.S. drilling this year and next.
Based on her 2004 earnings estimate of $1.25 a share, the stock is trading at a modest price-earnings ratio of 12. ADC, once a highflier -- hitting 49 in 2000 after several splits -- could double in a year, says Farley. Business is turning around, she notes. She figures ADC will earn 10 cents a share in 2004, after a loss in 2003.Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. See Gene Marcial on Fridays at 1:20 p.m. EST on CNNfn's The Money Gang.