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November 03, 2005

Ave Maria Fund ideas

Amey Stone

I spoke recently with George Schwartz, portfolio manager of the Ave Maria Fund, a stock fund that invests according to Catholic values (which basically means it avoids companies which have anything to do with abortion or pornography, or that provides benefits to unmarried couples).

We didn't talk about the fund's philosophy though. Instead I asked him what stocks he likes. Here are two ideas he gave me (in his words, with a few edits):

Diebold (DBD) makes ATM machines for banks and self-checkout machines for grocery stores. The company has been around for 140 years and has increased its dividend every year for last 51 years. It has low debt and is a financial powerhouse. But its earnings disappointed earlier this year and the shares fell from $57 to $36.

At that price it is a real bargain. It will earn $2 a share in earnings this year and $2.50 next year. Its dividend is 2.2% and I'm very confident that will be increased next year.

Fargo Electronics (FRGO) is a very small-cap name. It is a homeland security play since it makes printers and supplies for making high-tech identification cards, like driver's licenses and security access cards. It has no debt, high margins and is growing at a 14% to 15% annual rate. The stock is at $19. It is inexpensive for such a high quality company.

03:04 PM


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