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Business Week: August 17, 1998
Inside Wall Street
TOP TIPS IN SMALL-CAPS
Worried about small-cap stocks in this market? Not Susan French of Northern Trust Global Investments: She wouldn't have any other kind. French has outscored the small-stock indexes with her Small-Cap Fund, invested in 1,000 companies with average caps of $900 million. Last year, her fund gained 29.7%, beating the Russell 2000 index' gain of 22%. And this year through July 31, the fund lost 1.71%, vs. Russell's wider loss of 3.4%.
Topping her favorites in the portfolio: Charming Shoppes (CHRS), Integrated Device Technology (IDTI), and Glenayre Technologies (GEMS). French notes that they all have similar attributes: They're out-of-favor stocks, selling well below their intrinsic worth. Also they're cheap, compared with peers.
Charming Shoppes has 1,135 stores in 43 states specializing in moderately priced women's apparel. The stock is at 4 9/16, down from 7 3/16 last September. Sales for the year ended Jan. 31, 1998, of $1.01 billion matched those of a year ago. Earnings of 15 cents a share are expected for fiscal 1999, and 25 cents for 2000.
Integrated Device, a maker of high-performance circuits, is trading at 5 9/16--close to its 52-week low of 5. It hit 16 1/2 in mid-February. Some analysts see a big turnaround next year, estimating earnings of 53 cents a share, vs. a projected loss of 64 cents this year.
Glenayre, a worldwide provider of telecom gear and related software, now at 7 3/8 a share, is also trading close to its 52-week low. But it's expected to show earnings of 50 cents a share this year, vs. last year's loss of $1.28.
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