Value Line's Yeary Sees Gains by Small Stocks: Bloomberg Forum
Bloomberg News
December 31, 1998, 4:08 p.m. PT
New York, Dec. 31 (Bloomberg) -- The Russell 2000 Index of
small stocks will rise by 15 percent to 20 percent in 1999, said
Steven Yeary, portfolio manager at Value Line Asset Management
Inc., a unit of the publishing and investment-management company.
Yeary, 43, made that prediction ''based just on the earnings-
growth'' potential of the small companies tracked by Value Line,
he said. ''We see the market going up at least as high as the
earnings growth'' of the companies.
The Russell 2000, which measures the performance of stocks
with small market capitalizations, has reflected the woes of that
segment of the market this year, declining 3.4 percent compared
with a 27 percent gain for the benchmark Standard & Poor's 500
Index. A year ago, the Russell 2000 rose 21 percent.
''This year is the anomaly because we've seen negative
returns in the small-cap market,'' Yeary told the Bloomberg
Forum. Yeary helps oversee assets of $250 million for
institutional shareholders.
Yeary favors the technology sector in the year ahead. He
recommends Mercury Interactive Corp., which makes Web-based
software that eliminates ''bugs'' from computer systems. He also
likes PRI Automation Inc., which makes automation systems for
semiconductor makers.
Yeary said stocks of companies with larger market
capitalizations may not grow at the same rate as smaller stocks
in the year ahead because the smaller, nimbler companies could
report better earnings.
''With large-cap stocks, we may see break-even, maybe
5 percent earnings growth,'' he said.
Small-cap stocks have done better in the fourth quarter than
at other times this year. The Russell index rose 16 percent since
Sept. 30.
Like other investment executives, Yeary has mixed feelings
about Internet stocks. He said the industry is here to stay but
that investors must be careful, at this early stage, to pick
stocks of companies that are likely to have staying power and be
in business in the years ahead.
''The Internet is going to be like the automobile industry
at the turn of the century -- or the PC business in the 1970s,
where we've gone from 500 companies down to three or four,''
Yeary said. ''We think the same will happen with the Internet. A
lot of companies are coming out now. In 10 years, we'll be
talking about the 10 winners.'' |
