In January 1995, I started offering readers a list of 10 stocks to consider for the year ahead, making my selections from the choices of market pros whose opinions I value. In five years of this exercise, my lists returned an annual average of 25 percent, compared with 28 percent for the benchmark Standard & Poor's 500-stock index. My sabbatical spared me the ignominy of almost certain losses from 2000 to 2001, but I'm back for another try for 2003 - a bit early, so you can do your stock shopping in time for Christmas.
Before we get to the numbers, a few warnings:
1. It's never easy to beat the market as a whole. Although my picks did pretty well, you would have been better off with an index fund from 1995 to 1999.
2. While the stocks below are selected for their prospective performance of the next 12 months, I do not believe in owning stocks for only a year. Think of this as a set of ideas for further study and, among the 10, search for the companies you want to own forever.
3. As it turned out, the portfolio is weighted toward smaller stocks, perhaps because they are simply more interesting than the big brand-name companies. The final list is well balanced by sector; but it includes four large-caps, four mid-caps and two small-caps.
4. No guarantees.
MONY Group (MNY): James Roumell, a Chevy Chase money manager with a sensational record and a deep-value style, won the Wall Street Journal's "dartboard" stock-picking title twice before the contest was discontinued. His pick for our 2003 list has been a public company for only four years. It's the former Mutual of New York, a venerable life insurance company that also owns a small mutual fund business (Enterpirse), a brokerage firm(Advest) and a municipal-bond house(Lebenthal). Roumell admits that MONY Group's management "cannot be described as stellar operators," but shares appear very cheap. The stock trades at about half its book value (net worth on the balance sheet). Also, says Roumell, "there is a real consolidation angle. MONY, with a market cap of $1 billion, has excellent assets to sell to other companies in a fragmented industry, and in November 2003 the firm reaches its fifth anniversary of "de-mutualization," which means that, by law, outsiders can acquire more than 5 percent of the stock without getting insurance commission approval. That could significantly boost demand for the stock, which is down 40 percent from its April High.