NEW YORK (CNN/Money) -
With the markets just ending their third straight losing year, most analysts are expecting stocks to show some growth in 2003, and two equity strategists appeared on CNNfn to suggest stocks that might move higher in the new year.
Dan Veru, portfolio manager with Palisade Capital Management, believes discount retailers such as Big Lots will continue to perform well.
"You may go in for X and Y, but buy A and B. It's a great concept and they're in very good markets," he noted. "The stock got ahead of itself in the middle part of last year when it reached almost $20 a share. We used that opportunity to sell our position, but at these levels in the $12-ish range we think this is a great opportunity to buy a good growth company."
| Dan Veru's picks
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Veru says an improving economy will benefit his second selection, Genesee & Wyoming.
"We believe that as the economy continues to recover, you want to own railroads in early cyclical recovery, and Genesee & Wyoming is very well positioned for that," he mentioned. "You've got to move coal around, you've got to move wheat, and they actually benefit from the cold weather in the Northeast, because they move a lot of road salt."
Cooper Cos. is Veru's final pick. "This is a stock that I've owned personally for the last 3-1/2 years. It's a core holding in our institutional portfolio. It's the dominant maker of specialty contact lenses, and they just actually reported a very solid quarter. But some analysts looked at it and came away with some different conclusions based on what they saw. I personally disagree -- I think this company has done a phenomenal job growing its business. Those contacts for people having astigmatism is growing at a significantly greater rate than the ordinary commodity type of contact lenses. This is a great opportunity at 12 times earnings."
Funds under Veru's management own stakes in the companies mentioned.
Shares of Big Lots (BLI: up $0.34 to $13.57, Research, Estimates) are in a 52-week range of $19.90 to $9.75.
Genesee & Wyoming (GWR: up $0.19 to $20.54, Research, Estimates) shares have been between $26.30 and $15.70 in the past year.
Shares of Cooper Cos. (COO: down $0.04 to $24.98, Research, Estimates) are in a 52-week range of $31.47 to $19.17.
Paul Hogan, portfolio manager with Fenimore Asset Management, suggests a position in home service firm ServiceMaster.
| Paul Hogan's picks
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"They have over 11 million customers throughout the United States. And what's interesting about this company is there is a new sheriff in town. He's been there for about a year and a half now, and he has really focused the company on a few of their more successful brands. And he's been divesting divisions that have been non-core," he said. "They take the cash they get from the proceeds of the sales and they put that towards paying down their long-term debt. They've cut their long-term debt in half."
Hogan's other pick is Ross Stores. "It's an off-price retailer, but this is name-brand apparel. And their sales are up about 19 percent this year, and the stock is only trading at 14 times, so we think there is a great value here in this company," he noted. "They've only got 510 stores, and they can double their store base over the next five years, so it's a very compelling value. All they have to do is keep doing what they've been doing."
Shares of ServiceMaster (SVM: up $0.12 to $11.22, Research, Estimates) are in a 52-week range of $15.50 to $8.89.
Ross Stores (ROST: up $0.98 to $43.37, Research, Estimates) have been between $42.24 and $31.70 in the past year.
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