What To Watch Now That Things Are Looking Up

Posted 11:00 a.m. Nov 5, 1998 — Updated 11:00 a.m. Nov 5, 1998

RALEIGH — Given the pessimism that virtually blanketed the investment community just a few weeks ago, it's heartening to see the equity markets march upward again.

Some of the North Carolina companies we've mentioned over the past several weeks have been taking advantage of this newly found confidence among investors. Foremost among them isBiogen(BGEN/Nasdaq), which is actually a New Jersey company with a major manufacturing facility in Research Triangle Park.

Biogen has risen from $55 5/8 when I mentioned it in my Aug. 10, 1998, column to $72.50 last week. For now, these markets are riding an optimism sparked by back-to-back interest rates cuts implemented by theFederal Reserve.

But I still recommend caution going forward, and here's why: The Asian recessions already have been felt in third quarter earnings, which are up a minuscule 0.4 percent over last year. I see no reason for bullishness on earnings going into the fourth quarter, and if I'm right investors may once again take out their ire on stocks.

In tough markets to figure such as this one, investors often seek out high-yield, fundamentally sound companies whose stock is trading near their 52-week lows. That's because a solid dividend can be a hedge against stock price volatility.

Nothing is guaranteed on dividends going forward, but I went shopping and found 10 North Carolina stocks near their lows that over the past year have paid solid dividends. Here they are:

Bank of America(BAC/NYSE): 2.6 percent yield; low of $44

Boddie Noell(BNP/NYSE): 10.7 percent yield; low of $11 1/16

CCB(CCB/NYSE): 3.7 percent yield; low of $43 1/8

Highwoods Properties (HIW/NYSE): 7.7 percent yield; low of $22 3/4

Lance Inc. (LNCE/Nasdaq): 5.1 percent yield; low of $18 1/4

Public Service (PGS/NYSE): 4.3 percent yield; low of $19 1/8

Summit Properties(SMT/NYSE): 9.2 percent yield; low of $16 1/2

Tanger Factory Outlets (SKT/NYSE): 11 percent yield; low of $18 13/16

Triangle Bank (TGL/NYSE): 2.8% yield; low of $14 13/16

Winston Hotels(WXH/Nasdaq): 13.8% yield; low of $6 3/4So there's a shopping list. But first, do your own homework. I like them, but you've got to decide if they fit your investment philosophy.

In the meantime, here are two optimistic investing trends I've noted of late. First, small-cap stocks have come back into favor as evidenced by the fact that the Russell 2000 Small Cap Index is up 17 percent over the past two weeks compared to 3 percent for the S&P 500.

Secondly, short interest has fallen by 5 percent on the Nasdaq market, meaning fewer investors are betting stock prices will fall.

Now, should you decide to join the growing number of people doing their own investment research, where do you find it? My answer: The Internet. It's full of free and fee-based resources, but there also are scams you need to avoid. Be very wary, for example, of the thousands of free Internet newsletters that are floating all over cyberspace. Many are worth exactly what you pay: nothing.

Many of these newsletters tout certain stocks because the people who publish them are paid to do so. That's what the Securities and Exchange Commission alleged last week in bringing charges against 44 companies and individuals.

I avoid these free newsletters, but I constantly use the Internet to research companies and can usually find what I want for no fee. I've placed links to some good research sites on my Web page athttp://www.gibsonreport.com/page2.htm.And here are some of the best:

http://www.wsrn.com: Best free source of company research on the Web.

http://www.sec.gov/edgarhp.html: Gateway to research SEC filings.

http://www.prars.com: Public Register's Annual Report Service. Here, you can obtain free annual reports.Happy shopping, and have fun while you're at it.

Have a prosperous week. Dale Gibson is a Raleigh-based journalist who publishesThe Gibson Report,a weekly electronic newsletter focused on North Carolina business. Questions or comments may be directed to him by e-mail at dale@gibsonreport.com or by phone at 919-834-1033.

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