Newspaper article THE JOURNAL RECORD

Despite Changes, Growth Stocks Remain Popular

Newspaper article THE JOURNAL RECORD

Despite Changes, Growth Stocks Remain Popular

Article excerpt

By Susan Antilla

N.Y. Times News Service

NEW YORK _ Value is in. Growth is out. So why are some of the people who traditionally invest in value putting growth stocks in their portfolios?

Investors fell out of love with the go-go growth theme when the New Year dawned, opting instead for stodgier "value" stocks of companies selling on the cheap like GM or Caterpillar.

Growth stocks like Bristolers Squibb had been fashionable throughout the recession, as investors flocked to shares of companies that were known for making money in good times and bad.

Once signs of a recovery became apparent, though, shares of companies lumped in the value category _ particularly those among heavy industry companies that had languished in the recession _ became all the rage.

Growth stocks are generally thought to be those of companies whose earnings have consistently grown at a rate of 15 percent or greater each year, and whose prospects remain bright.

Growth issues typically sell at a premium to the overall stock market, because investors are willing to pay more for the reliability that a proven growth company offers.

Drug stocks were a big favorite in the last recession, offering perceived reliability of earnings to the investors who bid them up 61.2 percent in 1991 alone, while the Standard Poor's 500 rose a comparatively low 26.3 percent.

Value stocks, on the other hand, are often the market's dogs. To be added to a value portfolio, a stock must be selling at a price-tornings ratio below that of the overall market.

Other characteristics of value stocks include dividend yields higher than the overall market, and book values below the market.

Money managers are by no means bailing out of their value stocks, but several are starting to nibble at growth issues, feeling that the market has punished them enough.

"We are starting to see some of these growth companies coming down to levels where they are now in the value range," said one money manager, David Dreman of Dreman Value Management. "I would still recommend owning cyclicals, but I'd start to buy small positions in growth stocks now, too."

Dreman is considering shares of the oneme growth stars Eli Lilly and Becton, Dickinson as possible additions to his value portfolio. …

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