Holding out for Growth

By Anderson, James A. | Black Enterprise, September 1999 | Go to article overview

Holding out for Growth


Anderson, James A., Black Enterprise


Maceo Sloan says he's not fazed by the latest growth stock sell-off

A Strange thing happened to growth stocks this spring. Shares of companies that had been burning up he market--Lucent Technologies (NYSE: LU) and Merck (NYSE: MRK), to name a couple--stalled. In their place, it seemed that an unlikely cast of chemical companies, basic materials makers and retailers had stood up to take their turn in the spotlight.

All of which came as no great surprise to veteran money manager Maceo Sloan of NCM Capital Management. "Look over the really big gains, and you'll see that most of the upswing was concentrated on a very few companies, perhaps the market's 30 largest names," points out Sloan, who currently oversees $5 billion in assets. "That couldn't last forever."

But for Sloan, a growth manager, this was no time to start tinkering with his formula for choosing stocks. Those tried and true methods, in fact, have helped him propel the portfolio of the Dreyfus Third Century Fund (Nasdaq: DRTHX), which his firm manages, to average annual total returns of 24.32% over the last three years and 23.38% over five, 2 percentage points off the Standard & Poor's 500 index. In 1998, the fund posted a total return of 30.17%, beating the S&P 500 by 1.6 percentage points.

In fact, Sloan has held fast to some of the basic tenets of the "growth-at-a-reasonable-price" school. First, Sloan is willing to pay a premium to the market, that is a price-to-earnings multiple that as of press time exceeded the S&P 500's multiple of 28 times 1999 earnings. As a counterbalance, however, Sloan says a company's growth rate is going to have to come awfully close to that outsized P/E to get his money.

Secondly, Sloan says he likes to see a company that consistently increases earnings, typically over a five- to 10-year time frame. Finally, Sloan says he likes to spot earnings "surprises," instances where a company exceeds Wall Street analysts' expectations for its profits.

That said, one of Sloan's favorite picks, America Online (NYSE: AOL), doesn't quite fit his criteria. There's a good reason. Sloan says the company's dominant position on the Internet makes it hard to topple. Despite falling from $150 a share to $111.75 as of press time, Sloan says the stock could rocket off to $250 a share in the next year.

Meanwhile, another Sloan pick, casino operator Circus Circus Enterprises--now trading under the new name Mandalay Resort Group (NYSE: MBG)--has languished as Wall Street has cast doubts on a recent construction boom on Las Vegas' famed Strip. Sloan thinks the company will bounce back with a vengeance, however, from the $20-a-share range to the $50s in the next 12 months.

Sloan's remaining picks are conventional growth plays. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Holding out for Growth
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.