Good buying opportunities
Interview: Banc One Investment Advisors---Yturri, Lynn---Fund Manager
>> ford motor is recalling close to 30,000 police and taxi versions of its crown victoria sudan because the wheems may crack t national highway traffic safety administration says some wheels may develop cracks that can result in rapid loss of air from the tires. the recalled cars are made from august 18th through 2001 to september 22, 20002. dealers will inspect and replace those wheels t stock closed down a penny.
>> r j ren nomds tobacco says the securities and exchange commission has started a formal probe into its dispensing practices. they are looking into whether certain costs should be qualified individually. in a regulatory filing r.j.r. received a subpoena on july 3rd. the tobacco maker says it wants to keep the information secret. shares of r.j.r. and altria group, as you can seerks dropped today, r.j.r. by greart percentage thannal tree a the s&p 500 may have closed flat this week. our next guest says times like these may be good buying opportunities for stocks . linda yuturey is fund manager of the one group equity fund part of banc one.
>> let’s talk about this week as it made its way through to a fairly typical quiet friday overall in the middle of this summer. what do you make of this week for stocks 1.
>> remember august seemed to be a boring month historically. i think this week we saw the dow out perform the other averages. we’ve been in a consolidating period for a couple of months. i think what we are seeing is rotation, rather than price declines, digesting the big advance of the spring, we are seeing a rotation of groups, and now it’s the dow jones turns to move up and maybe nasdaq and technology stocks to move lowers.
>> certainly technology had the biggest gains at the beginning of the year. you see people moving out of that and into other opportunities.
>> well, exactly. plus it’s an opportunity to take profits.
>> a lot of the big winners of the year are suspect quality names where evaluation is a problem. it’s a good idea to lock in gains, move money to lagging groups. we’ve seen the dividend pairs underperform. the nondividend pairs over the last six weeks. i think that’s giving us an opportunity to raise portfolio yield, by adding to some of preferred stocks , electric utilities and some selected high yield, high quality growth companies.
>> how much are rising rates affecting stocks and how, if it is, changing your investment strategy? how so?
>> well, no doubt we are all afraid that the interest rate move will get away from us on the upside. we’ve seen interest rates sensitive groups like financials electric utilities, consumer discretionary stocks lag the overall market in here. but frankly, you know, looking at what happened in the bond market this week, signs of stability, it looks like the move in rates has been a little overdone. so i’ve been taking advantage of the weakness in some of these groups to build some positions in some electric utilities and some higher yield categories, boosting the overall yield on my portfolio about 10%.
>> uh-huh.
>> i think a 10% pay raise sounds pretty good to me.
>> healthcare is always an interesting group. what have you sold recently and why do you favor other stocks as opposed healthcare right now? why do you think it’s time to get out of some of these names?
>> i’ve done some adjustments in the portfolio in several industries, particularly healthcare. i’m disappointed at the price action of the pharmaceutical stocks , really ever since they announced earnings about the middle of july. so i’ve been taking profits in names like oom jen, wyeth, allergan, abbott labs, and moving that money into a little more diversity in the healthcare area. things like cardinal health that were beaten down last week and hospital corporation of america.
>> why pick up cardinal and h.c.a. at this point, when other names are dealing with medicare and medicaid issue such as tenet healthcare and others.
>> companies that deal with medicare have a history of having a problem and causing some readjustments in the financials from time to time. i think that’s just part of the realistic scene when you work with medicare adjustments are going to have to be made along the way. h.c.a., it’s a valuation call, 5 to 32 price move. cardinal, down big last week. seems like an overreaction, lowered their growth rates. still 15% gropth sounds good to me. i’ve also been adding to a couple other laggards in that healthcare. merck, and johnson & johnson which have also lagged in here. so we are playing a valuation call.
>> we have about 30 seconds left. what do you think is the biggest risk to the market right now in 30 seconds or less?
>> that the economy doesn’t get revved up; that the job growth doesn’t resume. if we don’t see job growth pretty quick, then think we are all in trouble in this recovery.
>> being keeping and eye on those numbers as they come in. linda yuturey, thank you very much for your time.
>> barr labs is making its move. the number two maker of generic drugs is launching new oral contraceptives to bump johnson & johnson in the top spot in that market.
