Barron's Interview Phil Foreman
858 views
Rate Now: 1 2 3 4

average rating: 0.00 / 0 ratings
Created by barrons3
DESCRIPTION:

Date updated:07-04-2009

Talking With Phil Foreman, Investment Manager of Principal Capital Appreciation Fund (CMNWX). Principal Capital Appreciation Fund looks for highly profitable companies that can swamp the competition, such as Nike and Microsoft.

symbol name last price % change open
  • +
  • OXY
    Occidental Pet
  • $82.14
  • +2.69%
  • $81.23

He also focuses on companies that can increase revenue at 3% or more each year. "A good company should grow faster than inflation," he argues. Robust free cash flow is another "thumbs up" signal. A company's size, however, doesn't matter to Foreman. He is willing to buy anything from a multinational oil company like Occidental Petroleum (OXY) -- "they're one of the lowest-cost producers of oil with a good success record in exploration" -- to a relatively unknown freight-forwarding firm such as Expeditors International of Washington (EXPD), as long as the firm produces free cash flow, a high net return on capital and barriers to new entrants. While toughest to find, the latter is the most crucial, he says.

People owning OXY also tend to own: AAALLAPCBUDCOPCVXDOW

TheStreet.com Rating: B What is this?

  • +
  • EXPD
    Expeditors Intern
  • $32.70
  • +1.62%
  • $32.58

In the case of Expeditors, a stock that the fund has owned since 1998, the business edge is its compensation structure. "Its rivals were unionized or otherwise had less flexible approaches to pay, but Expeditors' branch managers can be paid based on how profitable their branches are," he explains. Meanwhile, the company doesn't need much capital, because of the niche it fills in the otherwise capital-intensive business of freight shipping. "It has contracts with shipyards and railroads to get freight in and out of ports," Foreman rhapsodizes. "It can fill up a ship in Asia for one of its clients in days, and get it to the West Coast in record time." The boom in two-way trade across the Pacific has been great news for Expeditors, whose stock price has climbed from a split-adjusted 10.80 a share in early 2000 to about 33 a share today.

People owning EXPD also tend to own: INAPJSDABAMCNICOHFCE-BLM

TheStreet.com Rating: C+ What is this?

  • +
  • DNEX
    Dionex Corporatio
  • $70.10
  • +1.07%
  • $69.99

One he owns is Dionex (DNEX), another relatively small company (with market-capitalization of about $1.1 billion) he believes has the potential to become a big player as more customers sign up for its water-testing services, many of which are patent-protected. The company's stock has doubled since Foreman bought it in 2003, and now trades at around 60, reflecting growing global demand for its services, as well as a high market share. "Water testing is needed by pharmaceutical companies; it is used by people trying to control water pollution [and] by food companies trying to analyze what kinds of water compounds exist in the products they are producing," Foreman explains.

People owning DNEX also tend to own: AMGAMTBCRBEASBEAVCERNCOGN

TheStreet.com Rating: B What is this?

  • +
  • NKE
    Nike Inc Cl B
  • $64.49
  • +0.89%
  • $64.82

Foreman likes to hang on to stocks as long as the companies remain solid businesses, an approach that ties in well with the fund's historic approach. Current positions include Nike (NKE), first added to the portfolio back in 1986. "We've owned it since basketball shoes became a 'must own' item for consumers," Foreman says.

People owning NKE also tend to own: AXPBNICMCSKCOPCOSTGEIR

TheStreet.com Rating: A- What is this?

  • +
  • MSFT
    Microsoft Corpora
  • $29.94
  • +1.08%
  • $29.74

he fund has owned Microsoft (MSFT) stock since 1987, and Foreman has hung on to it, despite the fact that growth in both profits and revenues has slowed significantly. "It may be slower-growing, but it has also become more profitable," he says of the software business. "And growth should be in excess of inflation." In addition, he is convinced Microsoft's Windows franchise won't be threatened by Apple or other rivals, including open-source software providers.

People owning MSFT also tend to own: AAPLAMDCSCODELLGOOGIBMINTC

TheStreet.com Rating: B What is this?

  • +
  • SCHW
    The Charles Schwa
  • $18.20
  • -0.27%
  • $18.39

And which companies are beneficiaries of the rising savings rate? Charles Schwab (SCHW) is one Foreman cites. "We'll look at any company that helps investors save money by offering annuities, [certificates of deposit], stocks or mutual funds, or advice in managing money," he says. It is an important component of a portfolio built to win.

People owning SCHW also tend to own: BRCDCEBAYEMCFCFSFLEXGE

TheStreet.com Rating: C+ What is this?

Portfolio not tracked!

Comments not available

ADD YOUR COMMENTS:

Dividend Stocks for the Week

By Jonas Elmerraji Posted on Nov. 24, 2009 Don’t dismiss dividends right now. While stocks may have made significant strides in the rally that’s taken hold of the m...

11.24.09 | 11:36 AM
This Week's 'Barron's' Roundup

By Roberto Pedone Posted on Nov. 24, 2009 10 Terrific Dividend Stocks: This Barron’s article highlights 10 high-quality dividend-paying stocks for investors who’re ...

11.24.09 | 08:05 AM
Rocket Stocks for the Week

By Jonas Elmerraji Posted on Nov. 23, 2009 As well as broad-based indexes have performed in the last few months, Stockpickr's weekly Rocket Stocks list has managed to d...

11.23.09 | 10:34 AM
Cramer's Take on Headline Stocks...

Not a Stockpickr member? Join the community today -- for free.Regardless of why a stock is in the news, it never hurts to hear what a professional investor has to say about...

11.20.09 | 11:48 AM
more articles
Banks to lead us in economic rec...
11.24.09 | 23:55 PM From author graspthemarket
Boycott Mad Money
11.24.09 | 23:14 PM From author Searenity Research
General market Technical Analysi...
11.14.07 | 22:55 PM From author ZA
The Presidential/Political Thread
01.02.08 | 08:05 AM From author Dave Cox
more forums
Q. OK, what would it take to make g...
11.24.09 | 18:01 PM Asked by alchemist

A. A stronger dollar, reduction in
government debt, gold backing of the
dollar.

today 's lists
Earnings Announcements

Here is a list of some of the companies that will report earnings tomorrow (Nov. 25, 2009). For some of the companies below, EPS estimates* are provided. * Analyst op... more

Stocks With Unusual Option Activity

Unusually active options can often indicate that a major event in a stock is about to take place, or that unsophisticated investors (using options in lieu of leverage) are ... more

Dogs of the Dow

Here are the 10 stocks in the Dow Jones Industrial Average stocks with the highest yields as of the market close on June 2, 2009. more