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Home-Run Hitters of 2004
Who needs steroids? These pumped-up analysts hit it out of the park.
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While the U.S. stock market generated respectable returns last year -- the Standard & Poor's 500 index was up 10.9 percent in 2004, versus the 10.4 percent it gained annually, on average, over the past 78 years -- selected stocks doubled, tripled and, in one case, even quadrupled in value. The analysts who recommended the purchase of the ten best-performing stocks of 2004 constitute Institutional Investor's Home-Run Hitters. One team member, Christopher Edmonds of Pritchard Capital Partners, hit the longest ball. The 40-year-old analyst highlighted Cheniere Energy, a small-capitalization liquefied-natural-gas-facilities developer whose stock rose 444.4 percent for the year.
As a group, II's small-cap stocks outperformed their bigger brethren, producing average returns of 313 percent versus 218 percent. That's similar to the performance characteristics of the market as a whole, as the Russell 2000 index of small-cap stocks returned 18.3 percent, well ahead of the S&P 500 index's nearly 11 percent gain.
Also in the small-cap space, Nicholas Danna at Sterne, Agee & Leach placed his chips on Monarch Casino & Resort, which rose 263.7 percent. D.A. Davidson & Co.'s John Rogers, a two-time winner, opted for Oregon Steel Mills, which rose 249.2 percent. In last year's ranking his long ball was large-cap Schnitzer Steel Industries, which gained 508.2 percent. Richard Rossi of Morgan Joseph & Co. picked Park-Ohio Holdings Corp., which rose 248.8 percent.
Two of our large-cap four-baggers are retailers: Kmart Holding Corp., recommended by UBS's Gary Balter, rose 313.2 percent; American Eagle Outfitters, picked by Wedbush Morgan Securities' Adrienne Tennant, posted a 188 percent return. Another large-cap hitter, Charles Wolf at Needham & Co., called the 201.4 percent rise in Apple Computer.
To select this year's Home-Run Hitters, we asked Norwalk, Connecticutbased FactSet Research Systems to list the five top-performing stocks with a market cap of between $75 million and $1 billion
and the five top performers with market caps above $1 billion. We excluded any initial public offerings launched in 2004 and shares trading at less than $5 on last year's first trading day. A stock's performance is defined as total return, with dividends reinvested.
We used data from Investars.com, a New Yorkbased research performance measurement company, as well as company Web sites and other sources to help pinpoint the analysts who covered each stock and determine when they made their recommendations. Winning analysts are those whose recommendations in force in 2004 produced the greatest total return. We excluded analysts at any firm that lead-managed a winning company's IPO within the past four years. Only fundamental analysts qualify; sponsored research was excluded from consideration.