Emerging Markets Hit The Wall

Emerging Markets Hit The Wall

Following trends within the minority community was the focus of Nathan L. Lewis, head of the Equity Research Group at Atlanta-based Jackson Securities, when he offered stock selections in our Private Screening column last April. Lewis reasoned that companies owned and managed by minorities would be profitable “because those companies will target minority investors and consumers–the fastest growing in the United States.”

Although the premise for Lewis’ selections is sound, his four stock selections did not perform according to plan. His picks suffered a 11.78% loss during the period from Jan. 25, 2002, to Jan. 24, 2003. By comparison, the Dow Jones industrial average fell 17.37% and the Standard & Poor’s 500 index fell 23.99% during the same time period.

Lewis still believes in all of his selections, explaining, “The case for each of these companies has gotten stronger.” Radio One (Nasdaq: ROIA) has great potential because of its new deal to form a cable network with industry powerhouse Comcast (Nasdaq: CMCSA). Although Radio One stock fell 16.29%, going from $17.68 to $14.80, he says the deal allows the radio broadcasting company “to leverage its programming capability and knowledge of the urban market across platforms from radio to television.”

Univision (NYSE: UVN), the largest Spanish-language television company, suffered the largest loss among Lewis’ picks because of antitrust legal problems that blocked its proposed acquisition of Hispanic Broadcasting (NYSE: HBC), the largest Spanish-language radio company. Shares of Univision fell 25.54%, from $35.94 to $26.76, but Lewis feels the company will grow “because over the last decade, Spanish language TV advertising in the U.S. quadrupled,” and the Hispanic market in the U.S. continues to flourish.

Shares of Coca-Cola Co. (NYSE: KO) dropped 3.58%, going from $44.42 to $42.83, but Lewis says, its sound cost-cutting measures and new ads to attract customers will help it maintain its leadership position.

And finally, Sara Lee (NYSE: SLE) was down 1.72%, going from $20.88 to $20.52, showing its strength in spite of the struggling economy. Lewis says the company is operating more efficiently, and still offers a dividend, which bodes well for its future.

Nathan Lewis’ Private Screening Performance

Exchange: Symbol
Current Value
of $1,000
Radio One Inc. Nasdaq: ROIA -16.29% $837.10
Univision Comm. Inc. NYSE: UVN -25.54 744.57
Coca-Cola Co. NYSE: KO -3.58 964.21
Sara Lee Corp. NYSE: SLE -1.72 982.76
Portfolio Performance -11.78% $3,528.64