Small Companies Moving to Big League
By Saghir Aslam
Irvine , CA

 

(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)

Don't call them small fries anymore.

Thanks to the big run-up since the March bear market low. Some of the companies that had seen their market values shrink below $1billion – qualifying them as small-capitalization stocks-now are back among the nation's elite companies as big caps valued at $3billion or more.

When you invest in good companies, have patience you insha Allah will reap big rewards. Here is living example. How these companies were destroyed, but have came back up like gang busters. It is the result of good planning and patience.

The fact these companies have dusted off part of the recession's soot is comfort for investors who hope the market's rebound to 14-month highs will last. It's important small-cap companiesoutperform; otherwise, it's hard for me to be lieve it's the start of a new bull market. Companies regaining big-cap status have:

Proved themselves in the downturn. After the rally in battered bank stocks, Fifth Third Bancorp posted the biggest small-to-large cap shift.

In March, investors were suspicious of all banks' viability but now they realize many will survive, thanks to improving business and more lenient accounting rules. Same for insurers such as Genworth Financial. After dumping shares of many insurers, investors now realize why the industry's strong cash flow is such an attractive long-term investment.

Moved quickly to ease their cash crunch when the credit markets healed. Investors are pleased Hertz refinanced part of its $4 billion in debt tied to financing its fleet of rental cars. Raising $1.2 billion in October eased worries that Hertz would face intense financial stress. Likewise, MGM Mirage pushed back much of the debt maturing this year to 2010 and 2011.

Stayed globally focused. With the US economy growing more slowly than Asia and Latin America, investors see companies such as Tupperware, which gets more than half its revenue from emerging nation, as a play on growth.

Since the lowes of the market world wide emerging markets have been up dramatically again but it takes patience. When the market start to junk many people lost patience and lashed out some at the lowest send others little above. One's who stayed in the market are smiling today. Some of the funds and money managers are up over 60% - see once again the patience paid out. There was time trillions of dollars were sitting out to go back into the market. Staggering amount.

 

Tapped new markets or products. Human Genome Sciences is testing a promising drug for lupus, a disease that's long stumped researchers and it's the kind of reborn large-cap stock that may continue to lead. "Every other investor thought the stock was hopeless when (it) was on its knees.

(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr. Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, or does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr. Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr. Aslam does not have anything for sale.)

 


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Editor: Akhtar M. Faruqui
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