When looking for a quality investment, it is important to remember that "value" and "cheap" are not synonymous.
Look for financially strong companies with strong balance sheets and track records of success. Look for distinct products and services. Look for seasoned management that holds a personal financial stake in their firms, thereby inextricably linking their interests with those of their shareholders.
In today's world of hot stocks, mega-mergers and professional managers, these CEOs are a rare and precious breed.
Given today's economic uncertainty, readers should not be too surprised to see another shift in the value/growth paradigm. But remind yourself to be a long-term investor. Value investing will likely fall out of grace on Wall Street several more times in our lifetimes, but the true test of the contrarian investor is to have the dedication and patience to stay on the roomy side of the seesaw.
A Few Value Choices
Here are some of my own value picks for 2002:
My favorite companies are those with strong brands, long track records of growth and consistent earnings. Consider furniture manufacturer Herman Miller. The company's progressive employment practices and state-of-the-art office furniture rank it as one of the best companies in America. With its popular ergonomic Aeron chair, this stock could be sitting pretty in 2002.
Another company potentially worth adding to your portfolio is Lee Enterprises. Lee owns 23 daily and more than 100 weekly newspapers in small and medium-sized markets throughout the Midwest and Northwest. As the newspaper industry continues to consolidate, Lee would be an attractive takeover candidate, which would have a very positive effect on Lee's share price.
One additional company worth considering is ServiceMaster Company. The company has "mastered" the art of providing housecleaning, pest control and landscaping services to more than 12 million customers around the world. The company's best-known brands include Merry Maids, Terminix and TruGreen ChemLawn.
Mellody Hobson, president of Ariel Capital Management in Chicago, is GoodMorning America's personal finance expert. Click here to visit her Web site, Ariel Mutual Funds.com. Ariel associates Matthew Yale and Anne Roche contributed to this report.