For Subscribers

Get the complete article now!

TWST: Chris, what are you suggesting to investors?

Mr. Haley: Our top stock recommendations are largely based on the relationship between expected earnings growth and the current earnings multiple. We also research return-on-invested-capital (ROIC) historical changes and prospective changes, which actually are quite supportive, and thus, reflected in multiples.

TWST: Chris, you mentioned earlier that you were high on TrizecHahn (NYSE:TZH).

Mr. Haley: Our two large cap picks are TrizecHahn and CarrAmerica Realty (NYSE:CRE). Our two small cap picks, our small to mid-, are Parkway Properties (NYSE:PKY) and CenterPoint Properties Trust (NYSE:CNT). Each of these companies is seeing improvement in their ROIC quotients. Three of the companies have seen significant estimate revisions on the upside, which we don’t think have been reflected in the stock prices. CarrAmerica has 40%-50% of their office portfolio in some of the strongest markets in the US, and it’s a cheaper way to play some of the more expensive West Coast REITs. Their buyback program, which was just put into place, and the sale of their executive suites business, plus a recently announced joint venture, enable the company to retain all the upside of their development portfolio.