DM Stocks Beat Dow, Nasdaq for Q2

Stocks tracked in the DM News Portfolio outperformed the Dow Jones industrial average and the Nasdaq for the second quarter of 2003. The Portfolio increased 22 percent while the Dow rose only 12.4 percent and the Nasdaq 18.6 percent for the April-June period.

This is the stock market’s best quarterly showing since the last quarter of 2001, thanks to a three-month rally that began with much of corporate America reporting better-than-expected first-quarter profits and a swift end to the war in Iraq. For the year, the Dow is up 7.7 percent and the Nasdaq is up 21.5 percent, their first January-June gain since 1999.

Meanwhile, the DM News Portfolio is up 13.73 percent since January. Among the year’s big movers in the Portfolio:

* Metris Companies Inc., up 124.7 percent. Metris, which issues credit cards through a wholly owned subsidiary, continues to suffer from a high rate of consumer defaults because of the bad economy, but its stock has more than doubled since mid-March. The company has laid off 180 employees and cut costs to try to make it profitable again.

* Bombay Company, up 112.6 percent. Bombay has reported double-digit same-store increases every month since late 2002. For the 17 weeks ended May 31, same-store sales rose 24 percent while total revenue climbed 29 percent.

* Inc., up 92.3 percent. The company has ridden the tech wave despite pessimistic forecasts from analysts and price-to-earnings ratios similar to the height of the dot-com bubble. Last month, the company wrapped its operations that run Web stores for other companies into a new subsidiary. Amazon said the number of items sold by third parties through its Web site in the first quarter increased to 19 percent of items sold, up from 13 percent a year ago.

Other big gainers since January: MKTG Services, 87.5 percent; Checkfree Holdings, 75 percent; Cendant Corp., 74.8 percent; Geerlings & Wade, 71.4 percent; and DoubleClick Inc., 63.4 percent.

DM stocks that fell for the first six months include:

* Spiegel Group, down 80.6 percent. Spiegel filed for bankruptcy protection March 17 and has laid off more than 1,000 employees. It also has closed a teleservices division as well as sales and service centers to cut costs.

* RMH Teleservices Inc., down 58.9 percent. The company failed to meet analysts’ estimates for the second quarter and lowered its revenue forecasts for the year. Last week, RMH named a new chief financial officer and new general counsel.

Other big losers: Cross Media Marketing, which has filed for Chapter 11, down 56.4 percent; TeleTech Holdings, 47 percent; and Black Box Corp., 19.4 percent.

In other news, The Aristotle Corp. and Guitar Center Inc. have replaced Lillian Vernon and Successories Inc. in the Portfolio.

Portfolio value: If $1,000 had been invested in each of the 100 companies in the DM News Portfolio at the start of 2003, or when the stock first closed for newly public companies, the value would be $113,735, up 13.73 percent.

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