Barron's Interviews T. Rowe Price's Joe Milano

Barron's interviews Joe Milano, the portfolio manager at T. Rowe Price New America Growth Fund. Some excerpts:

Its harder to find good growth stocks after the recent rally. Monsanto's (MON) stock is down because it's out of favor but it's still a growth company and Milano likes its prospects. About 25% of the fund's portfolio is out-of-favor stocks.

In October/November 2008, Milano upgraded the quality of the portfolio, picking up stocks like Apple (AAPL) and Research in Motion (RIMM). He also picked up Priceline.com (PCLN). Milano expected the stocks to do well in 2010 but was surprised to see growth sooner than expected. Going forward, Milano expects to be much more selective about which stocks he includes.

High-quality names are what accounted for the fund's underperformance in the fall, but Milano wouldn't have sold the high-quality names anyway. It is important though to look at the big picture and be prepared for crazy things to happen.

Milano is optimistic short-term but more subdued long-term. In the short-term, any return towards normal will mean some growth. Long-term, Milano sees the need to be realistic, which means expecting several years of slower growth and a changing consumer attitude.

In terms of consumer names, look for companies that have a compelling product and are taking market share. Examples include Apple and Research in Motion, but also Wal-Mart (WMT) and Carnival (CCL), which both offer good value.

In health-care, the fund holds several dental firms, including Henry Schein (HSIC) and Dentsply (XRAY). Milano sees good long-term demographics for the dental industry. Also in health-care: Medco Health Solutions (MHS). The stock isn't overly-cheap but Milano is willing to pay up front for legitimate growth prospects because "the power of growth investing is compounding."

Milano views Electronic Arts (ERTS) as a consumer ma,e, even though many others see it as a technology stock. "Electronic Arts is pretty much hated by everyone" and lost money last year. However, they have new management, have cut costs, it's a great consumer-franchise company and Milano is "always on the hunt for names that other growth managers shun."

(The full interview is available here.)

Comments

[mdpath:]

The symbol for Dentsply is XRAY not xra.

Aug 16 09:35 AM

[SA Editor R...:]

Mdpath-

Nice catch! The stock symbol has been duly corrected.

Thanks,
R.G.


On Aug 16 09:35 AM mdpath wrote:

> The symbol for Dentsply is XRAY not xra.

Aug 16 09:43 AM