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Financials, Tech Rock T. Rowe Price Growth Stock

Cisco, Fannie, and Freddie weigh on T. Rowe Price Growth Stock.

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T. Rowe Price Growth Stock (PRGFX) usually stands well above its average large-blend peer, but in 2001, the fund is encountering a bit of turbulence. The usual suspect, technology, has been a drag here. Manager Robert Smith trimmed a big position in struggling Cisco Systems (CSCO), but it has still taken a bite out of returns. And while Solectron (SLR), a contract manufacturer, has made great strides over the past month, it's still well in the red for the year. Meanwhile, financials like Fannie Mae (FNM) and Freddie Mac (FRE), which provided ballast in 2000, have struggled so far this year. As a result, the fund's 3.6% loss for the year to date through May 17, 2001, puts it a bit behind the category norm for the time period.  

Smith's outlook for the rest of the year isn't all that rosy, so he's trying to pick stocks that are steady earners and aren't trying to blow the lights out. Lately, Smith is bullish on cellular firms like Sprint PCS (PCS) and the U.K.'s Orange. He added both companies to the portfolio this year, partly because their valuations were quite low following an awful 2000 for wireless stocks. Though the stocks have traded down because investors are skeptical about demand for third-generation applications, Smith thinks that these firms will be just fine in the long run. Meanwhile, he sold tech companies that he thinks will continue to be hit hard by the dot-com downturn. For instance, he sold his entire position in Veritas Software (VRTS), which has been hit by slowing sales growth as demand for its storage-management software has abated.

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Catherine Hickey does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.