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Stock picks by the pros
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June 22, 1999: 12:11 p.m. ET
The cheapest brokerage stock, a REIT with an 8 percent yield
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NEW YORK (CNNfn) - The nation's analysts and money managers continued the hunt for promising companies Tuesday, finding value in an electronics retailer, a drug maker and a regional bank.
Here's what stocks the latest guests appearing on CNNfn are buying and why:
Donald Selkin, chief investment officer at Joseph Gunner & Co., favors data storage firm EMC (EMC) on the belief that its hard-hit shares will recover soon.
"The stock fell sharply a couple of months ago, when Hewlett-Packard (HWP) announced that they would resell storage products from Hitachi (HIT)," Selkin said. "But despite that, EMC is on line to deliver earnings growth at around 30 percent this year. The stock came down quite a bit. It's starting to recover. We find that very attractive."
Shifting sectors, Selkin likes REX Stores (RSC), a small retail electronics chain he says is seeing strong consumer demand.
"They earn about 27 cents (per share) in the first quarter, 13 cents (per share) in last year, so they doubled their earnings," he said. "Their multiple is very, very low. And they're going to earn about $1.60 to $1.90 (per share) next year. So people who are looking for lower valuation stocks, this might be something to look at because it's part of a strong group, but it has a very, very low multiple."
Donald Selkin, left, shares stock picks with CNNfn's Jack Cafferty.
When it comes to finding value in brokerage stocks, Guy Moszkowski, brokerage analyst at Salomon Smith Barney, says Merrill Lynch (MER) is the best bargain.
"Merrill, relative to its historical valuations at this stage of the cycle, is quite cheap," Moszkowski said. "And (the company) will of course enjoy some recovery probably over the next few weeks as it has in the last week, as worries about the interest rate environment subside."
Alex Zisson, pharmaceutical analyst at Hambrecht & Quist, favors American Home Products (AHP) for some of its upcoming new drugs.
"They're at the start of a big new product cycle," Zisson said. "They have a new drug for insomnia that should be out later this year, a new clotting (drug) for hemophilia, a new ulcer drug. So they've got actually a pretty deep pipeline."
Robert Stovall, president of Stovall 21st Advisors, says it may be time to buy real estate investment trusts, or REITs, which have disappointed investors for the last several years.
His top sector pick is Brandywine Realty Trust (BDN).
"It's been downgraded recently by a big brokerage house," Stovall said. "That doesn't always mean too much. The yield is over 8 percent."
He also favors Union Planters (UPC), a Memphis-based bank, as a possible takeover target.
"I think it's either going to make more acquisitions or be bid for itself.," Stovall said. "I think it's in a good position in a good part of the country."
The views presented here are solely those of the analysts quoted. They do not represent opinions of CNNfn on whether to buy or sell shares of a particular stock.
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