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Stock picks by the pros
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September 14, 1999: 12:08 p.m. ET
Thumbs-up for Voicestream Wireless, Exxon, MCI WorldCom
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NEW YORK (CNNfn) - The nation's analysts and money managers continued the hunt for promising companies Tuesday, finding value in a wireless communications company, a number of oil stocks, and some picks from the technology and health-care sectors. Here are some of the stocks recent guests on CNNfn are buying and why:
Despite the inflated prices of many picks in tech-related sectors, Shawn Johnson, director of equity research, State Street Global Advisors, is bullish on communications stocks. "We still like communications. The earnings expectations are very powerful. One company that we`re following now that we like a lot is Voicestream Wireless (VSTR), out on the west coast. It`s still one of the cheaper cellular plays and it still has a lot of backing in the GSM (Global System for Mobile Telecommunications) area, which is a different technology."
"It`s also owned, partially, by Hutchinson-Wampoa out of Asia, which also owns Orange PLC (ORNGY). Eventually, I think, you`ll see a global wireless company come out of this at some point in the future. It's still a good buy, even though it`s had a run-up."
Johnson reports he's been "overweight to energy since about January, expecting the oil price to stay between $20-$25 a barrel over the next few years, "certainly through April`s meeting next year of OPEC. Also very bullish on natural gas prices, which have been very volatile of late. You can also buy an Anadarko Petroleum (APC), which we like a lot. It is a good entry point for Anadarko. They drew a dry hole down in the Gulf recently, that has caused the stock to trade off a little bit, but you can buy Burlington Resources (BR) or Baker Hughes Inc. (BHI) to capitalize on this movement."
"Oil prices," says Fadel Gheit, oil analyst at Fahnestock & Co., "are probably going to go over $26, which will mark the highest level outside the Iraqi invasion of Kuwait in 1990."
Gheit has some favorite picks, but he cautions investors "have to be very focused here."
Of the major oil companies, "Exxon (XON) says Gheit, "would be my top choice. It`s the only oil stock among the major integrated companies that underperformed the S&P so far this year. The stock is up only 7 percent. The group average up about 17 percent. Exxon is likely to do extremely well once they get the FTC's green light on the merger with Mobil (MOB). The cost saving are going to be tremendous. And we believe the stock could reach $100 in the next 12 months."
"Of the middle caps," continues Gheit, "I think Occidental Petroleum (OXY) is by far the most undervalued. We believe the stock should be trading about $30. The stock is trading about $22 right now. It gives you a high dividend yield. The dividend is secure. The company is also waiting for a billion dollar payment from Chevron (CHV), which could be decided in the next two or three weeks."
Alan Skrainka, chief market strategist at Edward Jones, finds his favorites in "financial stocks, healthcare, technology, and telecom."
His healthcare pick is Bristol-Myers Squibb (BMY). "They have new leadership for their R&D effort. They`re introducing two new drugs a year, (stepping up) the traditional pace of one. And they`re targeting the fastest-growing areas, such as cancer, AIDS and cardiovascular research."
Wells Fargo (WFC) is a Skrainka favorite among financials. The diversified financial services company "serves nine of the 10 fastest-growing states. Half of the nation`s population growth will come from the states they serve over the next ten years. And we think they have a very smart strategy to attack the Internet, while expanding branches nationally."
"Technology is still the fastest growing segment of the US economy. Earnings are growing at 20, 30 percent year over year, and U.S. companies lead the world in almost every major category." An excellent technology choice, says Skrainka, is technology grandaddy IBM. (IBM).
"IBM...is trading at just a slight premium to the market P/E. A quarter of their business is e-commerce. They`re aggressively attacking services, which is a market twice as large as hardware. And...you get all that and Louis Gerstner (IBM chairman and chief executive) for just a slight premium to the market."
A sensible telecom choice, says Skrainka, is MCI WorldCom." (WCOM). "Telecom is experiencing a revolution right now, fueled by the Internet, by international expansion. MCI WorldCom is expected to grow at twice the rate of AT&T (T). They have the assets and the position that everybody else is trying to achieve. I just think it`s a must-own stock at this price. It`s really sold off." 
The views presented here are solely those of the analysts quoted. They do not represent the opinions of CNNfn on whether to buy or sell shares of a particular stock.
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