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Stock picks by the pros
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September 22, 1999: 12:22 p.m. ET
Rosy outlooks on Applied Materials, Lucent, Mobil, Exxon, others
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NEW YORK (CNNfn) - Battered semiconductor stocks, an enterprise data storage firm, a consumer retailer, and various oil stocks, among others, got the nod from analysts and money managers Wednesday. Here are some of the stocks recent guests on CNNfn are buying and why:
Terence Gabriel, stock strategist with I.D.E.A. Global.com, is bullish on technology even though the sector has been wobbly of late.
His first pick is a semiconductor industry stock. "I think that industry looks great," says Gabriel, "into the year 2000, with the recovery in Asia and Europe. Applied Materials (AMAT) is a leader in that industry. They are exploring migration to new materials. Copper, for instance. We`re going to see the market for equipment used in that industry in that particular group of semiconductors go from 1.3 billion to 3 billion over the next three or four years."
Gabriel also favors telecom equipment maker Lucent Technologies (LU) and enterprise storage product developer EMC Corp. (EMC).
In June of this year, Lucent acquired Ascend Communications. "That," says Gabriel, "is a play on the DSL technology area, which is expected to grow from $400 million this year to about $7 or $8 billion in the next three years. DSL is going to be a great area whether the US economy slows or not, or whatever the Fed does. There are other stocks in that group, like Copper Mountain (CMTN), for instance. The whole group looks good."
"EMC is a way to play the Internet, playing the hardware infrastructure side of it. EMC provides digital storage solutions, and we all know that the Internet requires tremendous amounts of storage in order to handle the demands that users place on it."
Marc Klee, fund manager at John Hancock mutual funds, is another EMC (EMC) aficionado. "They really have a tremendous franchise. They have better than a 30 percent market share, though it`s nowhere near 100 percent of the market. And they continue to gain market share. But the most important thing," Klee says, "is that they are becoming more software oriented. That`s the stock that higher margins are made of, and that, to me, is the dream situation."
Klee also favors SRAM manufacturer Integrated Device Technologies (IDTI)..
SRAM stands for "static random access memory," explains Klee, "as opposed to something from Micron, which produces mostly dynamic RAM units. IDTI is one of three or four major producers. Static RAM units tend to be more expensive, but they are faster," says Klee, increasing their appeal to the wired consumer.
Larry Wachtel, market analyst at Prudential Securities, spots the silver lining behind the clouds of the current market downturn:
"There has been a shake-out in some of the retailers, particularly Abercrombie & Fitch (ANF). This stock has gone from 50 to mid-30s and yet they`re the generation x, generation y clothing supplier, and they are doing very well. So this pullback actually represents an opportunity."
And, notes Wachtel, "in this problem-filled semiconductor group, Cypress (CY) is not that involved with the Taiwan situation. That stock can be bought; it`s an SRAM memory chip company, a specialty chip company. This is an attractive stock."
Wachtel's third stock pick is beverage titan Coca-Cola (KO). "If Coca-Cola came down because of global problems, then, as global demand revives, why shouldn`t Coca-Cola revive also? I think the stock, down from 85 to 55, represents good value."
Kate Warne, oil and energy analyst at Edward Jones, sees growth ahead for some oil stocks.
"This will be the first quarter that companies will show a big increase year-over-year because the third quarter of last year was so terrible. Also, they`ll see higher exploration and production earnings, higher prices for products, better earnings from the refining and marketing segments of their business. The current pullback," says Warne, "is a good buying opportunity. I think the prices have further to run."
Warne particularly likes BP Amoco (BPA) and Exxon (XON). "Exxon has performed the least of the companies so far. And Exxon is, of course, merging with Mobil. They expect to get regulatory approvals relatively soon. Mobil has run up more than Exxon so far this year. But the 
combined company, I believe, will be the pace setter over the next decade and I really like the combination a lot. It`s my top pick." 
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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