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Stock picks by the pros
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September 23, 1999: 11:57 a.m. ET
New Century, Merck get nod; positive outlook on AT&T, Disney
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NEW YORK (CNNfn) - Analysts and money managers singled out two REITs, three pharmaceuticals companies and a telecom giant for praise this Thursday. Here are some of the stocks recent guests on CNNfn are buying and why:
Robert Stovall, president, Stovall 21st Advisers, sees opportunity in utilities industry holding company New Century Energies (NCE). "The stock is down from 52 to 33," acknowledges Stovall, "and there are some acquisitions underway which are impairing earnings. But I like to buy good, strong companies with a big market base, which this has."
Stovall also likes REIT Equity Office Properties (EOP). "The group was the beneficiary, if that`s the right word, of some bad news lately," he said. "But that`s a group that has positive forward funds from operations moving along. And the dividend returns are very high -- seven, eight, nine, percent."
Ned Riley, chief investment officer, BancBoston, sees prime picks in pharmaceuticals such as Merck.
"I've always liked Merck (MRK)," said Riley, "though we`ve had a little bit of a comeuppance recently -- the stock`s down about 28 to 30 percent from its high. But it has bounced a lot in the short term as you can see. Merck is a company that grows at 14 percent a year, it's predictable as heck, and you've got a company selling at a price/earnings ratio of about 20, but this is a premier company in the pharmaceutical industry."
Riley also likes Bristol-Myers Squibb (BMY) and Irish company Elan (ELN). "I would advise investors that they have as much as 15 percent of (their) equity portfolio that is in pharmaceuticals or the drug care area," he said. "Because, longer term, if people are looking for good consistent growth in earnings per share, and companies that have come down in price a little, clearly this is a group that fits the criterion."
David Otto, director of research at Edward Jones, has a mixed bag of favorite picks, from REITs to financial services to entertainment powerhouse Disney.
"In the real estate investment trust area, we like Kimco Realty (KIM), it`s one of our favorite companies," Otto said. "They're your neighborhood shopping mall owner all around the country. Their dividend yield right now is about six percent. So here's a company that will give you some growth and a great dividend at the same time."
Bank of America (BAC), another Otto pick, "saw some disappointing results a few weeks ago. The stock was cut at the knees."
"This is the time for long-term investors to step up and say: What`s the franchise? What am I buying?," he added. "I`m buying a great company with a terrific brand name and a lot of customers."
"AT&T (T)," said Otto, "is the classic 'orphans and widows' stock and it`s a stock that we`ve liked for a long time and continue to like today. Here`s a company that's 30 percent off its high and 100 million people write a check to AT&T every month. That`s the kind of company we want to own. Something we know is going to be around five years from now -- and we're pretty sure they`ll be a leader in wireless, data and long-distance."
"This is the time," Otto concluded, "to buy Disney (DIS), when they`re going through operational difficulties and cleaning house. They`re getting out of the businesses that don`t make sense and investing in the businesses that do."
"The market is saying Disney`s not going to make it, Disney`s not going to be around or they`re going to be an average company," he added. "We think they are going to be above average."
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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