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Stock picks by the pros
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September 24, 1999: 12:32 p.m. ET
Halliburton, Yahoo!, Intel, MCI WorldCom all win praise
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NEW YORK (CNNfn) - Various oil services stocks, a tobacco company and several tech stocks got the nod from analysts and money managers Friday. Here are some of the stocks recent guests on CNNfn are buying and why:
Hot on the heels of the abrupt market sell-off yesterday, led by wilting tech stocks, Ron Hill, partner at Brown Brothers Harriman, suggests two oil stocks with which to play defense against negative sectors. "One of the places to play defense would (be) the energy sector. And probably the safest play on higher oil prices is in the oil services area. Schlumberger (SLB) and Halliburton (HAL) are two good big caps. With Halliburton, remember, you`re getting the benefit of half a billion dollars of cost savings flowing through to profits. So, even without a great operating environment, the profits would look very good -- probably up 50 percent this year, next year and the year afterwards."
Hill is sticking with oil services stocks rather than oil refinery stocks "because the refining side is getting hit by higher input prices, and they`re not being able to pass it along quite as rapidly. So there`s always a lag in there. And Schlumberger and Halliburton, they're big cap stocks with pretty good visibility and good management."
A more offbeat pick is Hill's selection of tobacco giant Philip Morris, which is entering the latest round of tobacco-related litigation, this time with the Justice Department. "But," says Hill, "there is very little basis in legal theory from which that suit can even be launched. And this is a company that has better cash flow than 10 of the largest corporations in America combined. They also pay a 5 percent dividend year over year."
"Take a look at Philip Morris (MO),"concludes Hill. "I think this stock is going to survive pretty nicely."
Francis Gannon, portfolio manager at Sun America Asset Management, hasn't been scared off tech stocks.
The first pick on his tech stock short list is Cisco Systems (CSCO). "Cisco is a company that`s performed well all year long, despite the corrections we`ve had. This is just a leader in communications and communications equipment, getting us more in touch with the Internet, which is why it will continue."
Motorola (MOT) is also a favorite. "The company was upgraded this morning by Merrill Lynch. I think it represents an opportunity at current levels. The stock has gotten hit on the acquisition of General Instrument, which took place last week, but I think numbers are going to be stronger than a lot of people are anticipating."
Yahoo! Inc (YHOO) is another stock to consider, according to Gannon. "Part of the problem with the Internet market right now is there`s a huge oversupply. If I had to own some of the Internet stocks and the large cap names that do have revenue growth, I would focus on Yahoo!, because it is one of the better companies out there. You have good fourth quarter play in stocks like that because of e-commerce going into the fourth quarter."
Gannon also likes two financial services stocks, Chase Manhattan and Citigroup. "In a rising rate environment, the financials are not the stocks to own," he concedes. "However, I believe stocks like Chase Manhattan (CMB) and Citigroup Inc. (C), some of the larger money center banks, are extremely cheap at these levels. They`ve all been hit. From a value stand point, in looking at this market, I think you can pick up stocks like Chase Manhattan Bank and make some money over the next 12 to 18 months."
Michael Farr, president of Farr Miller & Washington, liked telecom MCI WorldCom (WCOM) before today's news that the firm reportedly is in merger talks with Sprint (FON). "I think that MCI WorldCom has been great at their entire acquisition strategy. They`ve expanded and vertically integrated. They have done acquisitions for stock before. They are experienced at this. (A potential deal with Sprint) to me is a good thing and I think it`s going to bode well for the long-term. Short term, you never know."
But, Farr adds, his outlook on MCI WorldCom remains favorable. "They already have an anchor in the long-distance business. It is the digital wireless PCS national element that they pick up from Sprint that really makes the (news) interesting. They need that wireless portion for a fully integrated communications network."
Farr also likes micro-component manufacturer Intel Corp. (INTC). "I liked Intel back in the spring when everybody hated Intel. They reported earnings and people said the earnings numbers were lackluster. But sales had increased 18 percent. They've increased the top line. They`ve developed new products. They`re doing good things at Intel. I liked it then, I still like it now. I`m a long-term investor." 
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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