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Personal Finance > Investing
Stock picks by the pros
September 29, 1999: 12:34 p.m. ET

RealNetworks, Amgen, Immunex, Inktomi on stock pick short list
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NEW YORK (CNNfn) - Technology companies and a slew of biotech firms are among the picks getting thumbs up from analysts and money managers Wednesday. Here are some of the stocks recent guests on CNNfn are buying and why:
Hedge fund manager Greg Kuhn of Kuhn Asset Management is short the market this morning; There are, he says, "two major problems with the market -- extremely low liquidity and extreme overvaluation." On the other hand, says Kuhn, two stocks are worth keeping a stake in.
     The first is streaming media product developer RealNetworks (RNWK). "Once the weight of the market comes off," says Kuhn, "the stock can actually start to move.
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     Another stock that might entice market bears out of hibernation is Internet company Inktomi (INKT). "They provide Internet business solutions. I think that`s going to be big. It was one thing to see the development of portal companies and to establish acceptable commercial use of the Internet, but now businesses need to operate their businesses through the Internet, and solutions providers will be big."
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The biotech sector, says David Saks, biotech analyst at Gruntal & Co., "used to be as hot as the Internet sector in the early `90s. It cooled off and now it`s hot again. That`s because of the promise of great drugs that are now hitting the market and driving sales and revenues and value, and they`re breaking out in many companies."
     Saks has a number of recommended biotech sector picks. His first is Amgen.
     "Amgen (AMGN) has a best-selling product worth $2 billion, close to three, called Epogen, which has been a miracle product for people with anemia and cancer. There`s going to be a new version of this drug that could appeal to a much bigger market; it`s called NESP."
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     "Amgen, which is up about 50 percent this year, is one of the cheapest biotechs, it's one of the best known biotechs, and they'll have a huge earnings upside surprise as we hit the Q3."
     Saks is including Amgen in his new biotech trust, saying that the stock "could go to 125-plus, which may not sound great, but we`re still looking at a stock that`s about 80, and if the nest is anywhere near the billion dollar potential, we could see a double in the stock in three years."
     When looking at biotech product lines in order to gauge potential profits, says Saks, "investors have to be very adroit and careful; one percent make it to the market from the early stage. That one percent become miracle products for helping mankind. They drive sales and earnings and tremendous profits for years, unlike other areas that have high competition. They`re patent protected, and gross margins are 80, 90 percent. There's been a big move here: Amgen, Biogen (BGEN), Immunex (IMNX), IDEXX Laboratories (IDXX), MedImmune (MEDI). There have been tremendous moves in this group, based on the promise that is now being delivered."
     "Biogen has got a great drug for treating MS on the market: Avonex. It`s heading toward $1 billion. And they have a new drug in the pipeline, Entova, that could effect a miracle in the realm of current drugs used in protection against reaction to transplantation; this could make transplantation as common as going in and changing a muffler. All body parts have adverse reactions when transplanted."
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     "I think," says Saks, "that Biogen could match the potential of Amgen. The stock has done quite well this year, with earnings surprises on the upside. The stock`s at about 80. I can think about a near-term move to about the $90 to $100 move in the next 12 months."
     Another Saks favorite is Immunex. "Immunex has got a great product for treating rheumatoid arthritis: Enbrel. Enbrel could be many times bigger than it presently is. The stock`s come off its all-time high. Here`s a stock that`s growing 200 to 300 percent near term. I can see this stock retracing what it lost and appreciating another double from here in the next two or three years based on Enbrel alone."
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     As enthusiastic as Saks is about several companies in the biotech sector, he does have one general caution. "There have been very hurtful experiences in the biotech sector, when a drug, for instance, doesn`t meet the expectations of the FDA, and gets turned down. Most recently we saw Xoma (XOMA) get hit this week, a 50 percent or so hit. We saw a lot of companies that have failed with the FDA, and that happens more often than the upside surprise."
     Software analyst John Puricelli of A.G. Edwards recommends two tech stocks: Verisign, and Citrix Systems (CTXS).
     Citrix specializes in server-centric computing, "which is going to be a key issue when it comes to ASPs," says Puricelli.
     Verisign (VRSN) provides encrypted channels for browsers to talk to Web servers. "Right now," says Puricelli, "it`s mainly credit card information, but you could also encrypt communication between browsers and servers so people can send secure e-mail."
     "Verisign," adds Puricelli, "is absolutely the dominant force in there, and they do it really in a service provider mode, which is very similar to what the ASPs are doing on the software side." Back to top
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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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.