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Stock picks by the pros
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October 6, 1999: 11:41 a.m. ET
MCI WorldCom, Wells Fargo, Aon, Apple, Pepsi, Monsanto all get nod
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NEW YORK (CNNfn) - More enthusiasm Wednesday for telecommunications company stocks, select financial services stocks, and a technology pick, all singled out for praise by analysts and money managers. Here are some of the stocks recent guests on CNNfn are buying and why:
"It`s a fantastic deal strategically," says Greg Miller, telecom analyst, at Jeffries & Co., of MCI WorldCom's (WCOM) recent $129B acquisition of rival Sprint (FON).
"The stock could flounder here in the short term as people continue to be a bit fearful for the regulatory concerns on the horizon...over the course of the next year. But longer term, I think it strategically positions the company as well, as if not better than, AT&T (T).
That's not to say Miller sees AT&T as an also-ran in the telecom arena. "At this point," says Miller, "I`d probably stay focused on the regional Bell operating companies. The weakness in the long-distance market today presents an excellent buying opportunity for both AT&T and MCI WorldCom."
"I think," Miller says, "that the fears of long- distance pricing competition have been a bit overdone, at least in the last 3 to 6 months. As a result of that, [some telecom stocks have] become very, very interesting buying opportunities."
"I`m not the first person to observe a lot of cheap stocks in the market," says Robert Morris, director of equity at Lord Abbett & Co., "even though the averages overall look expensive by historical standards. I have three ideas for you that all have multiples of 15 times or less, which I`d say is in the bargain area."
"The first is Wells Fargo. You don`t have to go down in quality to find low-price stocks today. You can find some very good companies like Wells Fargo (WFC), selling at 15 times earnings, a terrific banking franchise. It's a company that should be able to show mid-teens earnings growth."
Another stock that should make investors' hearts beat faster, according to Morris, is insurance broker Aon Corp. (AOC). "What you have here is a global player in an industry with difficult fundamentals, but we think we`re at the bottom of the pricing cycle. We think 12 times earnings, in a global player like Aon, represents a good opportunity."
Apple (AAPL), Morris' third choice, "took a heck of a hit; down to 60. It is rallying back for the right reason. The right reason is that the company is continuing to bring very attractive products to the market place; yesterday, for example, it introduced the new Imac line. The third hit in a row, I would say, for the company. Once they get the operating problems worked out, you`re looking at a company selling at 15 times normalized earning power. That`s a cheap stock in the technology sector."
Caroline Levy, beverage analyst at Schroder & Co., says the firm is "upbeat on Pepsi (PEP). All of the beverages are oversold and Coke will probably start performing better and that will help Pepsi. The same for [Pepsi's snack-maker unit] Frito-Lay. Frito-Lay`s trends are fabulous. It is the bull of the company today. So we need to be early."
Coming up this afternoon on CNNfn:
Bill Ehrman, mutual fund manager at EGS Associates, tells us why he likes Monsanto (MTC): "Good management, getting stronger, a lot of value for their shareholders."
He'll also discuss small-cap pick Rail America (RAIL). Look out, Ehrman says, for this transportation company's "rapidly growing earnings, which have risen dramatically over the last five years". 
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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