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Stock picks by the pros
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October 15, 1999: 12:25 p.m. ET
Amgen, Carnival, Caterpillar, Ingersoll-Rand on short list
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NEW YORK (CNNfn) - A cruise ship operator, a biotech company, and an industrial machinery manufacturer, among others, got the thumbs up from money managers and analysts Friday. Here are some of the stocks recent guests on CNNfn are buying and why:
"With regard to equities," says Alan Kral, portfolio manager at Trevor Stewart Burton and Jacobson, "we're about middle of the road in terms of maximum and minimum allocations and we're afraid because two years ago, the level of interest rates could support the valuations of the market; interest rates were going down and earnings were growing. Now all we have is earnings growth, and if the earnings growth starts to falter -- and we've seen a couple stocks in the last few days with bumps -- you could have some real problems."
Kral still sees some opportunities in the current market environment, however. "If you can find stocks that are based upon strong fundamentals, upon economic trends, there's some real opportunity out there. The two that we continue to see are demographics. The baby boom generation, for instance, is getting a little wealthier, our incomes are going up, we're willing to (take part in) leisure time events such as (those provided by cruise ship operator) Carnival (CCL)."
"At the same time, we're all getting older, we're willing to spend money on health care, we're willing to do whatever it takes keep us going, so a stock like Amgen (AMGN) in the biotech area should do well."
On Caterpillar (CAT), which beat Street expectations by 1 cent Friday, Tobias Levkovich, industrial machine analyst at Salomon Smith Barney, has set "a $70 price target in the next 6 to 12 months. (There is) some concern about where the U.S. housing market is going, but only about 8 percent of Caterpillar sales are to the U.S. housing market. I know that's hard for people to believe when they think of Caterpillar as a big construction equipment company. But John Deere, [for instance], a farm equipment company, has double the exposure to housing that Caterpillar does."
Levkovich also likes Ingersoll-Rand (IR), saying "we recently recommended it on its pull-back from $65 to about $53...The markets are so jittery," Lefkovich points out, "that any kind of negativity is automatically being taken out of stock prices when you're literally talking about 5 cents of earnings risk to the company's $4 estimates next year."
"Merck (MRK)", says Tim Ghriskey, senior equity portfolio manager at Dreyfus, "is one of the big drug companies and drug stocks to come down this year. They've had a tough year because of what is going on in Washington. But," continues Griskey, "this is the preeminent, the largest drug company. They also seem to have a cat to pull out of their bag. I would not be surprised if there is [a rebound] this year for them." 
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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