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Stock picks by the pros
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December 7, 1999: 2:03 p.m. ET
Rite Aid, Unisys and Telefonos de Mexico earn praise from analysts
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NEW YORK (CNNfn) - A few leading technology stocks with earnings potential, some beaten-down businesses, and some choice Latin American firms got the nod of approval from equity analysts and money managers this Tuesday.
Here are some of the stocks recent guests on
CNNfn are buying and why:
In the technology sector, Robert Morris, director of equity at Lord, Abbett & Co., said he sees some of the top runners taking a breather in the coming months but not necessarily a fall.
"I think at some point we should expect the leaders to take a rest. I don’t expect the leaders to sell off dramatically. In the environment that we’re looking at with low inflation, companies that can put big growth rates up ... that’s the whole key in the technology sector. We’re seeing companies growing earnings 25, 30 percent. And those stocks are going to remain attractive.”
Among his picks are stocks such as; Unisys (UIS) and IBM (IBM).
"(They) are still very reasonably valued and I think one of the things that people are missing in technology is service,” said Morris. "Everybody now needs expertise to survive in an increasingly technological world. And companies like Unisys and IBM provide service to companies that are trying to get their technology up to speed.”
John Chadwick, senior portfolio manager at Bessemer Trust, said the market at this time of year tends to be fairly narrow, leaving investors with few money-making choices.
"But, there are places where there is some real opportunity, and you got one of them yesterday, for example, with Rite Aid (RAD). Stock down from over 50 to $8 a share. The company even looked like it might go under. Then the whole team from Fred Meyer, which have done a great job there, moves in; stock’s up 42 percent in a day. That is only to 11. But I think there is a spot where you can really make some money,” Chadwick said.
But, Rite Aid is not alone, he said, and added, "There are other companies that have been knocked down ... Tyco (TYC) would be another good example.”
For those investors seeking profits from non-U.S. companies, Jorge Suarez, president of AFIN Securities International, recommended looking south of the border.
Globalization is the most compelling reason for U.S. investors to consider leading Latin American companies as investment opportunities, Suarez said.
"Mexican companies - the largest Mexican companies, are not Mexican. They’re international companies. If you look at Telmex (TMX) (Telefonos de Mexico) this side of the border, if you look at their partnership with Prodigy (PRGY); if you look at what Televisa (TV) has done in the Spanish media in the United States -- at the end of the day, the evaluations of companies between Mexico and the United States should in some cases be pretty similar.”
But, instead leading Latin firms traditionally have been compared with their emerging market peers.
"If you compare, for instance, Telmex with Telefonica de Argentina (TAR) or with CANTV (VNT) it appears pricey. But if you compare TelMex with, for instance, ... Cable & Wireless (CWP), it looks like a company that has a much better cash flow and that it is much better priced. So I think that it still has room to go up in price.”
Suarez recommended putting money into Mexican and Brazilian stocks that have a heavier weighting as international benchmarks, such as Telmex and Brazil’s Telebras (TBH).
"I think in both cases you will ride the wave because additionally they are companies that are very strongly placed, for instance, on the Internet side. They’re very well-integrated with their Internet subsidiaries,” Suarez said.
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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