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Personal Finance > Investing
Stock picks by the pros
December 10, 1999: 11:56 a.m. ET

Cypress, Burr-Brown, LSI Logic, National Semi score praise
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NEW YORK (CNNfn) - Several technology stocks and a variety of consumer stocks won favor with equity analysts and money managers Friday.
    Here are some of the stocks recent guests on CNNfn are buying and why:
    

    Sky-high IPOs and rip-roaring dot-coms have Robert Robbins, market strategist at Robinson Humphrey, a little worried about realistic stock valuations and tech company performance.
    
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    "I think we always have to watch for the smaller companies to see that their fundamentals really are in place for them to have a viable lasting market share, market presence and to eventually grow
    over the years to profitability. I generally encourage people to invest in the larger companies in the Internet area; for example America Online (AOL).
    A compelling reason for that is that the Internet has penetrated only a portion of the U.S. marketplace. The world remains as an underdeveloped area for the Internet. It has tremendous potential. When you have a new technology like this that's so obviously hugely productive, it's very difficult to price the stocks. I think people have to go with the momentum. I think the lessons in market strategy show that that's best strategy, go with that momentum, but recognize that you're going to have huge volatility.”
    

    One of Mona Eraiba’s first picks is Intel (INTC). The semiconductor analyst at Gruntal & Co. had this to say about the chipmaker: "We think Intel has some short term problems, some short term issues with their microprocessor in the first quarter. But Intel is definitely a major focus for us. We think the stock [has some] catching up to do, which makes it extremely attractive, [price-wise], at its current level."
    
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    Eraiba also mentions National Semiconductor (NSM), saying, "We've actually increased our estimates for the company for this year and next year -- and the year after. And we increased our price targets for the stock to $58 intermediate and $70 long term [12 to 18 months]. So, we're very bullish on National and the group overall.”
    
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    Eraiba is "very positive [about] the whole group. [Among] the bigger names, we're looking  Motorola (MOT), Texas Instruments  (TXN),
    Micron (MU), Intel (INTC), LSI Logic (LSI), which is a custom chip supplier. And among the smaller -- National Semiconductor, of course. We're also looking at Burr-Brown (BBRC), Integrated Device Technology  (IDTI), Cypress (CY). We're pretty positive about the key players, because they really did their homework during the downturn. They repositioned their product lines and so the [necessary] leverage is there; with the industry improving, they’ll be able to capitalize on what's happening.”
    

    When it comes to choosing the right stock in a market filled with rowdy valuations, says Ron Hill, partner and equity strategist at Brown Brothers Harriman, "not everybody’s dancing at this party. Most people are sitting on the sidelines watching the guys in the middle who are having a lot of fun. That is generally indicative of a market that is not particularly healthy.
    "It’s hard out there,” Hill admits, "because you keep wondering ‘Do I buy something trading at 357 times earnings and hope it’s going to go up to 500 times earnings?’ Top-line growth is what everybody’s focused on. [When] people will start to focus on profits, it’s going to look a little different [for] those stocks.”
    
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    When the party is over, Hill says, investors might want to be looking at "Colgate (CL), Procter & Gamble (PG), good, solid, consumer product firms doing great business worldwide, getting the same kind of benefit from the Internet because of the explosion in margins through better management, use of technology. Those are
    safe. I'd [also] be looking at BellSouth (BLS) which is big news today; US West (USW), companies that are out there in the phone business which are probably going to issue tracking stocks after AT&T (T), and each one of these is going get a pop on that business. So there's good money to be made out there.”
    
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    "We expect to see the markets continue to move
    higher,” says John Eade, stock market strategist at Argus Research, "and for the breadth of the rally to expand. Technology should do well. But also health care, and Bristol-Myers (BMY), we think has the next blockbuster drug coming out next year. So, we have just added that stock to our focus list.”
    Tellabs is another Eade favorite. "Tellabs (TLAB) is almost a fallen angel in the technology space. And it is down about 15 percent from its highs. A deal fell through with Sprint, but management has told us that they are not going to miss earnings or revenue targets. It's a 35 percent long-term grower.”
    Eade’s final pick is Source Information Management(SORC). "Source set earnings yesterday up 60 percent over the last quarter. It's trading at about 15 times our earning forecast next year. We think small caps belong in portfolios. They have underperformed for some time. Source is a ‘new economy’ stock that massages information and delivers it to publishers and to retailers in the business services space. Earning are growing. The stock's cheap. We think it's a good buy here.”
    

    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. Back to top

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Stock picks by the pros - Dec. 9, 1999





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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.