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Stock picks by the pros
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December 13, 1999: 12:31 p.m. ET
Financial services, phone technology, CBS find favor with analysts
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NEW YORK (CNNfn) - Financial services companies, phone equipment makers and online stock services were among equity analysts’ and money managers’ top picks Monday.
Here are some of the stocks recent guests on CNNfn are buying and why:
Jack Shaugnessy, chief investment officer, Advest, says the pressure financial services companies have felt as a result of Federal Reserve interest rate hikes is over for awhile; he doesn’t expect any changes until March at the earliest.
"[Insurer] American International Group (AIG) is a beneficiary of China`s economy opening up because of the World Trade Organization,” he said. "And AIG, of course, is a major business in Asia as well.”
Financial services companies that offer customers one-stop shopping will do well, noted Shaugnessy. "That certainly continues to be a [strategy] that has excellent prospects. American Express(AXP), Citigroup(C) [are] stocks [we like] very much right here.”
Shaugnessy’s last pick is PC maker IBM (IBM). "If you really believe that electronic commerce is going to continue to be one of the rapid-growth sectors of the economy, then IBM is probably the way to participate in that trend,” he said.
Plantronics (PLT), a telephone headset maker, is the stock of the week of David Braverman, senior investment officer, Standard & Poor’s.
"It’s a technology company with roughly a billion dollar market cap,” he said. "We could see a 40 or 50 percent increase -- that would only get you up to 22 times earnings, so it’s not one of these triple-digit P/Es that you’re starting to see.”
Braverman also sees CBS (CBS) as a powerful Internet play because its broadcast networks are getting a lot of advertising dollars from the new online sites.
"They will do very well with all of this dotcom advertising, political advertising later on in 2000,” he said. "Once they merge with Viacom, combine their broadcasts, their own stations, radio [properties] and all of the Viacom properties, you may have a real powerhouse [in hand].”
Covad and E*TRADE are two strong post-IPO performers in the eyes of Kathy Smith, portfolio manager and IPO analyst, Renaissance Capital.
"Covad (COVD) is the leading company in the xDSL business (an Internet access technology),” she said. "And we believe it has tremendous opportunity ahead. It`s an infrastructure company. It`s a beneficiary of [increasing] Web traffic.”
"The E*TRADE (EGRP) group has been a long-time holding for the fund,” she said. "We think this company and the financial segment is the killer application for the web, and we believe we hold the leader in that segment.”
Smith also likes Sycamore Networks (SCMR), saying "it [was] one of the all-time home runs and we did get a hold of [it] early. We have a strong interest in the company. It’s a fiber-optic equipment company, an Internet-related infrastructure play.”
Smith’s last pick is the biotech company Genentech (DNA). "We believe that Genentech’s a leader in its sector and it is a large position in our portfolio,” she said.
"It’s probably a good strategy for both,” said John Davidson, chief investment officer, the Orbitex Group of Funds, of America Online’s announced cross-marketing alliance with Wal-Mart (WMT).
"It really gets Wal-Mart into that end [e-commerce] of the business, and it’s continued expansion for AOL (AOL), which continues to seek new partners and grow the business,” Davidson said.
Jim Waggoner, technology analyst, Sands Brothers & Company Limited, says three picks --Ariba, RSA Security, and Chemdex -- reflect his view that the nation’s economy will become technology based.
"Business-to-business e-commerce is one of the key [trends] to look for in the decade ahead,” he said. "It’s a very important way to increase efficiency of all of the operations of corporations, and Ariba (ARBA) is on the leading edge of that, servicing Fortune 500 companies. Our analyst is forecasting a $255 price target. But I would not be surprised to see that moving up [even further].”
"Chemdex (CMDX) is one that we recommended last week,” he said. "The stock is at about 92. We look for an upside of $150.” Chemdex is an e-commerce company servicing the health care industry: laboratories, hospital, and drug companies.
Lastly, said Waggoner, "RSA Security (RSAS) is actually one of my favorites this morning. RSA has a $40-$42 price on the stock.”
"It’s growing at about 30 percent a year,” he said. "We look for $80 in this stock.”
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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