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Stock picks by the pros
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December 22, 1999: 12:37 p.m. ET
Micron, CVS, Biogen, Charles Schwab, Cypress, Dell win mention
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NEW YORK (CNNfn) - Tech stocks continued in favor among equity analysts and money managers Wednesday. Also mentioned were a biotech company and a top U.S. discount brokerage, among others.
Here are some of the stocks recent guests on CNNfn are buying and why:
"I think we’ll hear pretty good results from Micron (MU),” said Larry Borgman, semiconductor analyst, Josephthal & Company. "Peoples’ expectations have been moving up during the quarter, mainly because semiconductor pricing has been stronger. I would say DRAM pricing has been strong for Micron. And they are one of the lowest cost manufacturers in the world, so they should meet [earnings] expectations. I think the expectation for the year 2000 is that supply and demand will be in much better balance than they were this year and so it could be a very interesting stock if that’s the case. The company still has quite a bit of unused capacity and [we could see some] very big numbers if the pricing holds -- people will probably start to talk about $10 kind of [price bounds], which would get you to $150, $160 [per share].”
"We’ve continued to like Intel (INTC) for most of this year. The consumer market has been strong. Another name [we like is] Cypress (CY)
Back after the third quarter, we began to recommend Advanced Micro Devices (AMD). They have a very competitive microprocessor now and things look good for them this year.”
"I think some of the stocks, some of these mid stocks, are probably getting a little bit ahead of themselves,” said Kevin Bannon, chief investment officer, Bank of New York, "particularly those where the market caps are very large and the floats are fairly small. But I think we can expect to see some broadening out next year, because the economy has progressed very nicely. Earnings have been fairly strong across the board. And a lot of stocks just basically not having been to the party, their valuations are becoming very, very attractive.”
"We still like the communications sector most of all,” said Bannon "The top line growth is really what investors will pay the most for. Now, we also like our top line growth to translate into bottom line growth, so we like some of the backbone kind of companies - Cisco (CSCO), Sun (SUNW), companies like CIENA (CIEN) companies like MCI (WCOM).
Bannon also said he likes Biogen (BGEN), "The biotech area is heating up. Top-line growth is being driven by big, new products and big new products have a much larger impact on earnings per share among the biotech companies than they do among the major pharmaceuticals. But I wouldn’t rule out those stocks coming back also.”
Bannon’s last pick is discount broker Charles Schwab (SCH). "We’re convinced the market’s not going to overheat; at some point consumers will step back and say I’d better do a little bit of saving [or investing], a little less spending. Charles Schwab I think is in a wonderful position to capture a lot of that incremental buying.”
"The broader market is not participating as much as technology,” said Storm Boswick, fund manager, J&W Seligman, "simply because there’s less going on there. It is not as much of a growth market as technologies and that is why I think it’s inevitable that you see people increasing their weighting and exposure to technology investments because that is the best and purest way to participate in the growth economy. We think the PC area, in particular, Dell (DELL), Compaq (CPQ), Lexmark (LXK) and some other companies; even Microsoft (MSFT) could have a very, very good 2000 because in the consumer space, a lot of people are waiting for the Y2K issue to be behind them in order to buy new PCs and in the corporate space, that’s clearly [the case as well]. A lot of people are waiting for Windows 2000 in order to upgrade. This should be a terrific 12 months for the PC and peripherals industry.”
Coming up at 2:50ET on CNNfn:
Rocky Barber, portfolio manager, William Blair fund, discusses some of his stock picks, among them:
Freddie Mac (FRE): "They’ve been growing 15 percent or more for the last ten years. This is a stock which is very attractively valued at 15 times earnings.”
CVS (CVS): "It’s the first- or second-largest drug store chain [in the US], depending on how you look at it, and it is also growing probably in excess of 15 percent per year. It is a very predictable [performer], and it’s been beaten down to less than 20 times earnings.”
Pentair (PNR): "It’s on its lows for the year, now down to ten times earnings, and also growing predictably at [some] 15 percent per year. They are in the industrial manufacturing area.”
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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