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Stock picks by the pros
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December 27, 1999: 11:50 a.m. ET
AOL, Yahoo!, Alaska Air, Exodus, Compaq, Radio One win favor
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NEW YORK (CNNfn) - Equity analysts and money managers continued to favor tech stocks Monday.
Also mentioned were two radio station companies, a domestic air carrier, and a discount retail chain.
Here are some of the stocks recent guests on CNNfn are buying and why:
"I don’t like to bottom fish normally,” admits Robert Stovall, president, Stovall 21st Advisers, "but this is a quality [stock], Becton Dickinson(BDX). It’s been around for generations, and it’s way down in price. A lot of its troubles this year were caused by overseas slowness in sales. So, I think it can give you a good performance on a whole year-ahead basis. Not,” Stovall cautions, "short term, though.”
Alaska Air (ALK) also is a favorite. "Alaska has a good route structure, it would fit nicely into one of the bigger airlines. It also, like Becton Dickinson and Berkshire(BRK.A), has been a poor performer this year, but it has a good, basic position. And so I think, again, you’re buying a stock in an interesting sector that’s near its low for the last 12 months.”
Dodge Dorland, chief investment officer of Landor Investment Management Inc., is recommending two stocks based on their respective fundamentals profiles, Compaq (CPQ) and Wal-Mart (WMT).
"Fundamentally, both companies are strong. And technically speaking, if you take a look here at Compaq, it has gone through a long period of time based at levels below the 30 level. We’re not breaking up above the 25 to 27 trading range. It will test 30. And our projection is to cross through 30 and get to 35.”
"Wal-Mart,” says Dorland, "has been a fundamentally strong story for a long period of time. It has had consolidation. It has moved down. It is now consolidating at much higher levels. We expect it to go to new highs.”
"[Nose-bleed] valuations cannot disturb me,” says Ulric Weil, technology analyst at Friedman Billings Ramsey & Co. "If you’re disturbed by valuations, get out of the Internet space altogether. I’m in the Internet space and I’m not disturbed by valuations because I don’t think they’re relevant in this space at this time of the evolution of the Internet. So, yes, [despite sticker shock], AOL (AOL) and Yahoo! (YHOO) are certainly [stocks to look at]. Network Solutions (NSOL) is the Internet play par excellence because they control the domain name registration system and have a very strong position.”
"Exodus (EXDS) is a leading Web hoster and so are some of the application service providers such as Interliant (INIT) and... USinternetworking Inc. (USIX), in Washington. They are all playing the infrastructure game and that’s where I think the best action will be, in the infrastructure, in terms of safety and investor protection, because without the infrastructure, the e-tailers can’t work on the Internet, nothing will work.”
"So [we’re looking at] the optical, the telecom players with the optical. The fiber players. We have the ISPs like PSINet (PSIX) which have a very bright future as infrastructure plays.”
Small-cap specialist Scott Mayo of John Hancock Funds has been "[positive] in number of areas -- in technology, telecommunications and media. In technology, we have played the Internet and it has been a good sector for us. Among the companies there, one [we like] is Media Metrix (MMXI), an Internet audience measurement firm. Like an Internet Nielsen. And with the proliferation of web sites out there, a lot of their revenues are advertisement-based and you need to determine the currency for those ad rates. Media Metrix is one of the companies doing that.”
"We don’t like to focus too much on price targets,” admits Mayo, "but [they] had a strong run earlier in the year, [the price has]come back in a little bit, but I think it’s very early for this sector. It’s a two-horse race. There’s another company, NetRatings (NTRT), that recently came public. That company has been there for a little while, they made an acquisition back in October that people were a little nervous about, but they are integrating that well. Again, you need [these kinds of firms in order to] determine a currency for these websites and this is the way to do it.”
Mayo also likes Radio One (ROIA) "because it’s focused on the African-American community. It’s a population that is growing over three times as fast as the average population. Their annual incomes are rising just as fast and [Radio One] has about 27 stations in 9 markets. It’s a good demographic. They have some of the highest growth rates in the industry. They have not had the advantage of some of the dot.com advertising that some of the other radio companies have had, but they have hosted strong growth rates, and they are good at acquiring underperforming stations and turning them around.
So they can get these stations cheap and really drive down the purchase multiple. They came public in may with a very strong run. They keep posting better and better numbers, and the Street has to keep raising expectations [for this stock].”
Mayo’s last pick is Citadel (CITC). "That’s another radio company. They focus on mid-size markets.
They have very strong management and they are good at acquiring underperforming stations. They have about 170 stations across the U.S. The radio sector in general is very strong; they enjoy very strong fundamentals and [it looks to be a] very strong [market] going into the year 2000.
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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