|
Stock picks by the pros
|
 |
January 11, 2000: 12:23 p.m. ET
AOL, Time Warner in spotlight; Baxter, Nokia, Cisco win praise
|
NEW YORK (CNNfn) - Money managers and equity analysts remained positive about both partners in Monday's media-Internet marriage, but other stocks also rated highly on must-have lists.
Top picks included a company that builds the infrastructure of the information highway, a chain of do-it-yourself stores and a telecom ADR.
Here are some of the stocks recent guests on
CNNfn are buying and why:
The top Internet service provider is number three among Marc Klee's top holdings. Klee, portfolio manager for John Hancock Fund, had this to say about yesterday's mega deal between AOL and Time Warner. "These are the two premier companies on their fields. AOL (AOL) is the premier distribution company, if you look at it from the standpoint of the number of subscribers they have. If you look at it from the Time Warner (TWX) standpoint, Time Warner is to a certain extent a second-tier player in the Internet strategy, opposed to the other major content companies, the Disneys, the NBCs, the CBSs, all of whom have a much more defined Internet strategy. But look at what Time Warner brings to the table; they bring the whole network side of it, the CNNs, the HBOs, they bring the movies on the Warner side, they bring the music, they bring the publishing, Time and Sports Illustrated and all that. It's a whole slew of media. That's an unusual combination. The two fit together very nicely with minimal overlap."
Klee also sees opportunity in some ADRs, saying "I think China Telecom (CHL), which has had a big run, may be a drop ahead of itself. But I think that's an interesting situation as well. I think in Europe, I like companies like ASM Lithography (ASML), which is in the semiconductor capital equipment side. Nokia (NOK), which is our largest [international] holding, has been all over the place, another volatile stock. But I think the outlook in the cellular handset business is brilliant. And I think that should do well as well."
"We're cautious [ahead of the next FOMC meeting], says Robert Bloom, president of Friends Ivory & Sime. "We think the market has risk of up to 10 percent. You have to remember that we went up nine years in a row, and that has never happened before."
"[Given that fact], we like the big capitalization stocks, particularly Wal-Mart (WMT) and Home Depot (HD), which we've mentioned for years. [Maybe] we sound like a broken record there. But you have to remember that each of those stocks went up 10 times in the 1980s, and another 10 times in the 1990s. So they must be doing something right. And their near-term growth appears to be accelerating. So we would buy those on weakness. If the market goes off 10 percent, they should go off more than that, and we think that would be a buying opportunity."
"In technology," says Bloom, "we would be a little more selective. Technology has been the answer forever; we think it will still be the answer once we come through this correction, and there we like Cisco (CSCO), which is the fastest to get to the 300 billion market cap. Again, it is well positioned for growth in the Internet."
Bloom holds shares in AOL and Time Warner, saying "We own both stocks, so we were pleased [about yesterday's deal]. We were nicely hedged. Time Warner (TWX) up almost 40 percent; AOL(AOL) up a little bit. We like them both, we think the deal makes sense, we expect to stay with the position long term."
"The primary lesson coming out of the AOL (AOL)-Time Warner (TWX) deal," says Scott Reamer, Internet analyst at S.G. Cowen, "was that distribution matters a lot. Internet distribution. And the second-largest Internet distribution powerhouse on the Internet is Yahoo! (YHOO), right behind AOL. Clearly the market was telling us something yesterday. [Yahoo's] stock was up a very healthy margin, 20 or 30 points at times.
I absolutely believe that the market is right in valuing the distribution power of a Yahoo! a little more aggressively than we were."
"I think the Internet is an industry," says Stanley Nabi, vice chairman of DLJ Asset Management. "I think it's an industry that will be around for years and years. However, you can't have 300 Internet companies operating all successfully. A few will merge and a few others, like what we heard yesterday with Time Warner (TWX) and AOL (AOL), are going to just branch out into other
businesses. I think the majority of them will fall by the wayside. [So, given the current investing climate], later this year I would rotate into financials, but not yet. [Right now is the time to look] into the health-care stocks. Many of the health-care stocks have done very well in the last week. I think what you will begin to see is [a] return to some of the old fundamental industries that had good earnings last year, but the stocks did nothing."
"I think Baxter International (BAX), [in this area], which is trading at about 21 times earnings, and growing about 15 percent, is a good candidate. Bristol-Myers (BMY) is a broad health-care company and trading in the mid 20s as far as P/Es are concerned. [They have a] very solid pipeline [and] a good balance sheet. And I would buy some food stocks like General Mills (GIS). And as I said later on in the year, I would concentrate on the financials."
Washington Mutual (WM) is a Nabi pick. "It's the largest thrift in the country. It has had an excellent track record in both operations and acquisitions. It is growing at about 12-15 percent and trading at about 6 1/2 times earnings."
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. 
|
|
|
|
|
|
Track your stocks
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
