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Stock picks by the pros
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March 9, 2000: 12:47 p.m. ET
CuraGen, Cisco, Global Marine, Office Depot, and Nortel make the short list
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NEW YORK (CNNfn) - Technology stocks appeared several times among money managers' and analysts' top picks Thursday, but oil services stocks and several retailers were also mentioned with enthusiasm.
Here are some comments on the stocks that recent guests on CNNfn are
buying -- and why:
 "We've been talking about biotechs for a while," said Brian Clifford, portfolio manager, SunAmerica Asset Management, "and certainly these stocks are starting to garner mainstream appeal. Investors have been warming up to the group. There's no doubt that many companies emerging here are in the genomic space. We've seen a couple of key events including the mapping of the human genome, and the deals that genomic companies continue to sign with major pharmaceuticals. Also, incumbent biotechnology companies, those that have put products on the market over the last few years, continue to announce positive product pipelines. We're going through a revaluation process within the group.
"Some of the names that I've owned in the past," said Clifford, "have been Millennium Pharmaceuticals (MLNM: Research, Estimates), Human Genome Sciences (HGSI: Research, Estimates) which would be considered a leader among companies working on human genome-related research, and CuraGen (CRGN: Research, Estimates). In the short term, I think we could see pullback here. A lot of these stocks are extremely extended. The valuations have been dramatically changed over the last six-to-eight months. But again, they've made the first leg of a multi-leg move here. And this is going to be a trend that's going to continue going forward."
"I would also be buying Biogen (BGEN: Research, Estimates) at the current stock price," Clifford continued. "Biogen would be considered a premiere biotechnology company. It's a good example of what's happened to increase the appeal of biotechs over the last few years - the company put a blockbuster product on the market, Avonex, for multiple sclerosis. The company is going to do over a billion dollars in sales over the next two-to-three years. This went from a high-flying technology company to a steady cash flow and product company. We're going to continue to see news out of their pipeline. And they've got the balance sheet to make things happen. I would consider Biogen one of the preeminent biotech companies and I think you've got to use any kind of weakness as a buying opportunity."
 Clifford also mentioned stocks in the oil industry, particularly oil-services stocks, such as drillers. "[Oil] stocks have made a definite move. But I think the next two quarters are going to be the swivel quarters for these stocks, meaning that their earnings are really going to turn," he said. "And it's our contention, from what we're hearing from our companies, that utilization rates are setting new highs, and capital expenditures budgets in major companies are going to continue to increase. And it's going to translate into earnings for these guys over the next two quarters. This is a cyclical business. We really believe the cycle is turning. So we would want exposure to the drillers, because they've got the most leverage in the cycle.
"Names like Global Marine (GLM: Research, Estimates) and Marine Drilling (MDCO: Research, Estimates), even Transocean (RIG: Research, Estimates) should be considered. I am adding stocks in this group [to holdings] and will continue to do so," Clifford said.
"I think the area that will outperform for me," said John Golden, technology analyst, John Hancock Funds, "is really technology. I think the fundamentals in this area are extremely strong. I don't see any brakes there. We have web sites being built out, we have the telecom infrastructure being built out. This will both benefit the companies and the providers of equipment and services, and so I think those areas that would be the best."
 "We like selective names among software stocks. You have to be more selective with the names you look at there. I think a lot of the Internet-related names have had great runs already," Golden said. "We like Microsoft (MSFT: Research, Estimates) for Windows 2000, but we like small cap names that will benefit from the rollout of Windows 2000; Bindview (BVEW: Research, Estimates), for instance, which makes systems management software. Their software allows you to monitor Windows 2000 and Microsoft Outlook, and as that gets rolled out through corporation environments we expect it to do well. A second is i2 Technologies (ITWO: Research, Estimates), which focuses on supply- chain management. You hear a lot these days about the rise in business-to-business e-commerce. Buying is one of the engines for that growth. Bindview is 30 or so right now. I think the stock could go to 50."
"In the telecom equipment area, the companies benefiting from demand here are Nortel Networks (NT: Research, Estimates) and CIENA (CIEN: Research, Estimates)," said Golden. "Look at the demand high-speed connectivity in the consumer arena. Connections to the house, that's called the last mile. AMETEK (AME: Research, Estimates) is a play on that 'last mile'. We're looking at cable here, cable networks. AT&T has made a huge bet on building out the cable infrastructure to provide not only cable TV, but voice and other data. Just last week we had saw an endorsement from AT&T that said AT&T is planning to use AMETEK's or Ericsson's equipment exclusively. So this is just a bet, actually, on the success of AT&T's roll-out of cable telephony."
"Abbott Labs (ABT: Research, Estimates)," said David Katz, chief market analyst, Matrix Asset Management, "is perceived as an old-economy stock. But it's a premier drug and medical products company. It sells at about 18 times earning. It's had one of its worst years of relative performance that it's had in the last decade. It's selling at a great price, and the company has good long-term prospects. We think it's a great buying opportunity. Insiders just bought a slew of stock at current levels. So, we would take a cue from them.
 Another "old-economy" stock, Office Depot (ODP: Research, Estimates), "is just a category killer in the office products area," said Katz. "Their business is doing well. Their earnings are expected to rise about 15 percent or better this year. They bought back a heap of stock. They also have a wonderful Internet strategy. By the end of this year, they will be selling about $800 million worth of goods over the Internet. No one's paying attention to that at the moment - but one day they will." Katz has also looked at Office Depot rival Staples. "We think that Staples (SPLS: Research, Estimates) is a better company," opined Katz, "but to buy Staples, you pay about 25 times earning. To buy Office Depot, you pay just 10 times earnings."
 'Pros' bonus: "It pays to wait with this company. We think you're going to make back 100 percent in about 18 months," said David Katz, chief market analyst, Matrix Asset Management of this "old economy" company. To find out which one, click on either [308KB WAV] or [308KB AIFF].
"The 'dot.com' appendage is associated with a lot of what is called e-tailing," said Patricia Chadwick, president, Ravengate Partners, "but I think that what we're facing there is something very different from what is going on in the whole technology sector. E-tailing is really not technology. E-tailing is about increasing the capacity of the retail space, which, to me, will only drive prices down. A lot of people think that e-tailing is the cheap way to get products to you. In fact, a lot of infrastructure has to be built by those e-tailing companies, and they have to deal with credit card stuff, they have to deal with returns - I'm not sure that that is the way to make money."
"Meanwhile," Chadwick continued, "there is a lot going on in the whole Internet arena that will make money for you. Right now we're looking at optical networks being built out; that is really the information highway. You want to be with the companies that are providing either the products for that or the software for that, and I think that's where you can actually make money in the Internet space. I'm talking about companies like Cisco (CSCO: Research, Estimates), for sure, Sycamore (SCMR: Research, Estimates), EMC (EMC: Research, Estimates) for data storage, all that kind of thing. Also, in the area of Web site development services and software, Ariba (ARBA: Research, Estimates) is a name to look at."
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. 
-- compiled by Tatiana D. Helenius
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