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Stock picks by the pros
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March 15, 2000: 1:15 p.m. ET
Amgen, GE, GM, IDEC, Home Depot, Costco, and Ford garner praise
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NEW YORK (CNNfn) - Biotech names abounded Wednesday as money managers' and analysts' discussed their top stock picks, but several "old economy" stocks were also named as top contenders.
Here are some comments on the stocks that recent guests on CNNfn are
buying - and why:
 "I think one is likely to see a rebound in biotech," said Meirav Chovav, biotech analyst, Salomon Smith Barney, "and I would especially focus on products companies; for instance, companies such as Amgen (AMGN: Research, Estimates), IDEC (IDPH: Research, Estimates) and MedImmune (MEDI: Research, Estimates), which stand to benefit from the widespread availability of genetic information, rather than lose by it. Human Genome Sciences (HGSI: Research, Estimates) is now focusing on product development. In terms of the product companies, we are still recommending the one that we have recommending. We love Amgen, IDEC and MedImmune."
 "The genomics sector still remains very overvalued," said Eric Hecht, biotechnology analyst, Merrill Lynch, "and I wouldn't be surprised if we saw more profit taking there, but there are a lot of good companies that have products on the market, strong earnings potential, strong earnings growth as we speak, that should be bought now, including names like MedImmune (MEDI: Research, Estimates), names like IDEC (IDPH: Research, Estimates). These are growth companies that are in the sweet spot of their product cycle, and they're being taken down with the Clinton news which has absolutely nothing to do with these companies."
"If you look carefully at the 'old economy' stocks like GE (GE: Research, Estimates) that recognize what's going on and are making the shift to participating in the 'new economy,'" said John Chadwick, senior portfolio manager, Bessemer Trust, "there's no reason to throw them out. And General Electric's multiple reflects the fact that people understand that. I think investors heard a very sharp re-telling of a Wall Street adage last week; just because a stock has a low valuation doesn't make it attractive. Procter & Gamble played out in spades on that. Whereas a stock that may have a high valuation still remains quite attractive because earnings are going to surprise, and surprise a lot, on the upside. And I think Oracle (ORCL: Research, Estimates) kicked off what's going to be a very strong earnings season for technology."
"Investors talk about throwing stocks out," said Chadwick; "Wal-Mart (WMT: Research, Estimates), Fannie Mae (FNM: Research, Estimates), Home Depot (HD: Research, Estimates), Costco (COST: Research, Estimates), a lot of the good retail companies in here, have just been trashed for reasons that I fully don't understand, because earnings growth for these companies is extremely strong. And they're more dominant, frankly, in their markets than most of these tech companies are."
"Investors are at a point right now where they recognize that a lot of very old-fashioned value names may suffer some from damage to their businesses as a result of the new economy," said Bernie Picchi, portfolio manager and director of research, Federated Investors. "And I think it's the role right now of analysts, portfolio managers and individual investors to distinguish between those companies in the 'old economy' that really do have the right stuff to take them forward into the 21st century, and those that are just old companies. For example, we're 35 percent invested in technology and 8 percent in telecommunications, and even though the telecommunications names are the New Age telecom companies, not the AT&T (T: Research, Estimates) or Bell Atlantic (BEL: Research, Estimates), we also have financial services and basic industries and a lot of 'old economy' companies included in our holdings as well."
 "When you talk about 'old economy,'" said Picchi, "there is no one that is more 'old economy' than General Motors (GM: Research, Estimates). But General Motors made a decision about 15 or 20 years ago that it was going to be a participant - I don't think people used the words "new economy" back then - but certainly what was the new economy at that time, GM decided to participate in it. It was a very early investor in Hughes (GMH: Research, Estimates) and EDS (EDS: Research, Estimates). Well, Hughes is about to be spun out, we think. And we think also that General Motors, and Ford (F: Research, Estimates) too, which we own in the portfolio, could be big beneficiaries of the rise of e-commerce networks where companies and individuals are able to purchase everything from tires and batteries, to windshields for their autos, more cheaply."
Lastly, said Picchi, "you certainly can't dislike the management of General (GE: Research, Estimates). I think they probably have the greatest bench strength of any industrial company in America today."
'Pros' bonus: Hear further commentary on General Electric from Bernie Picchi, portfolio manager and director of research, Federated Investors.
Select: [134KB WAV] or [134KB AIFF].
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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