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Stock picks by the pros
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March 28, 2000: 1:02 p.m. ET
Wells Fargo, BindView, AOL-TWX, Sprint, and Virata head the short list
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NEW YORK (CNNfn) - Technology and financial services companies were most often mentioned by money managers and analysts Monday.
Here are some comments on the stocks that recent guests on CNNfn are
buying -- and why:
"I think we're seeing a fantastic tug-of-war," said Charles Lemonides, CIO and senior portfolio manager, M&R Capital, "between the argument that the economy's growth is going to keep equity valuations high and corporate earnings growing, and those that are concerned that that very same growth is going to trigger higher interest rates. And that conflict is really giving you these jarring returns over the past couple of weeks. We're seeing big swings one way or the other as that conflict plays itself out. The new economy/ old economy debate is also an issue."
 Even given uncertainty about the market, however, Lemonides does discuss one stock that investors might want to investigate: telecom giant Sprint (FON: Research, Estimates). "I think there are two things going on here," said Lemonides. "One, I think you're getting new economy-type growth [particularly as a wireless services provider] with Sprint. But you are still getting old economy valuations, and beyond that, you get the merger with MCI WorldCom (WCOM: Research, Estimates). When that MCI-WorldCom merger goes through, Sprint stock will be converted into roughly $76 worth of MCI WorldCom, which is almost a 30-percent gain from here. On top of that, you're stepping into MCI WorldCom at basically 16 times next year's earnings."
 "One of the big themes in the current marketplace is communications semiconductor stocks," said Anurag Pandit, co-portfolio manager, John Hancock Funds, "and these are stocks that are benefiting first from the secular growth in the communications industry, but also from the cyclical rebound that we've seen in semiconductor stocks after they sold off due to the Asian crisis."
"Our top holding is Virata (VRTA: Research, Estimates) which is a DSL company which helps alleviate the congestion in the 'last mile' in terms of broadband access to the Internet. The other company in our top 5 holding is Exar (EXAR: Research, Estimates)."
 'Pros' bonus: Anurag Pandit, co-portfolio manager, John Hancock Funds, comments on Quanta Services (PWR: Research, Estimates). Select: [194KB WAV] or [194KB AIFF].
BindView Development (BVEW: Research, Estimates) is another Pandit pick. The company "provides systems management tools for the NT platform that's basically a play on the Microsoft (MSFT: Research, Estimates) rollout of Windows 2000. It's going to do extremely well, and the market is just expanding. Over the last quarter, they saw revenue growth in excess of 50 percent, and we believe that that should start increasing as Microsoft rolls out the NT platform later this summer in full force. We believe that that stock has a lot to go, it could easily double from here."
"If you put 10 analysts in a room and polled them," said Sean Ryan, banking analyst, Bryne Ryan & Co., "you'd get 10 for 10 that the majority of banking stocks are no longer rate-sensitive, that when they go down on rate fears, you should buy them. We're actually concerned that the consensus may in fact be too optimistic. So we'd be cautious here. But there are some names we like: Wells Fargo (WFC: Research, Estimates) [and] Capital One (COF: Research, Estimates). But we see some short potential as well. It's a mixed bag."
 "The old Wells Fargo was effectively acquired by the old Norwest and so they got 10-for-one. It's the 'GE of financial services,' the one conglomerate that actually works, and I think that goes back to CEO Dick Kovacevich and his demonstrated ability to give these different business lines sufficient autonomy to run properly. We rate Wells Fargo a 'buy', with a target price of $50," Ryan said.
'Pros' bonus: Sean Ryan, banking analyst, Bryne, Ryan & Company, comments on financial services firm Capital One (COF: Research, Estimates).
Select: [144KB WAV] or [144KB AIFF].
 "We like AOL (AOL: Research, Estimates) for a number of reasons," said Jonathan Cohen, technology analyst, Wit Capital. "First and foremost, it is probably the single company best and most dramatically positioned to benefit from the continued growth of the Internet. If you look at the number of people that AOL reaches out and touches everyday, they have more than anybody else in the Internet space. This is a company that has the user population, it has critical mass, and it is in many ways best positioned for benefiting from the growth of broadband access. If you think about AOL's ability to benefit from that, it's pretty dramatic. America Online can go from delivering static Web pages to delivering things like audio and video and music and movies. In combination with Time Warner [CNNfn's parent company] now, we think that's a very, very powerful combination."
Cohen also favors 24/7 Media (TFSM: Research, Estimates), noting that "as the Internet becomes even more pervasive and even faster and touches even more people, the notion is that the revenue model for an awful lot of companies is going to continue to be advertising-based, just as it has been in the traditional media world. 24/7 is awfully well positioned to make money from that."
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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