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Stock picks of the week
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June 16, 2000: 6:16 p.m. ET
Adaptec, Bell Atlantic, Ensco, Mylan Labs, Ralston-Purina won mention
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NEW YORK (CNNfn) - Every week CNNfn asks some of the top U.S. analysts and money managers to comment on their favorite stock picks.
Here's a rundown of their recommendations, culled from CNNfn.com's daily feature, "Stock picks by the pros."
"I'd like to see a summer rally. I guess there's no guarantee. But overall, I think we're still pretty bullish. The economy is still very strong, and global growth continues to be pretty solid, and the companies that we focus on I think can do well, even if we see some moderate slowdown in the economy," said David Kaslow, portfolio manager, Banc of America Capital Management.
"Global Marine is in the drilling group, and we think that the approach to this group is probably a basket of stocks, with names like Global Marine (GLM: Research, Estimates) and Ensco (ESV: Research, Estimates). Also in the services company, Weatherford (WFT: Research, Estimates), BJ Services (BJS: Research, Estimates), these companies are all really well positioned to take advantage of what looks like two more years of solid earnings growth, as this group really rebounds strongly."
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"Frankly, I think Lucent (LU: Research, Estimates) is the most undervalued stock in my universe. It's trading at half the multiple of Nortel (NT: Research, Estimates)," said Ariane Mahler, telecom analyst, Dresdner Kleinwort Benson. "If you unlock all of those businesses that they have -- in wireless, in optical electronics, in optical networking, voice data -- you can easily end up with $120 as a sum of the parts valuation and it's trading at half that."
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"We expect the whole year to be very volatile. When the market's excited and upbeat, it goes up a few percents, and when they get concerned about things like earnings, they'll go down. At this point, we'd probably think we're in the middle of a trading range. We think at the end of the day the market is going to be up maybe 10 or 15 percent for the year. Expect wild volatility along the way," said David Katz, stock analyst, Matrix Asset Advisors.
"We like companies like Bank of America (BAC: Research, Estimates), or Freddie Mac (FRE: Research, Estimates) on the financial side. On the drug side, Bristol-Myers Squibb (BMY: Research, Estimates), Mylan Labs (MYL: Research, Estimates), which is a very volatile stock, just sold off about 30 percent. We think it's a great buying opportunity here. On the technology side, companies like Computer Associates (CA: Research, Estimates), Adaptec (ADPT: Research, Estimates), or EDS (EDS: Research, Estimates)," Katz said
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"What we look at is basic fundamentals, looking at cash flow, looking at a franchise, so when a company has a solid business in a local marketplace, with a good customer base, we like that. It's very simple to understand. Consistent generation of cash flow is something that no matter what the interest rate environment does, no matter how volatile the market is, the company continues to build what we'd call, asset value in the form of cash," said Marc Gabelli, managing director, Gabelli Funds.
"We look at all sectors, everything from the food and consumer products sector -- and in that area we like Ralston-Purina (RAL: Research, Estimates) — to the telecommunications area, Bell Atlantic (BEL: Research, Estimates). We also like Time Warner (TWX: Research, Estimates)," Gabelli said. Time Warner is the parent company of CNNfn.
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"The demand for all of the networking gear and Internet infrastructure equipment is running way ahead of expectations. These companies cannot produce enough product to meet the demand, and that's their biggest challenge right now. Demand for the Internet data traffic is still growing around 300 percent per year. The Internet is still doubling in size every 98 days. All of these things that had shaken investor confidence over the last several months is a non-event. The fundamental business line is 100 percent intact," said Andrew Barrett, technology analyst, Salomon Smith Barney.
"I think investors should be focused on several key areas, because at the end of the day you really want to be focused on earnings momentum," said Barrett. "One key area is going to be wireless. You look at companies like Qualcomm (QCOM: Research, Estimates). You look at companies like Nokia (NOK: Research, Estimates), Ericsson (ERICY: Research, Estimates) looks very, very solid in here. The chips look very good. Intel (INTC: Research, Estimates), Texas Instruments (TXN: Research, Estimates), PMC-Sierra (PMCS: Research, Estimates), and AMCC (AMCC: Research, Estimates) look very good to us.
For more Monday picks, click here
--compiled by Alexandra Twin
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