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Stock picks by the pros
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June 22, 2000: 4:05 p.m. ET
Texas Instruments, Pfizer, Kulicke and Soffa, Intel, Motorola get positive buzz
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NEW YORK (CNNfn) - Market analysts picked the semiconductor, wireless and biotech sectors Thursday as good summer bets for investors. Some stocks that won mention included Kulicke and Soffa, Broadcom, Lynx Therapeutics, Ciena, EMC, Motorola and Pfizer.
While the Dow and Nasdaq fell sharply in late afternoon trading, recent guests on CNNfn commented on the stocks they are buying, and why.
 "There are a lot of enticing valuations as well as enticing technologies [in the wireless industry]," said Seth Kirkham, analyst, Guinness Flight Wireless. "Some of the biggest stocks in our fund, Nokia (NOK: Research, Estimates) and Ericsson (ERICY: Research, Estimates), you can buy on about 50 times earnings for 25 percent earnings growth. Now, that's a sensible multiple, almost like some 'old economy' stocks that people are looking at to buy now. And they obviously have a significant growth path a long time into the future."
His final pick is Motorola (MOT: Research, Estimates). "We think they have a very integrated offering to both the operators in terms of the handsets and infrastructure, but also in terms of building out services. Obviously, they had component shortages and the handset division didn't do so well last quarter, but we think they'll turn that around. And they have a good profile of handsets and are particularly well positioned in the Asian markets."
 "I think that in the semiconductor world one has to realize that there are a number of different dynamics that drive the industry," said David Wong, semiconductor analyst, Paine Webber. "One of the most important things, which provide some security, is the fact that technology changeovers are a very important source of growth. In particular, in the communications world we're seeing lots of new standards, we're seeing the world move from copper protocols to optical fiber communications. So in some of these segments, almost independently of the economy at large, there's going to be huge growth just as we move into these new technologies and we take on these new areas in semiconductors."
One of his picks is JDS Uniphase (JDSU: Research, Estimates). "I think JDSU looks like an excellent value. I believe it's the dominant company in opto-electronics and that it can achieve growth rates of the order of 70 percent per year internal growth over the next several years. I think this is one of the best stocks in the universe. We have a $200, 12-month price target on JDSU and a buy rating on this stock."
He also said that he liked Broadcom (BRCM: Research, Estimates). "It has competed in some very high volume, rather important markets. They are the dominant player in chips for cable equipment. They also sell chips for local area networks. They have several new areas that could have explosive growth, like home networking. They are also a company of proven quality, being able to maintain dominance in some of the most difficult markets."
His final pick is Texas Instruments (TXN: Research, Estimates). "I have an attractive rating on TXN. I think that it is a very strong company. I think that the core business of TXN has long-term strength. We're projecting a growth in excess of 20 percent per year over the next two years."
 "Looking forward through the summer and into the fall, we think the Nasdaq is going to perform well, outperforming the Dow, and moving back to its old high," said Terence Gabriel, equity strategist at IDEAglobal.com.
"We think Intel (INTC: Research, Estimates) is going to make a new high as we move through the summer. Stock is exhibiting high relative strength, and demand for microprocessors and chips, flash memory, continues to be strong," Gabriel said. "Cisco Systems (CSCO: Research, Estimates) is a real, big name tech stock. Cisco Systems is again, like Oracle however, pretty pricey at these levels still. I would think Cisco can, however, tread back toward its old high, which is just over 80."
"Kulicke and Soffa (KLIC: Research, Estimates) are makers of assembly equipment bonders for the semiconductor industry. We think they offer very good value in a strongly growing industry," he said.
"Lynx Therapeutics (LYNX: Research, Estimates) is a genomics company. We love it on a technical basis. Many of these biotech stocks had a late-run last year into the first quarter, and crashed off their highs. But they're coming back very strongly," Gabriel added. "So, this sector remains hot. It's volatile, but it is an area where momentum players are taking advantage."
 "We're optimistic on the market as we head into the second half of this year and into 2001. We think the Fed is probably done in terms of interest rate hikes for the rest of the year," said David Presson, associate director of equity research at Banc of America Capital Management. "At most, we could see another 25 to 50 points [in] hikes. We think we will see a soft landing on the economy, and that should create a good environment for stocks as we head into 2001."
"We think second-quarter earnings for the most part will look pretty good," he said. "But with the economy slowing, we do think that growth will be at a premium, and the type of stocks and the type of sectors that we prefer right now are in technology, health care and communications, where you will see the most growth."
"We like the future growth of the Internet," said Presson. "With Cisco (CSCO: Research, Estimates), the critical issue here is valuation. Also, we think if Cisco can continue to grow -- we don't think they're going to grow at 50 percent a year as they had the last few quarters -- they can still maintain a very high level of growth for a long period of time, and that would justify the valuation and send the stock higher."
"EMC (EMC: Research, Estimates) is involved with data storage. And with the Internet, you need massive amounts of data storage to serve these web sites," he said. "EMC is the strongest company in that market and the best positioned, and again, we see a lot of growth in the future for EMC."
"We like Nortel (NT: Research, Estimates) and Ciena (CIEN: Research, Estimates)," Presson added. "These are companies involved with bandwidth, and again, you will need tremendous data flow to support the Internet."
"Pfizer (PFE: Research, Estimates) is probably one of our favorite names in terms of the big cap drug companies," he said. "We think the recent merger of Pfizer and Warner-Lambert really creates a strong powerhouse, with a very strong product pipeline, limited patent expiration risk, and strong distribution network. And also a huge R&D budget. And all of those factors should lead to very strong earnings growth out of Pfizer for the next several years."
--Compiled by Parija Bhatnagar and Alexandra Twin
* Disclaimer 
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