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Stock picks of the week
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August 4, 2000: 5:32 p.m. ET
WorldCom, PepsiCo, Genentech, Flextronics, Motorola, AIG, Cisco
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NEW YORK (CNNfn) - Analysts and portfolio managers this week selected stocks from the wireless, technology, semiconductor, and energy sectors, as well as the beverage industry, including such names as Genentech, Infospace, Texas Instruments, Chubb, PepsiCo, and Anheuser-Busch.
Every week CNNfn asks some of the top U.S. analysts and money managers to comment on their favorite picks.
Here's a rundown of their recommendations, culled from CNNfn.com's daily feature, "Stock picks by the pros."
"I think we've been in a search for leadership in the market. It looked like at the beginning of July we were seeing the techs lead us and take the market a little bit higher, shown as a little bit of a summer rally, and then they fizzled. And so did the rest of the market. And we've just sort of swooped lower. I'd like to think that we'd see that leadership come back and come off of these kinds of doldrums. But I think it might take a little bit longer, might even be today's unemployment report that begins to give us a nudge along," said Michael Farr, president of Farr Miller & Washington.
"I think either way [Microsoft] shakes out, you win as an investor," said Farr. "Now short-term, I think that you could endorse some real volatility, and short term you certainly have with Microsoft (MSFT: Research, Estimates), and it hasn't been the fun kind of volatility. It's been the down kind of volatility. But if this goes through, if you get two companies, you get Steve Balmer running one, you get Bill Gates running the other. These will be two meaner, leaner companies with two proven executives. I think you get a premium for that. I see that as a win for investors."
"My favorite stock is WorldCom (WCOM: Research, Estimates," Farr said. "The market's been beating on this stock. The earnings numbers are coming in. The Sprint merger didn't go through. Fine, guys. They're getting penalized for their long-distance segment. Company is supposed to be at $2.45 this year. 30 percent of that is the consumer long distance that nobody likes. But that's not the big deal. The big deal is Internet. They have the strongest and best Internet backbone in the industry. They're international and they're data. These guys are making a lot of money. They're making their numbers and they're increasing their earnings steadily. This stock, I think, is an easy double over the next 12-to-18 months for those who are willing to be patient."
"Technology is such a huge part of market cap right now; if that part of the market is performing poorly, it's really tough for the other indices to go up," said Douglas Cliggott, U.S. equity strategist, J.P. Morgan.
"I think the key in the market is technology, because what has been giving us this extraordinary earnings growth is spectacular earnings growth from a lot of tech companies. They are telling us the second half is going to be slower. So I think the broader market earnings trend is going to be not sharply down, but trending down," Cliggott said.
"PepsiCo (PEP: Research, Estimates), in beverages is good," he continued. "We also like Anheuser-Busch (BUD: Research, Estimates). And what we like there is pricing. I think a theme is, if you can find an industry that is having some success in raising prices it tends to work for you in the equity market."
"El Paso Energy (EPG: Research, Estimates) is back up over $4 and it is really a good idea to invest in the natural gas segment," Cliggott said.
For more Thursday picks, click here
I like technology. I like Flextronics (FLEX: Research, Estimates), Juniper Networks (JNPR: Research, Estimates) and a new comer, a rebounder that is called PeopleSoft (PSFT: Research, Estimates). And Genentech (DNA: Research, Estimates), of course in biotechnology," said Joseph Parnes, analyst, Technomart Investment Advisers.
"Flextronics is a manufacturer of electronics," Parnes said. "Most of the contracts are in wireless. That's the area that I don't think really that the slowdown in the economy would be a reality for them. There may be some changes in the deferred contract of the revenue, but not really in the growth part of it. They just signed up an agreement with Motorola for $20 billion for five years' time. Flextronics will be enjoying a good earnings coming in, at least the growth not only from the fundamental, but from a technical pattern that the company will go up higher and it's doing it exactly on that pattern."
For more Wednesday picks, click here
"The market is looking for that soft landing. If we can get through the productivity unit labor cost next week, and they are benign, and it takes the Fed totally off the radar screen, then we'll get a relief rally, but not a bull market. So we're in a non-bear market, non-bull market. We're in a trading-range environment," said Richard Suttmeier, chief financial officer, Joseph Stevens.
"Infospace (INSP: Research, Estimates) is clearly the leader in the wireless Web. So if you believe in the future of the wireless Web, Infospace is your No. 1 choice. They have wireless devices that will have new features that will change the way we live. And a lot of things will be not handheld with regard to this. You will see it in automobiles. You'll see it all over the place. They have access to 88 percent of the American cellular market through Verizon, AT&T, and SBC," Suttmeier said.
His other picks include: Cisco (CSCO: Research, Estimates), AT&T (T: Research, Estimates), Motorola (MOT: Research, Estimates) and Compaq (CPQ: Research, Estimates).
For more Tuesday picks, click here
"It's basically a technical dead-cat bounce we're seeing here today. The thing in the market that has been lacking is sustainability and follow through. So we'll keep our eyes on some upcoming economic data. And that's basically going to take today and this week's trade," said Bryan Piskorowski, analyst, Prudential Securities.
"We're aggressive buyers of Texas Instruments (TXN: Research, Estimates) here trading around $60. We think the semiconductors are oversold. And if you are going to be able to step up, now is the time to get in. The only problem with the semiconductors is there's been talk that there may be peeking within the cycle demand. Our feeling is no, that is not happening," Piskorowski said. "And the only time you're going to see that is once we see sequential revenue and earnings growth going out into the third and fourth quarter. And by that time it will be too late. So we're aggressive buyers of the semiconductors now."
Other picks include: Marsh & McLennan (MMC: Research, Estimates); Baker Hughes (BHI: Research, Estimates); Chubb (CB: Research, Estimates); AIG (AIG: Research, Estimates); and American Express (AXP: Research, Estimates).
For more Monday picks, click here
-- compiled by Alexandra Twin and Parija Bhatnagar
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