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Stock picks by the pros
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August 11, 2000: 2:38 p.m. ET
Schlumberger, Baker Hughes, Global Marine, AT&T, Noble Drillers make list
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NEW YORK (CNNfn) - Top picks Friday of market analysts came from the energy, health care, financial, retail, and telecommunications sectors, including Halliburton, Cardinal Health, Northern Trust, Eastman Kodak, and The Gap.
While Dow blue chips sparked a rally in the markets after Big Tobacco got a boost from a bullish Goldman Sachs report, recent guests on CNNfn commented on the stocks they are buying, and why.
 "We've been raising rates in this country since about June of last year, so we've had over a year's worth of rate increases starting to flow into the market. That has slowly, but surely, drained liquidity out of the overall financial system in America. So money supply growth has been below nominal GDP growth now for a number of months. So what's happening is slowly, but surely, there's just not enough money out there available to make everything go up all at the same time. So that's why rallies fail sooner than you expect, and why you know people get punished more for bad news than they get rewarded for good news," Ron Hill, equity strategist, Brown Brothers Harriman.
"I think you know you can find some interesting areas. And I've been trying to figure out - you know, the race doesn't go to either the tortoise or the hare right here, but maybe to the ants, the guys who sort of work hard all the time, and grow steadily," Hill observed. "And so I think there's some stocks there in sort of you know health care area, and some of the distributor stocks, which look kind of interesting out there.
"Energy is a big part of any portfolio right now and I think you know we've continued to stress the drillers and the oil service companies over the big majors, simply because with oil bouncing around, as you say, the majors tend to be a little more sensitive to the direction in oil prices. Oil service and drillers have a better sensitivity I think to the level of oil prices. So you know big oils, yes, look interesting, but even more interesting would be the Schlumberger (SLB: Research, Estimates), Halliburton (HAL: Research, Estimates), Baker Hughes (BHI: Research, Estimates), Global Marine (GLM: Research, Estimates), and Noble Drillers (NE: Research, Estimates)," Hill said.
"One of the interesting names here is Cardinal Health (CAH: Research, Estimates), which is a distributor of health care products. And they're just having gangbusters earnings growth here," he continued.
"The banks have pulled back a little bit, but you know, Northern Trust (NTRS: Research, Estimates), I think is interesting. One, it is a big trust bank; a lot of servicing revenue. Volumes have come off a bit on the New York Stock Exchange in here, but still, volumes are pretty good. So you know those transaction volumes helped Northern Trust. Trust assets are growing overall as the economy gets older, gets richer, you know, more and more things are going to Trust management. So that's the kind of place. And of course, you know, our favorite, AFLAC (AFL: Research, Estimates) out there, and AIG (AIG: Research, Estimates) in the insurance world. You know, everything's pretty ducky for those guys right now," Hill said.
 "We've liked Eastman Kodak (EK: Research, Estimates) for a while. It's been in a range of 15 or so points, but the company continues to make the inroads here. They're cutting back costs. You're buying the stock at 10 times earnings and now all of a sudden a couple of analysts come out and say that hey, maybe they're gaining market share on Fuji photo. And the stock is up about 8 and 9 percent, but down the bottom again, they were going out of business. And you can apply these to almost a whole cross section of big industrial-type stocks that no one likes," said Larry Rice, chief investment strategist, Josephthal & Co.
"Gap (GPS: Research, Estimates) is getting very interesting. We have it as a buy. I haven't done any buying of the stock yet, but my target had been following this news in the mid to high 20s, it's there. Every couple of years they stumble for a quarter or so and they regain their momentum. I don't think this is going to be different. There's a cautious outlook for the balance of the year. We're uncertain about retail spending, but when you look at the macro-picture, 4 percent unemployment declining, consumer income is rising. Confidence is high. The group is down 40, 50 percent across the board. The analysts don't like them. That's why I buy them," Rice said.
"If you're an investor, I'd look at companies like AT&T (T: Research, Estimates). I'd look at companies like Kodak. I'd look at companies like Federated Department Stores (FD: Research, Estimates) that are down substantially from their highs where management is focused on regaining momentum in their stocks and in their basic business plans. I think the market for the next few sessions will be upwards and choppy. I'd keep cash in reserve for after the FOMC meeting. If we don't get a quarter point, it will already be in the market," Rice said. "If by some chance, the numbers between now and next Tuesday come out and we by some chance get a quarter-(percentage)-point increase, the people will say that's it for the rest of the year, but the market would have already anticipated that particular outcome as well. So keep some cash on reserve. Let's buy on the correction after the meeting."
-- compiled by Parija Bhatnagar
* Disclaimer 
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