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Stock picks of the week
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August 11, 2000: 4:16 p.m. ET
Halliburton, KLA Tencor, Ann Taylor, About.com, Beckman Coulter rate
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NEW YORK (CNNfn) - Analysts and portfolio managers this week selected some of their favorite stocks from the energy, semiconductor, retail, technology and financial sectors, highlighting such names as Schlumberger, Applied Materials, Tiffany, Morgan Stanley and Sybase.
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."
"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," said Ron Hill, equity strategist, Brown Brothers Harriman.
"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.
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"One of the great question marks out there is the consumption of chips actually does parallel gross domestic product measures among the developing nations. None of these people dare give away business to their competitors. And what you see is, as long as demand is good, the cash flows from the semiconductor manufacturers are strong. They will spend it on next generation equipment, or they lose their competitive position. What they don't know is: what is next generation product that will keep the demand cycle going? And witness a year ago, who would have thought we'd do over 400 million handsets? So we're continually surprised by the strength of technology," said Byron Walker, semiconductor equipment analyst, UBS Warburg.
"Applied Materials (AMAT: Research, Estimates) is just a great company -- I mean, no doubt about it. There are some other companies on a valuation basis that may be more attractive to investors: KLA Tencor (KLAC: Research, Estimates) would be one, and Varian Semiconductor (VSEA: Research, Estimates) would be another one that we like. And Novellus (VNLS: Research, Estimates) is also executing very well," Walker said.
For more Thursday picks, click here
"Right now, the economy isn't slowing enough to hurt the retailers, in terms of their sales. You certainly have had some do better than others, like women's apparel retailers, Ann Taylor and Talbot's performed very well. You certainly are seeing some home furnishings companies, like Bed, Bath & Beyond, Linens'n Things, and Pier 1 perform well. While others, like some of the off-price retailers, like Ross stores and TJX are having a little bit of a hard time," said Dana Telsey, retail analyst, Bear Stearns.
"Some favorites right now include Bed, Bath, & Beyond (BBBY: Research, Estimates) and Linens'n Things (LIN: Research, Estimates) with an average transaction of less than $50 and repeat purchases. They're certainly well positioned. Ann Taylor (ANN: Research, Estimates) has easier comparisons going back into the holiday season, and their merchandise for fall sees certainly right on target. We think they'll do well. We think Tiffany (TIF: Research, Estimates) will have a good holiday season. And don't count out Gap (GPS: Research, Estimates), it's down from its low, but any positive sales trends could spark an increase in the stock price," Telsey said.
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"This is the Goldilocks economy," said Paul Rabbitt, the president of Rabbitt Analytics. "We've had a very strong economy. GDP growing in the 5, 5-1/2 percent area. Over the last 30-to-40 years that would result in hyperinflation; it would force the Federal Reserve to raise interest rates substantially. But with productivity so strong and today's numbers ideal, what it means -- as demand increases and companies need to increase output - is that when they bring on a new worker they really make money for doing that because their productivity is so high."
His picks include Sybase (SYBS: Research, Estimates) and Morgan Stanley (MWD: Research, Estimates).
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"I think even the most skeptical people about the productivity enhancements due to technology have been totally shocked by how it's played out in our economy," said Dan Veru, portfolio manager, Palisade Capital Management.
"It's radical to pick a dot.com, but About.com (BOUT: Research, Estimates) is one of the companies -- the No. 7 Web property of all Web properties -- that will actually show a profit in 2001. They have a very strong balance sheet. They've exceeded my estimates for the last five quarters," Veru said. "Cullen/Frost (CFR: Research, Estimates): they're a regional bank based in Texas, a very high-quality name. If the banks are going to work, typically the money centers will work first and then the regionals will follow. This company has done an exemplary job of growing their loan portfolio very judiciously without taking on unusual amounts of risk. The quality of the portfolio has still stayed intact.
Other picks include: Everest Re insurance (RE: Research, Estimates), Beckman Coulter (BE: Research, Estimates) and InterTAN Inc. (ITN: Research, Estimates).
For more Monday picks, click here 
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