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Stock picks by the pros
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August 21, 2000: 4:20 p.m. ET
Bank of America, WorldCom, Oxford Health, Viacom and China Telecom rate
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NEW YORK (CNNfn) - Market analysts took a look at the financial, health care, telecommunications, technology, and e-commerce sectors for their top picks Monday. AOL, Motorola, CNET, Cablevision and Critical Path were some of the companies that won favor.
While the markets struggled to hold on to gains in late afternoon trading, recent guests on CNNFN commented on the stocks they are buying and why.
 "When you look at who may win, Democrats or Republicans, I think it makes the case of stock selection and sector selection a little bit more important," said Barry Hyman, analyst, Ehrenkrantz King & Nussbaum. "You can see the weakness last week when the statistics came back and the polls for Al Gore, what happened to the drug stocks. They came right down because of his Medicare proposal possibly, and Democrats are usually going after drug stocks."
"When the Republican convention was doing well you saw a great uptick in defense issues and other sectors as well. So I think there's opportunity elsewhere, you can't ignore the political process but having an election usually helps the market in general anyway. So given the seasonality, interest rates peeking, the election which usually means positive market reaction post election, I think the market's in fairly good shape for the second half of the year," Hyman said.
Hyman's picks include Cablevision (CVC: Research, Estimates) and Viacom (VIA: Research, Estimates). "I like the media sector," he said. "I like the catalyst in Cablevision -- their tracking stock of Rainbow Media -- which is the programming asset. They understood what programming means, knew that years ago. How to bundle programming and trying to sever it out. I think it's going to achieve shareholder value for the company as well. As far as Viacom, we've liked Infinity Broadcasting (INF: Research, Estimates) and Infinity is being brought in by Viacom and I think you're looking at Viacom as a great company going forward as a total media company."
 "I think we've clearly seen over the last three years that the currencies of emerging markets can be extremely volatile," said Paul Matthews, chairman and chief investment officer, Matthews International Capital Management. "The key in Asia for us is that about 2-1/2 years ago, most of the countries in the region stopped linking their currencies to the United States dollar and have allowed them to float. That does mean that currencies will be volatile relative to the U.S. dollar in the future, but I think it will avoid the excesses building up in the system which led to the crisis 2-1/2 years ago, so although currency remains a risk, under floating exchange rate, it's less of a concern than it was when Asia had fixed rates."
Some Asian stocks that he's buying include Samsung Electronics (SSNHY). "Samsung is one of the world dominant players in the chip market," Matthews said. "In addition to that it's also a substantial manufacturer of telecom equipment in Asia, particularly in Korea. Cell phones and most recently LCDs and a number of other consumer electronics products, but uniquely, amongst the majors, Samsung Electronics sells less than 10 times earnings and while they're concerned about the dram cycle and a number of other things, they have moved to be one of the better managed of the Asian companies and at the moment are currently one of the better values."
Another Matthews' pick is China Telecom (CHL: Research, Estimates). "The cell phone market in China is probably, if not certainly, the fastest growing cell phone market in the world. Of course, if that continues, China will be the largest market in the world. At the moment China Mobile is one of two Chinese cellular companies that has listed shares for foreign investors and although it sells on a high multiple, it is growing rapidly and it also has the opportunity to acquire other existing cellular franchises in China and I think that this will remain a growth market for some time," he said.
 "We're starting to see trickle through to some of those regional banks like Bank of America (BAC: Research, Estimates). Things like that are really starting to improve. The brokerage stocks have been very strong. They look like they could have some more upside. So we like that group, and again I think that's telling you that the Fed's really done raising interest rates, well, at least the market foresees that it's done for a while," said John Hughes, market analyst for Shields & Co.
"HMOs have had a great year very quietly. They're up about 47 percent on the year. And recently they've gotten a little bit beaten up because, if you listen to Mr. Gore's speech on Thursday, it would concern anybody that owned them. They are up a lot, we still like the group, (and) we selected medical group as a whole," Hughes said.
"In particular Oxford Health (OXHP: Research, Estimates) acts extremely well. It's something that's well known here in the tri-state area, New York, and that one acts very well and we continue to stay with them," he said.
 "Flour City (FCIN: Research, Estimates) is, believe it or not, a small cap-micro cap stock but I would like to think that it's a real small micro cap value stock. They're probably going to earn somewhere between 65 and 75 cents this year. They're a construction company located down in Tennessee, well managed. It's a construction company that specializes in high-rises. Iron curtains for high rises, they're -- basically, have backlogs all over the place. The company's doing great but one of the problems is that there isn't much of a float out there and it's really not recognized. And here's a company that's selling 3-1/2, 3-3/4, and is probably going to earn somewhere between 65 and 75 cents this year. They also have international contracts and the European businesses picked up somewhat. Even their Asian business is starting to pick up. And I wouldn't be bit surprised to see some sort of a merger or a takeover within a very short period of time," said Peter Cardillo, director of research at Westfalia investments.
"In general all the telecommunications stocks have been under pressure. They are at are 52-week lows and WorldCom (WCOM: Research, Estimates) is no different. I think that you know somewhere along the line here there's a good possibility that WorldCom may be a primary takeover candidate. And I could see some foreign concern coming in here, and either making a major strategic alliance or just taking them over. I think the -- it's ripe for that," Cardillo said.
"I like Motorola (MOT: Research, Estimates) I think it's cheap. It's basically a good technical buy down here. It's based off it's lows, it's basically stabilizing around the present level and I suspect that any good news could take the stock up at least another 5-to-10 points within a short period of time," he said.
"CNET Network (CNET: Research, Estimates) is a great company-Internet company and media business. Unfortunately it's once again trading at lows here, it has a very low multiple in relation to other Internet companies. I think the stock is a terrific buy," Cardillo continued.
 "AOL (AOL: Research, Estimates): If you think about blue chip Internet company, AOL will be right up there. First of all, the company is just on a -- operates on a scale vastly larger than anybody else in this space. And secondly, AOL is really in, you know, a number of different businesses right now some of which are showing some wonderful profitability. The Time Warner (TWX: Research, Estimates) deal infuses AOL with a body of intellectual property that's probably second to none almost in the world. What it does is it allows AOL to use its incredibly distribution force that they've built the strength to reach consumers and to start selling them products and services; movies and video stream and on demand pay per view," said Jonathan Cohen, technology analyst at Wit Soundview.
"With Yahoo! (YHOO: Research, Estimates), again, there's a scale issue. What we saw into the second quarter: Yahoo! had a great second quarter. And they had it in an environment where people really didn't think that things like CPN rates and advertising sell through rates would do very well. And in fact those things didn't do very well, but they did gate for Yahoo! So all of those negative issues that we're seeing around the whole online advertising model really are not affecting Yahoo! because it is as big as it is and because it contract are as good as they are," he said.
"Priceline (PCLN: Research, Estimates) is probably our top pick right now in the traditional e-commerce space. Priceline is really much more than a retailer or a on-line vendor. They are actually a platform company. They've built this robust system for vending all kind of good and services; mortgage and gasoline and groceries. And they just keep rolling them out. We think this is a company that can be profitable in the not too distant future," Cohen said.
"Critical Path (CPTH: Research, Estimates) is more of a infrastructure play of a kind of back-end software functionality play. A space that we like a lot. Critical path provides messaging services to big companies like AT&T and MCI and Yahoo! If you budget what people do on Internet this is a big component how people spend time messaging other people e-mail all this stuff this is a company that is right in middle of that trend," he said.
-- compiled by Lucy Banduci and Alexandra Twin
* Disclaimer 
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