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Stock picks by the pros
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August 22, 2000: 3:50 p.m. ET
Tribune, Ericsson, IBM, JDS Uniphase, Delphi Automotive Systems mentioned
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NEW YORK (CNNfn) - Analysts and portfolio managers Tuesday took a look at the media, oil and gas, technology, and wireless sectors, highlighting such names as Reader's Digest, Enron, Oracle and Schlumberger.
As the markets moved in reaction to the Fed's decision, recent guests on CNNFN commented on the stocks they are buying and why.
 "I think that we're entering into a season of commonality. Earlier this year we had such a euphoric spike in different sectors at different times, and it was very tough to get a fix on valuation and fundamentals," said Scotty George, chief investment strategist, Corinthian and Partners Asset Management. "The consolidation begun in March, which is still ongoing, has really a more level playing field in which more sectors appear to be at valuations that we call nominal and as a result give us a better opportunity to look at the fundamentals and then go forward from there.
"I mean we've had a consolidation but we haven't penetrated any long term support levels, and so, as I said, we're in a period of commonality where traditional market leadership may take hold and make some of us older guys look a little better than the-you know, high tech performers," George said.
He continued, "I think irrespective of what the Fed says in their announcement today, there are much broader secular themes at work and those themes include pricing power and inflation.
"The groups that I think resonate our theme of inflation and pricing power are companies that have the ability to pass along their core costs to the end user, the consumer. Those obviously include energy stocks, but they are also publishing companies, food stocks, telecommunications companies, and utilities companies. These are really where our leadership and our portfolios is taking hold right now," he said.
One stock that George said that he likes is Delphi Automotive Systems (DPH: Research, Estimates). "We're not really dot comers per se, but we do look at technology that has a clear mission statement and has strong unit volume growth," he explained. "And we believe right now that Delphi Automotive has a very strong pricing power in its chain. It's the maker of those OnStar Navigational systems in the cars. It's used as not only for automobiles, but for other technology as well. And this is the type of company based on earnings that we would like to have in our portfolio."
Other picks include entertainment and media stocks, such as Fox Entertainment Group (FOX: Research, Estimates), Tribune Company (TRB: Research, Estimates) and Reader's Digest (RDA: Research, Estimates) as well as oil company Schlumberger (SLB: Research, Estimates).
 "The U.K. has been the weakest market in Europe and actually consistently across Europe, the problem has been more the currencies rather than the local markets," said Rosemary Sagar, international portfolio manager, U.S. Trust. "In local markets, most of the markets have not done badly at all, but it's really the euro weakness which has hurt dollar-based investors.
"If you look at the most recent economic numbers, there's been a nice pickup in business investment and consumer spending. So those are really domestic drivers," she observed.
"Total Fina (TOT: Research, Estimates) is the oil company; it's the fourth largest in the world. It's really firing on all cylinders now. They have very high production growth. Total is the prime beneficiary of deep water, West Africa, which is about the hottest area in oil exploration, and they're very big in the Middle East as well. So they've got higher production growth than most of their peers, reasonable valuation, entire growth and most of their peers," Sagar said.
"Ericsson (ERICY: Research, Estimates) is the prime beneficiary of mobile infrastructure. Everybody's talking about handsets. That only makes up 20 percent of the business and they're outsourcing that now. That news just came through today," she said.
 "I think what we're seeing actually is portfolio managers and individuals diversifying their portfolios. So we're having a spreading out of the market," said Bernadette Murphy, market analyst, Kimelman & Baird. "We're not abandoning technology, but investor are a little bit shy of the high multiple stocks right now. And so they are trying to go back to some of the old growth areas."
IBM (IBM: Research, Estimates) has been trading sideways, since about November of last year. It's trading to the upper part of their range and it's making some really interesting deals with other companies right now. And I think the potential there is for a substantial move in IBM," she said.
"Enron (ENE: Research, Estimates) is an old economy stock that transformed itself into a new economy stock. Since the 1990s it has totally changed itself. It is the major buyer of energy and natural gas in this country, Scandinavia and Australia. It's number one in Europe. And they think most of their business will be done on the Internet in the foreseeable future. They've come out with good earnings. The stock has already gone up, but it still has a lot more in it," Sagar said.
 "I'm happy that things are going up in the markets but when things get too bullish and too, I don't know if they're exuberant, but too optimistic, someone will find something between the lines on the Fed statement saying, 'but they said this, they cautioned here', maybe to have to be vigilant, so people might use that as an excuse to stay profits," said Donald Selkin, analyst, Joseph Gunnar.
"JDS Uniphase (JDSU: Research, Estimates) is a great stock. I love it. I think people feel positive about the merger. Look at its partner, SDLI (SDLI: Research, Estimates) breaking out. The upside going crazy over 400. JDSU has been grinding higher," Selkin said.
"Oracle (ORCL: Research, Estimates) is a favorite. Great stock. This is a big winner and it will keep going," he added.
-- compiled by Alexandra Twin
* Disclaimer 
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