Stock picks by the pros
Strategists tout tech, retail, steel and mining shares
NEW YORK (CNNfn) - The nation's analysts and money managers continued the hunt for promising companies Thursday, finding prospects in everything from retail stocks to rust-belt firms.
Here are some shares a series of strategists are recommending and why, as told to CNN Financial News.
Low unemployment and high consumer confidence mean one thing: shopping. No wonder retail stocks continue to be good bets. Specifically, Dorothy Lakner, analyst at CIBC Oppenheimer, likes two retailers with clothing lines geared to teens and their disposable incomes.
She favors Abercrombie & Fitch (ANF) for its high-end customer focus and American Eagle Outfitters (AEOS), for its discount emphasis.
Lakner also likes Gap (GPS) for what she calls its universal appeal.
"I think everyone shops at the Gap these days and that's really been the key to their success," the analyst said.
Lakner says Talbots (TAL) is one of her favorites and should recover from a recent marketing mistake.
"They have done some fashions that were really too young for that customer," Lakner said. "They've gone back to doing what the core customer wants and she's back and she's spending."
AnneTaylor (ANN) is another turnaround story.
"The quality of the merchandise has improved and...the service levels are very high," Lakner said.
Hours after Lakner spoke, a series of big retailers said their same-store sales surged in April.
Morgan Stanley Dean Witter's steel analyst Waldo Best is certain about his best pick: AK Steel (AKS).
"AK Steel is probably the most aggressive, most progressive management team in the industry and it has had the most profitable results over the last five years," Best said. "It's probably the best-run steel company in America today."
He forecasts the stock hitting the 35, up from its current 27 range.
In other metals firms, Best is eyeing Armco (AS) for its potential as a takeover target.
."They've definitely cleaned up their balance sheet and made a dramatic improvement in their operating procedures over the last two years," Best said. "I think that's a really undervalued stock, selling at just five times forward earnings."
Rounding out the sector, Best chooses Steel Dynamics (STLD), rating its stock a "strong buy."
For John Leo, manager of the Northern Technology Fund, the Nasdaq's recent slide has meant a tough two weeks for some of his favorites.
Going ahead, he's focused on tech firms with commanding market positions and strong earnings. That's why America Online (AOL) is his top pick.
"It will continue to be a core holding for us, no doubt, based upon its dominant franchise and its long-term ability to consolidate and drive the way the Internet is moving," Leo said.
Despite his interest in market leaders, Leo keeps a small position in Microsoft (MSFT) out of concerns over the software giant's anti-trust problems and high stock valuation.
"I think it will be hard for us to ignore it completely, but we look at possibly the clouds blowing away and things becoming a little more sanguine for Microsoft later in the year," Leo said.
Bob Dickey, technical analyst of Dain Rauscher Wessels, looks for trading patterns as opposed to company fundamentals.
In this respect, he sees money moving into three mining companies: Barrick (ABX), and Homestake (HM) and Phelps Dodge (PD).