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Personal Finance > Investing
Stock picks by the pros
July 7, 2000: 2:08 p.m. ET

Corning, HCS, Baker-Hughes, American General, CVS make the list
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NEW YORK (CNNfn) - Telecom, Health Care, oil services, and drug retail were some of the favored sectors with market strategists Friday, with such names as SDLI, NTRS, and SFA.

While a solid rally on Wall Street saw the markets gaining momentum going into the midday, recent guests on CNNfn commented on the stocks they are buying, and why.




graphic"In this environment, as long as the market is not falling apart, there is still money to be made. You have to be very selective, be patient, go slow," said Greg Kuhn, stock market analyst, Kuhn Asset Management.

"I don't see the market getting very far from here. You have too much overhanging it; the Fed tightening, concerns about the slowing economy's effect on profits," Kuhn said. "But within that context as long as the markets aren't falling apart there will be stocks that will be working and we'll have some leadership develop. It kind of knocked off course a little bit a couple of days ago and that's the semiconductor stocks. And they came back yesterday, so that was a real good sign from the market that that leadership that was developing there is still intact. It's selective, but there are some stocks that you can be involved with here."

"The growth of laying fiber optic cable around the world is just in the top of the 1st inning," he continued. "There is Corning (GLW: Research, Estimates) and SDL (SDLI: Research, Estimates), which is a very pricey stock, but their earnings growth has been very strong. This is a stock that when the semiconductor stocks were sort of badmouthed a couple of days ago, even yesterday, had a chance to really fall apart. It did early on in the morning, but held and actually closed up several points. So the market's making it vote on that stock. It's had strong earnings growth and they're a semiconductor manufacturer that supplies chips for fiber optic companies."  




graphic"The market is actually caught between two real competing issues. If the slowdown is very bad for profit growth, that sort of reduces what you want to pay for stocks. If in fact the economy reaccelerates - and there are some signs that the manufacturing sector is starting to reaccelerate -- then you know the Fed comes back in on the interest rate front and hits you with a P/E. So I think you know you're kind of flattish. Our sense is that there's probably an upward trend, a mild summer rally here, nothing major, but you're going to have some good news on profits, going forward. You've had a lot of the negative stuff up front. I think you're going to get some very good early preannouncements going forward. That's going to help to lift stocks," said Ronald Hill, equity strategist, Brown Brothers Harriman.

"We've been broadening out from the Bristol- Myers (BMY: Research, Estimates), Pfizer (PFE: Research, Estimates), Lilly (LLY: Research, Estimates) kind of big-cap pharmaceuticals now, and you're starting to see the hospital companies do better. HCA (HCA: Research, Estimates) - The Healthcare Company changed their name in May. It's the old Columbia/HCA. They seem to be clearing up their problems with the government," Hill observed. "Baker Hughes (BHI: Research, Estimates), one of the best turnaround stories in the oil service industry, which is responding well to the level of oil prices, not the direction. So even if oil prices come down back towards $22-to-$23 a barrel, these guys are all going to get more contracts. They're going to do better, and their earnings are going to grow nicely."

"Northern Trust (NTRS: Research, Estimates) is doing a great job with custody assets and trust assets, and they're growing there," he said. "They are responsive obviously to what's going on in the market here because increase in volumes helps their business. And they're showing a really good earnings provisions.




graphic"What we've got here is just a little fine tuning on the part of the Fed. You know, the economy is just fabulous and the Fed is just nipping at just a little bit of its robust strength. And no big deal with inflation pressure. We've seen this time and again over this 18-year super bull market, and I think it's very important for people to realize that you don't have to crush the economy to get disinflation. You just have to get it to simmer down to maybe around a 3 percent. Most people think a little lower - 2.5 percent growth rate," said Robert Robbins, chief investment strategist, Robinson-Humphrey.

"American General (AGC: Research, Estimates) reflects my emphasis now that we should be more defensive than usual. We are coming up on the summer rally high. We may be halfway through the summer rally and we'll go about 6 percent higher. But then we would typically see the seasonally worst period of the year for investing in stocks where the market might decline 7 to 11 percent. And so we have got a retracing rally going on, and one where we don't want to be in the aggressive stocks. So American General is a more defensive play, more value play in the insurance area, and this is a company that emphasizes annuities which are a play on the long- term super bull market for stocks and bonds. And it could be a takeover candidate longer-term, in the next couple of years," he said.

"CVS (CVS: Research, Estimates), again, illustrates my emphasis on being defensive. Here is a company that has essential products and services. This is the leading growth story in retail drugstores, and obviously very essential types of products and services. It's a low risk, by our measure. This is a major cap play. Scientific-Atlanta  (SFA: Research, Estimates) is a company that's been around a long time, long- term growth record," said Robbins. "SFA is a play in cable broadband Internet access, and the stock's just roaring ahead yesterday and breaking out, accelerating out of a consolidation for the last few months.




-- compiled by Parija Bhatnagar

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.