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Stock picks by the pros
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December 20, 2001: 2:47 p.m. ET
Analysts are drawn to techs, drug companies heading forward.
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NEW YORK (CNN/Money) - U.S. markets fell Thursday, coming off a recent rally on a poor outlook from networking company Juniper Networks and weak quarterly results from some financial firms.
Juniper (JNPR: down $3.93 to $19.00, Research, Estimates) said its fourth-quarter results would be 5 cents a share, missing analysts' estimates by 50 percent. The news weighed on networking shares and the tech sector in general.
Brokerage stocks slid following some poor results from the financial services sector, including Goldman Sachs.
For those looking for stocks that might gain in a recovery, the recommendations of analysts appearing on CNNfn range from software provider Microsoft and motorcycle maker Harley-Davidson to pharmaceutical company GlaxoSmithKline.
Michael Carty, stock market strategist with New Millennium Advisors, says it's a good time to jump on some big tech names, pharmaceutical stocks and a certain motorcycle retailer.
"First off, Microsoft does have a good product mix," Carty said. "It has a five-year earnings growth rate, which is somewhere around 15 percent because it is a giant after all."
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 MICHAEL CARTY'S PICKS
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Intel Corp. (INTC)
Harley-Davidson (HDI)
Microsoft (MSFT)
Barr Labs
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He added, "Its multiple was a tad high but it's got a great balance sheet. It's got a good product line and it reinvents itself every two or three years. And I can't see that stopping."
His second pick is Barr Laboratories. "Barr Labs is doing generic Prozac. It's had massive earnings increases. It's selling at a multiple of 21," he said. "Its long-term (five-year) growth rate is expected to be 25 percent a year."
He continued, "This is a company that's cheap and of high quality and it's trying to go after a drug to stop osteoporosis in post-menopausal women right now - going against Merck (MRK: up $0.59 to $59.92, Research, Estimates). And they've succeeded in creating these generic drugs, and fast, and probably will continue to do so in the future."
"As far as Harley-Davidson goes, it makes a great product. It's got one of the best bikes in the world," Carty said. "It's, I think, leading motorcycle sales. It does restaurants. It does clothing. It's diversified and it's a winner."
"It's recorded strong earnings over and over for the last couple of years. We've held it for the last couple years and made out very well. And it's trading at pretty much its high," Carty added.
Carty also said Intel was one of his favorite stock picks.
Intel (INTC: down $1.09 to $31.96, Research, Estimates) shares are in a 52-week range of $38.59 to $18.96.
Microsoft (MSFT: down $2.20 to $67.29, Research, Estimates) shares have traded between $76.15 and $40.25 for the past year.
Harley-Davidson (HDI: up $0.28 to $54.28, Research, Estimates) shares are in a 52-week range of $54.52 to $32.
Barr Labs (BRL: up $0.28 to $78.16, Research, Estimates) shares have traded in a range of $90.50 to $44.60 in the past year.
Diana Yates, financial services analyst with A.G. Edwards, says Morgan Stanley shares look good.
"We think it trades at a discount. We think that it's a good opportunity, especially when we look for a good recovery into next year," said Yates.
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DIANA YATES' PICK
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Morgan Stanley (MWD)
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"When you look at where it's trading - when you look at a Goldman Sachs, say 17 to 18 times earnings, and Morgan Stanley, say more than 12 to 13 times. Then you compare it to a Merrill Lynch which has a lot of problems, a lot of layoffs, a lot of mass restructuring going on, we like Morgan Stanley. We like its position. We like its return on equity," she added.
"Also when we look at the market share that it was able to keep this year in a pretty poor environment, we think that is also key. And that the company will come out very strong given a good economic and market recovery into 2002," Yates said.
Morgan Stanley (MWD: up $0.58 to $56.37, Research, Estimates) shares are in a 52-week range of $90.49 to $35.75.
Vincent McBride, portfolio manager with Credit Suisse Asset Management, says tech can't be the only sector to win from a recovery in the market, so he favors reasonably valued industrial materials stocks, stable-growth pharmaceuticals and insurance shares.
His top pick is pharmaceutical company GlaxoSmithKline.
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VINCENT MCBRIDE'S PICK
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GlaxoSmithKline (GSK)
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"If you were to look at a chart, you are actually back down to late September levels. Nothing has changed here fundamentally other than a short-term shift in sentiment," he said.
"I think this is a good double-digit grower with very reasonable valuations and it's a great buy-and-hold company at this point," McBride added.
GlaxoSmithKline (GSK: down $1.06 to $49.17, Research, Estimates) shares are in a 52-week range of $58 to $47.15. 
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