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Stock picks by the pros
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December 6, 1999: 12:59 p.m. ET
McAfee, PFSweb, Agency.com, Disney, AOL, Yahoo head short list
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NEW YORK (CNNfn) - Several technology stocks came in for praise among equity analysts and money managers this Monday.
Here are some of the stocks recent guests on CNNfn are buying and why:
John Fitzgibbon, IPO analyst, Redherring.com, commented on recent IPO performances. His first pick is McAfee (MCAF). "McAfee, they have all the magic words going for it - you know, their PC-fix products, and [they had a] great underwriter. The stock just exploded. And the after market gained about 266 percent its first trading day.”
His second pick is PFSweb (PFSW). "That was another skyrocket.”
Another Fitzgibbon pick is Digimarc (DMRC). "The one thing these [successful IPOs] have in common is that they all have brand name underwriters, and they all have a great institutional following. [Add] a sizzling Nasdaq Composite, and that is the whole story behind it.”
On his top list of IPOs this week is interactive ad agency Agency.com. "We have about 17 Internet deals. Heading the list is the Agency.com. They were supposed to come [to market] last week. The price range has increased to 22 to 24, up from 10 to 12. There’s an old Wall Street expression: if you increase an IPO in size, double my order.”
Fitzgibbons also said he likes VA Linux, "The key word there is Linux. You think of what’s happened with the Linux deals this year, they have all done very well in the after market.”
His last pick is FreeMarket (FMKT). "It’s a business-to-business online auctioneer. It’s not an eBay (EBAY), but it’s not too far behind either.”
"The recent deregulation of the financial sectors bodes very well for insurance stocks,” said Tom Goggins, portfolio manager, John Hancock, "because we believe a lot of banks will be buying insurance stocks going forward. So we have overweighted the life insurance sector within our fund.” Also, said Gogines, "The regional banks have gotten extremely cheap. One of the names that we like a lot is Detroit-based bank holding company Comerica (CMA). They have a franchise in California and Texas and Michigan, and they are the premier small business bank in the country, [with a record of very few] non-performing loans; that’s really what gets banks in trouble, is making loans and not getting them repaid. They have a very good track record of getting repaid when they do lending.”
"I like to bottom fish,” admitted Larry Rice, chief investment officer, Josephthal. "[I’ve] made most of my profits, historically, buying out-of-favor stocks. And in this type of market environment, out-of-favor stocks tend to stay out-of-favor. We like Disney (DIS) at these levels. The stock’s been acting a touch better here. If it could change the name to Disney.com, it would double in price. I think they are moving in that direction.”
"In the pharmaceutical sector,” said Rice, " we like Abbott Laboratories (ABT) here, we’ve talked about that, some of the laggards. For example, earlier in the year, you could have given away Hewlett-Packard (HWP). We’re looking at stocks like Eastman Kodak (EK), which have underperformed here. Could be next year’s winner. Xerox (XRX), too, was pounded down mercilessly this year, could also be next year’s winner; [these are] big depressed blue chips that institutions will want to own when the momentum changes.”
Frederick Moran, Internet analyst, Jeffries & Company, said, of the sub-sector he follows, "It’s clear that the leaders like AOL (AOL) and Yahoo! (YHOO) are great investments. They have traded dramatically higher and are at very aggressive multiples relative to the group, but justifiably so, given their fundamentals. The second tier players have somewhat been ignored. Earthlink (ELNK)-MindSpring (MSPG) is the No. 2 play behind AOL [and it] has been ignored during this recent recovery. We think they’re poised for some comeback.”
The views presented here are solely those of the analysts quoted. They do not represent the opinions of CNNfn on whether to buy or sell shares of a particular stock. 
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