|
Stock picks by the pros
|
 |
December 8, 1999: 12:54 p.m. ET
Starbucks joins Yahoo! and other tech issues in gaining analysts’ favor
|
NEW YORK (CNNfn) - Tech stocks dominated the selections of equity analysts and money managers Wednesday -- with the noted exception of a well-known coffee klatch chain.
Here are some of the stocks recent guests on CNNfn are buying and why:
Tony Dwyer, chief market strategist, Kirlin Holdings, likes Starbucks (SBUX), saying people head to the café chain to "taste better coffee.”
"They have other items that help the margin, but the staple store sales growth has been above expectations. It was 8 percent, better than expectations,” he said.
"I like the chart of the stock,” Dwyer added. "The fundamentals look like they’re intact. They’ve had a good quarter and the stock’s pulled back after a nice run. So it’s time to get back in again.”
Peggy Ledvina, Internet analyst, Dain Rauscher Wessel, says leaders in the Web industry such as Yahoo! (YHOO) are judged by different rules than traditional companies. Because they so dominate their category, they justify price-earnings ratio of as much as 90 when other types of companies are seen as overpriced at 20.
As a result, Ledvina believes investors should keep the Web portal for the long haul.
"Clearly, the institutions that jumped in here are still looking at this as a long-term play,” she said. "We view it as a long-term play. Certainly, they are the leader in the space when it comes to the pure media play portal sites.”
Ledvina says others in this class of issue include online service provider America Online (AOL) and the auction site operator eBay (EBAY).
"We look for the category killers in each spot and we tend to give them a premium,” she said.
Paul Meeks, portfolio manager, Merrill Lynch Global Tech Fund, says Yahoo! (YHOO) is on his list of recommended stocks, $300+ current price aside.
"Of the large-cap American Internet companies, it’s probably in the best position,” he said. "One of the reasons is, as the action moves from the United States to abroad, this company has the most international subscribers and the best position offshore.”
"Also, the company is supremely well-managed, and ...they’re starting to transition their model, from a pure portal, in which they make their day’s pay on advertising revenue, to starting to take little snippets of e-commerce revenue on transactions,” Meeks added.
Lucent (LU) is another Meeks pick.
"I think Lucent has faced a misperception that it is a far worse-quality company than Nortel Networks, which is getting a lot of play right now because of its optical lead, or perception that the company has an optical lead,” he said. "In the meantime, Lucent is doing the right things, they have an optical networking product of their own that will ship in the first quarter of calendar 2000. And the stock has really been blasted, it has not really participated in the tech boom, particularly the telecom equipment tech boom of 1999.”
Even though Meeks is bullish on technology, he spreads his risk, even when concentrating on taking advantage of the latest hot sector performers.
"In our Offshore Internet Strategies Portfolio, we own several of the -- I’d call them new-age data networking companies like Extreme(EXTR) and Foundry (FDRY) and Juniper (JNPR),” he said. "Now, these are companies that are trying to do what Cisco (CSCO) does, but do it with faster products, and we’ll see how they succeed.”
"But I think right now, the appropriate thing to do is buy a basket of these companies, and then when the leader establishes itself, then focus on that name,” Meeks added.
Brian Clifford, portfolio manager, SunAmerica Asset Management, has two tech stocks on his short list: Interliant (INIT) and Citrix (CTXS).
Interliant hosts applications at their data centers and distributes them via the Internet. "It’s changing the distribution model in software companies, and this company’s got to be considered a leader in that group,” he said. "It’s one I like going forward.”
Clifford said "is still below the radar, being really mainstream, and it’s a good example of a company that’s posting quarter after quarter of just explosive top-line growth. It’s another leader, it’s the enabling technology within that application service-provider arena, as well as a leader in thin-client architecture solutions for small- to medium-sized business.”
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. 
|
|
|
|
|
|
Track your stocks
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
