Xerox, Todd-AO Studios, Apple, Tandy

A selection of some of the most intriguing tech stock ideas on the Web. The items presented do not represent the views of TheStreet.com; rather, the collection is offered as a service to our members who may be scanning the Web for stock-related information.

Xerox
William Schaff (2/15)

The future looks good for digital copiers. Dreams of paperless offices have remained just that. People still print out emails and pass around paper copies of Web pages, notes William Schaff, chief investment officer of Bay Isle Financial in San Francisco. Businesses continue to use and need digital imaging and printing, which means that digital copiers that allow network printing, scanning, faxing, and copying all on one machine will only become more popular. "No wonder the recent earnings report for Xerox (XRX) was so impressive," says Schaff.

As the leading maker of both digital and analog copiers, network and production printers, fax machines and imaging supplies, Xerox enjoyed an increase of 12% in its equipment sales in 1998. Meanwhile, Europe is growing fast, and sluggish sales in Brazil and Asia only have a small effect. Revenue increased 7% year over year. In addition, sales of digital copiers exceeded analog copiers for the first time last year, representing 62% of all copier sales, says Schaff.

On the other hand, Xerox faces stiff competition. No. 2 Canon is driving to boost its sales to $10 billion by 2001. Ricoh is right behind. And Hewlett-Packard (HWP) will soon join the slugfest, since the difference between copiers and printers is getting hard to determine.

At last week's price of 113, Xerox is selling for 21 times 1999 earnings. "My price target was passed at $95," says Schaff, "but given the current bullish sentiment on Wall Street, maybe Xerox is worth $113, and I'm just a curmudgeon."

More information can be found at: www.informationweek.com

Todd-AO Studios
Sy Harding (2/16)

There is at least one technology-based company not trading at an outrageous price, says Sy Harding of the Street Smart Report newsletter. Todd-AO Studios (TODDA) is a provider of post-production audio and video services to the movie and television industry. Its business also includes audio dubbing and sound effects. Its work has earned 19 Oscars and 21 Emmys.

That quality should only improve because the company is moving to digital formatting. A one-time restructuring charge to pay for this conversion reduced 1998 earnings by almost half, to 33 cents a share from 63 cents in 1997.

Analysts forecast that earnings will make a comeback to 75 cents a share in 1999. The company's shares are trading at just 11 times 1999 earnings, well under Todd-AO's multiples in the past. "We feel this small-cap stock is undervalued," says Harding. "Once investors rediscover Todd-AO, the stock has a shot at doubling in price sometime over the next 12 months." The stock traded recently at 8 1/2.

More information can be found at: www.tfc.com

Apple
Richard Young (2/16)

The Apple (AAPL) comeback may be an old story by now, but there still are investors who think the best is yet to come. Richard Young of Richard C. Young's Intelligence Report, who has been buying the stock since its 1997 low of 12, believes the stock could "easily double."

Sales of the iMac and prospects for the high-performance Power Macintosh G3 systems are reasons for optimism, he says. He also does not discount the possibility of a merger, naming Sun Microsystems (SUNW) and, suprisingly, Walt Disney (DIS) as possible suitors.

"Regardless of Apple's eventual partner, a deal would get done at a price well above today's $41 per share," Young says. The stock was trading recently at 36.

More information can be found at: www.investools.com

Tandy
Blair G. Jeffery (2/17)

Computer hardware maker Tandy (TAN) could be one of those rare birds -- a technology value stock, says Wall Street City columnist Blair G. Jeffery.

Jeffery cites comments from Merrill Lynch analyst Peter Caruso as evidence that the stock, which traded this week at more than 56 times current-year earnings, is a value investment. Caruso notes that 20% of Tandy's business is driven by the tech boom, that its top-line growth is "superb" and that its February comparative-store sales have risen into the high single-digits.

"Mr. Caruso is not just whispering his thoughts at the coffee breaks," writes Jeffery. "He is, in fact, saying that value buyers should add this stock to their portfolios now before the bottom line catalysts become obvious."

More information can be found at: www.wallstreetcity.com

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