Report Card: David Togut

David Togut Morgan Stanley Dean Witter
	Report Card 3* Overall rank 2* Rank by institutions 20* Rank by stock picking Makes money for me Saves me from disaster Makes me think Tells the truth Meaningful service, not overkill Well-connected *Out of 21. Best star rating is 3 stars. Click here for our methodology.
3rd Place IT Consulting and Services

Biography

B.A., Brown University; M.B.A., Columbia University. Togut began his career on the buy side , covering technology and energy at Fred Alger Management. After five years as a computer services analyst at Credit Suisse First Boston, he joined Morgan Stanley Dean Witter in 1996, where he is currently a managing director.

Industry Outlook and Style

The Winners

By name By category By firm Best stock pickers Best firms

Togut is cautious. Though he believes that strong growth prospects, reasonable valuations and high earnings visibility make the computer services sector attractive, he tries to focus on companies with accelerating, long-term earnings growth. Earnings, says Togut, can be powered by at least three factors: a restructuring, an aggressive shift to e-business and a new-product cycle. "Since most new products must have a high Internet content," says Togut, "it all boils down to e-business."

Togut expects his favorite stocks to benefit from several long-term trends, such as the accelerating growth of Web-based outsourcing opportunities. Leading his top picks is Convergys(CVG Quote - Cramer on CVG - Stock Picks), an $8.4-billion company that provides customer service, technical support and telemarketing services. Togut anticipates strong demand from the Cincinnati company's top tech customers, including Microsoft, Gateway, Compaq and Cisco.

Togut also likes Automatic Data Processing(AUD Quote - Cramer on AUD - Stock Picks), which has launched a new menu of Internet payroll processing products, and he's a fan of First Data(FDC Quote - Cramer on FDC - Stock Picks), which has developed new Internet payment processing methods through its Western Union Financial Services network. Togut describes this as First Data's strongest growth engine.

He expects Computer Sciences(CSC Quote - Cramer on CSC - Stock Picks) to reap the rewards of providing integrated, end-to-end e-business solutions to the tune of $1 billion next year. Interestingly, James Kissane and Mark Wolfenberger, the other two analysts profiled in this category, are not enthusiastic about Computer Sciences. (Morgan Stanley has investment banking relationships with Convergys and First Data.)

According to a buy-side analyst who voted in TSC's Analyst Rankings -- Equity 2000 survey, Togut has an "excellent grasp of the long-term drivers of the industry," and "knows what matters for the companies." He earned additional praise for his "great big-picture" understanding and his intimate knowledge of the companies themselves. Contributing to Togut's success is his number crunching: "Every quarter he goes through the 10Qs for all the companies and picks out the salient facts," said a voter. "No other analyst I know does that."

Stock Pick

Favorite stock for next 12 months:
Convergys

Comment:
"They're the dominant provider of wireless billing services in the U.S., and they've just launched a powerful new-product cycle in IP and GSM billing."


Rate Their Stock Picks:

Which stock do you like best? Kissane: First Data Wolfenberger: Sapient Togut: Convergys