Scientific-Atlanta, Euro Stocks, Union Pacific Resources, Charles Schwab

This week: set-top boxes, ADRs that could benefit from the euro and the new age in brokerage.
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A selection of some of the most intriguing stock newsletter suggestions 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.

Scientific-Atlanta

Online Investor

(1/8)

Digital set-top cable box manufacturer

Scientific-Atlanta

(SFA)

said last week that second-quarter earnings are expected to come in 18% higher than Wall Street estimates. The good news reflects strong sales of its Explorer 2000 digital set-top boxes and increasingly bright prospects for delivering Internet access via cable, says

Online Investor

.

Scientific-Atlanta shipped 126,000 Explorer 2000 set-tops to its cable company customers in the most recent quarter. In addition,

Time Warner

(TWX)

has committed to ordering 1.1 million units, with an option for 500,000 more for distribution to its cable users.

Online Investor

cautions, however, that the success of digital set-top boxes depends on cable companies upgrading their cable network infrastructure at a cost of several billion dollars. In addition, Scientific-Atlanta faces competition

from General Instrument

(GIC)

, considered to be the market leader. One other cause for concern: The

Federal Trade Commission

has approved the retail sale of cable set-top boxes, which opens the door to competition from electronics heavyweights such as

Sony

(SNE) - Get Report

and

Philips

(PHG) - Get Report

. Scientific-Atlanta has positioned itself to meet these challenges, says

Online Investor

, by ramping up production capacity to 1 million units per year, before the electronics giants enter the picture.

More information can be found at: fnews.yahoo.com

Euro stocks

Pat Dorsey

(1/13)

Morningstar Stock Investor

analyst Pat Dorsey picks four European stocks he believes will benefit from the Jan. 1 introduction of the euro. All trade as ADRs on U.S. exchanges.

Telecom Italia

(TI)

is the largest telephone provider in Italy -- the only European country in the where growth is projected to accelerate in 1999. TI has been concentrating on reducing its debt and expanding its profit margin in the past few years. The company also owns 60% of

Telecom Italia Mobile

, the largest mobile phone service provider in Europe. Its price-to-earnings ratio is 24, low compared to

Deutsche Telekom's

(DT) - Get Report

35.

Ireland's

Allied Irish Banks

(AIB)

has managed to grow earnings at over 20% per year for the last three years, and is predicted to continue at a 15% pace for a while. Allied Irish is a prime candidate for a takeover, offering larger banks a way to expand into new markets via a healthy local bank. Allied Irish has a couple positives going for it -- a strong asset-management business, fueled by a population just getting to know the joys of owning equities. The bank, however, is currently valued as just an average bank, so there's money still on the table, says Dorsey.

Finnish cellular phone manufacturer

Nokia

(NOKA)

is a leader in its market, and like other leaders should attract investment capital in the coming years. Already, Nokia stock has risen almost 250% in the most recent year, and the company has captured 40% of the U.S. cellular phone market. But it's Nokia's return on equity that is really impressive. In the last year, the company achieved an ROE of 42%, meaning it returned 42 cents in profit for every dollar invested. Even at 34 times next year's earnings, it is cheaper than a company such as

Cisco

(CSCO) - Get Report

, which trades at a P/E of 66.

More information can be found at: www.morningstar.net

Union Pacific Resources

H. Phelps Salter III

(1/11)

Insider trading analyst H. Phelps Salter III notes that insiders are buying at natural gas company

Union Pacific Resources

(UPR)

. In August and early September, 12 insiders purchased a total of 36,500 shares at prices up to 14.13, the first open-market purchases in five years. The stock is currently trading around 9.

Considering that natural gas prices are at a five-year low mark, and that UPR's shares are selling at, perhaps, below the company's proven reserves, Salter wonders if a larger oil company might see an opportunity to obtain some good natural gas reserves in UPR. "No doubt, at some point," he says, "a larger oil company will find it cheaper to search for oil on the floor of the NYSE than beneath the earth's surface."

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

Charles Schwab

Joe Shaefer

(1/14)

Charles Schwab

(SCH)

is fundamentally sound and has a "lock on future growth," says ex-Schwab VP and value investor Joe Shaefer, but the Internet frenzy has pushed the price too high. He has issued a sell recommendation.

The stock is worth "$40 or more," he says, but not the 56 where it was recently trading. Schwab's online trading, though driving down the firm's cost per trade, is "cannibalizing" the nonelectronic customer base, says Shaefer. He says he's indifferent to whether profits come from high-volume, low-cost electronic trades or lower-volume, higher-cost traditional trades. In either case, the company has overtaken

Merrill Lynch

(MER)

as the "premier brokerage firm in America."

"I'll buy the company aggressively when the Internet bubble bursts," he says.

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