As expectations and buzz build around the iTunes cell phone that

Motorola

(MOT)

and

Apple Computer

(AAPL) - Get Report

are expected to unveil next week, investors are interested in finding ways to profit from the growth potential associated with it.

I believe the best plays aren't these headline names but companies one step away. The new phones will be sold through Cingular, which is expected to announce the retailing deal next week as well. My screens show that the baby bells that jointly own Cingular,

SBC Communications

(SBC)

and

BellSouth

(BLS)

, should be considered the conservative way to play this growth potential. And out of all these prospective bets on the iTunes cell phone, SBC is my preferred pick.

These stocks are trading close to 52-week lows, in contrast to the recent strength in Apple and Motorola. I believe that strength reflects that this deal was been long-awaited and may be built into the recent run-up in Apple and Motorola share prices.

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Apple is actually 10.0% overvalued; this makes its fair value $42.35. Shares even reached a new 52-week high, $48.33, on Aug. 15, a level that sits between my monthly pivot at $45.38 and a monthly risky level at $49.04 -- heady territory. Apple's weekly chart profile is positive but overbought, with the five-week modified moving average as support at $43.25. At these levels, Apple is a buy only for the short-term momentum trader, not the long-term investor. The time for long-termers to buy Apple was in April and May, when shares were 12.5% undervalued and testing my annual value level at $34.22.

Motorola's profile is similar to Apple's at these levels, and I believe it, too, is for the momentum trader rather than the long-term investor. Motorola's weekly chart profile is positive but overbought, with the five-week MMA as support at $20.24. Its stock price is currently 4.0% undervalued, which makes fair value $22.84. Shares reached a new 52-week high of $22.30 earlier this session, above annual pivots at $20.71 and $21.90, but below my quarterly risky level at $22.46. That's territory just as heady as Apple's.

I have been

following Motorola in the Tech Trading Diary since

Barron's

published a positive article on the company

five weeks ago. My model suggested that the stock should not achieve

Barron's

implied price target of $25. My pivots have worked to exactly that effect; Motorola shares declined to $20.41 on Aug. 18, with the pivots at $20.71 and $21.90 acting like magnets, as expected.

With shares more than 20% undervalued, BellSouth is a better candidate for a long-term portfolio than either Apple or Motorola. Its shares are actually 30.7% undervalued currently, which makes fair value $37.77. Its weekly chart profile is negative, with the 52-week low at $24.85, the five-week MMA at $26.85 and the 200-week simple moving average at $27.81.

However, I prefer SBC Communications over BellSouth, even though it is less undervalued than BellSouth. SBC is 26.9% undervalued, which makes its fair value $32.59. Like BellSouth, its weekly chart profile is negative, and it has a 52-week low at $22.78, its five-week MMA at $24.04 and the 200-week SMA at $26.54. It's definitely a candidate for a long-term portfolio, because its shares are more than 20% undervalued, and weakness to my quarterly value level at $23.35 is a level at which to buy. (Keep in mind that my quarterly risky level is $26.98.)

What gives SBC added appeal for me is the fact that it has two additional long-term catalysts. First is the purchase of

AT&T

(T) - Get Report

, its former parent, which should be completed by late 2005 or early 2006. Second, it has developed several IT products that help large and small businesses manage information and their Internet needs, and that should fuel revenue growth over several quarters.

Understanding the Model

Fundamental screens:

I calculate a fair value for every stock, which is the price that a stock can trade at in a perfect world. Fair value is not a price target. Fair value is based on the stock's past data and projections for the future. Fair value is based on the trailing 12-month EPS, the forward 12-month estimated EPS and the yield on the 30-year Treasury.

How these data points are weighted is determined by a historical analysis of the stock's price history, with some 17 other variables influencing the calculation, depending upon the stock's sector and industry group. The other factors are the stock's weekly chart profile and the value and risky levels that my models provide. For instance, I will become positive on the homebuilders when they become 20% to 40% undervalued; that could happen after a technical correction.

Weekly chart profile:

A stock with a positive profile has a weekly close above its five-week modified moving average with a rising 12x3 weekly slow stochastic, which is a measure of momentum on a scale of zero to 100. A reading below 20 is oversold, while a reading above 80 is overbought.

Value levels, risky levels and pivots:

A value level is a price at which buyers should emerge on share price weakness. A risky level is a price at which sellers should reduce holdings on share price gains. A pivot is a value or risky level that was violated in its time horizon, and can be expected to act as a magnet during the remainder of that time horizon. These levels are calculated in weekly, monthly, quarterly, semiannual and annual time horizon, based on the past nine closes in each time horizon. My theory is that the closes over a nine-year period are the summation of all bullish and bearish events for that market or specific stock.

Richard Suttmeier is president of Global Market Consultants, Ltd., chief market strategist for Joseph Stevens & Co., a full service brokerage firm located in Lower Manhattan, and the author of

TheStreet.com Technology Report

newsletter. At the time of publication, he had no positions in any of the securities mentioned in this column, but holdings can change at any time. Early in his career, Suttmeier became the first U.S. Treasury Bond Trader at Bache. He later began the government bond division at L. F. Rothschild. Suttmeier went on to form Global Market Consultants as an independent third-party research provider, producing reports covering the technicals of the U.S. capital markets. He also has been U.S. Treasury Strategist for Smith Barney and chief financial strategist for William R. Hough. Suttmeier holds a bachelor's degree from the Georgia Institute of Technology and a master's degree from Polytechnic University. Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, he invites you to send your feedback --

click here

to send him an email.