John J. Edwards III Chat on AOL, Mar. 27

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John J. Edwards III chatted on AOL MarketTalk on Monday, March 27. AOL's MarketTalk is hosted by Sage Online (Keyword: PF Live).

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Live from New York, NY, please welcome John Edwards, assistant managing editor, TheStreet.com. John can answer questions about the latest market-moving news.

Comment:

John does NOT offer individual stock commentaries or recommendations. Visit Keyword: TheStreet.

Sage Lion:

It's great to have you with us in MarketTalk today John!

Jedwards:

Thanks for having me. Great to be here!

Question:

I'm looking at Abercrombie & Fitch. It has a P/E of 11 and a growth rate of 28%. What will it take to get retailers moving higher?

Jedwards:

That's a tough question. It's hard to imagine the economy in general and consumer spending in particular getting much stronger than they've been, so what you're left with is an industry with inherently low profit margins and modest growth.

Jedwards:

The market just doesn't want to pay up for those companies now, so you probably won't see retail catch fire in the near-term.

Question:

When do you think the WorldCom/Sprint merger will be completed?

Jedwards:

Looks like it's still tied up in the regulatory approval process. Washington state's regulators just today recommended rejecting the deal, saying it'll hurt consumers. I imagine it'll go through in some form, but not until later this year.

Question:

John, what do you think of the B2B sector right now? Veritas and Commerce One in particular. Lots of good news, but continued negative momentum. Do you see these stocks rebounding? Your thoughts?

Jedwards:

The B2B sector, like the Net sector in general, has a great deal of promise but is incredibly overvalued for the most part. Speculators are bidding up B2B stocks the same way they sent B2C and content stocks skyrocketing a year ago -- placing bets placed not just on the best possible business outcome, but on an outcome so good it's unprecedented.

Jedwards:

Even at current valuations, I would tread carefully in B2B. Assess the stocks as representing a stream of future earnings, rather than as trading vehicles, and see if you're still comfortable. Of course, if you're looking for a trading vehicle and you've got risk capital to spare, have a ball.

Question:

The Daily News today wrote a piece on ACTV, Inc. and Interactive television. They seemed positive about the future of this technology. What is your opinion?

Jedwards:

I don't know about the specific company or technology at hand here, but I would point out that much money and time have been wasted trying to come up with an interactive TV technology that's inexpensive and broadly appealing.

Jedwards:

Myself, I think people get enough interactivity elsewhere and would mostly like TV to sit there and be TV. But maybe that's just me.

Question:

Do you think the biotechs will have another run, or was the boom and bust and mini boom too much to sustain?

Jedwards:

As with all irrational boom-and-bust cycles, it's difficult to call. Some breakthrough or a series of breakthroughs could spark renewed interest in the sector, which will then die down once people realize breakthroughs are of limited relevance to humans and/or are years from any commercial application.

Jedwards:

There are worthwhile investments in biotech, certainly, but you need to do particularly careful research and know that you're putting your money into a company with a future.

Question:

What is your view on gold stocks?

Jedwards:

I have never been a fan of the not-so-precious metals, and I see no reason to change that view.

Question:

What do you think about this recent "Pump & Dump" scams? Are they IPOs mostly or all kinds of stocks?

Jedwards:

I'm not sure exactly what you're referring to, but true pump-and-dump scams are based on easily manipulated microcap stocks (new issues or existing ones).

Jedwards:

Small-time investment newsletters and no-profile brokerage firms often engage in behavior that can smack of pumping and dumping, so in general it's best to steer clear of the microcap arena and its hangers-on.

Sage Lion:

Thank you for joining us today John! Your thoughts going forward?

Jedwards:

Looks like the market's taking an end-of-the-quarter breather here, but I think people want to take it higher once earnings season (probably a strong one) gets started.

Jedwards:

We'll be watching it all at TheStreet.com!