Money Managers Pick the One Stock to Own in 2000
|
What's
the
stock to own in 2000?
Chances are, this week you've been asking yourself instead, "What are the stocks to sell?"
I know. It's not as much fun when the market heads in that other direction, the one we haven't seen in a while. And if that comes as a surprise, you are forgiven for thinking that stocks defy the laws of gravity, given last year's meteoric rise.
Yes, stocks go down as well as up, and you may have thought of getting out.
Hold on.
If your time horizon is more than a day, or a week, the gyrations of the
Nasdaq
shouldn't startle you. Check out how you're doing since you started investing. If you've been in the market the past few years, the bull has been very kind to you.
So if you're thinking of buying rather than selling, let's narrow it down:
The
tech stock to own. Not sector, or stocks, but stock. Singular. I asked this question of
Cramer
and the rest of our panel on the New Year's edition of "TheStreet.com" on
TheStreet Recommends
Fox News Channel
. (See the responses
here.) Of course, you don't necessarily want a one-stock portfolio, but this kind of focus can be useful in identifying winners.
CSCO
AMZN
I asked the same question of some top tech money managers who represent a variety of stock-picking styles and strategies: What's the one stock to watch this year?
Cisco
(CSCO) - Get Cisco Systems Inc. Report
.
Almost before I could get the question out, Jim Oelschlager of
(WOGSX) - Get White Oak Select Growth Report
White Oak Growth blurted out his longtime favorite. The manager of this large-cap diversified growth fund with a big stake in tech bought Cisco at its initial public offering. But he thinks it still has plenty of steam going forward. He almost views it as a defensive play -- a way to exploit the power of high tech without the downside risk of the dot-coms. "But the degree of moderate success is high."
Amazon.com
(AMZN) - Get Amazon.com Inc. Report
.
"I am like a broken record," says Phil Treick, the hotshot manager now with
Aesop Capital Partners
, who blew out the lights while with
Transamerica
funds. "Amazon would have been my answer for 1999; Amazon is the answer for 2000. I love companies that are redefining industries, especially big industries. Amazon is the
TCI
the cable giant acquired by
AT&T
of the new millennium. By virtue of size, it is creating a distribution juggernaut which over time will result in a portfolio of big equity interests in companies which, by themselves, are looking to redefine an industry."
Entrust Technologies
(ENTU)
.
Eric Efron and John Cabell, co-managers of
(USAUX) - Get USAA Aggressive Growth Fund Report
USAA Aggressive Growth, say the place to be is clearly business to business, and they put their money where their mouths are. Entrust, the fund's biggest holding, provides infrastructure used to secure Internet transactions.
"Within the Internet commerce sphere, business to business is experiencing the most explosive growth. B2B accounts for the largest portion of Entrust's revenue, so the company is in an excellent position to benefit from this trend," says Efron. "Additional growth opportunities may come from wireless applications."
Plus, they like the fact that Entrust is relatively cheap compared with its big competitor
VeriSign
(VRSN) - Get VeriSign Inc. Report
.
SAGA Systems
(AGS) - Get PlayAGS Inc. Report
.
Adele Weisman, manager of
(REGAX)
Reserve Small Cap Growth, which returned 136% last year, believes this software company is an easy bet for 2000. Trading now in the teens, Weisman thinks it should instead be fairly valued at about 30. Sagavista, SAGA's new product that helps businesses move to an e-commerce environment, will get the stock to that level soon, she predicts. She cites a number of competitive advantages. "These include the use of Java, which allows it to be ported to any other operating platform, established sales and distribution channels, and the hard-to-come-by blessing of industry experts."
Dell
(DELL) - Get Dell Technologies Inc. Class C Report
.
Chris Bonavico of
(TPAGX)
Transamerica Premier Aggressive Growth is betting that one of the best performers of the '90s still has plenty of power to climb.
"Dell is an Internet stock with a dominant position, extraordinarily high-returning business model and high profitability and cash flows. At 40 times earnings! A must-own."
Bonavico, who is also a
big believer in Amazon.com, visited management a few weeks ago and concluded that the outlook is better than ever. "Big drivers over the next several years are
Microsoft's
(MSFT) - Get Microsoft Corporation Report
Windows 2000 platform, the growth in network computing and the growth in wireless computing. Laptops and devices are very profitable for Dell."
Legato
(LGTO)
.
Kevin Landis of
Firsthand Funds
has proven he can find value in tech. His
(TVFQX)
Firsthand Technology Value is the top-performing fund of the past five years. He thinks storage manager Legato has both the end-market and the company management going for it.
"The storage management problem has been exploding and continues to explode. We're several years into the existence of this market, but it's still early enough that demand will keep ramping for the foreseeable future. Plus, it's a real good company."
Landis also likes Legato's chief competitor,
Veritas Software
(VRTS) - Get Virtus Investment Partners Inc. Report
. "These are the two clear winners. They're like the
Coke
and
Pepsi
of the industry," he says. But when pressed, Landis gives the nod to Legato.
There you go. A mix of old and new tech, big and small companies, from a variety of different styles of stock picking. Of course, anybody looking for a guarantee in today's market mayhem is asking for trouble. But I'll keep you posted on how these picks fare.
Brenda Buttner's column, Under the Hood, appears Thursdays. At time of publication, Buttner held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks or funds. While she cannot provide investment advice or recommendations, Buttner appreciates your feedback at
TSCBrenda@aol.com.
