WSJ:"Tech-Stock Crash Provided Opportunity To Buy Shares of Leaders on the Cheap"
quote.bloomberg.com
Selected highlights.
>>>01/29 10:01
Meanwhile Goldman, Sachs & Co. investment strategist Abby Joseph Cohen said there's less risk in putting money into the stock market now than there was a year ago.
``Last year the focus (in Davos) was return, this year it is risk; might I suggest it should be the opposite,'' she said. Cohen, one of Wall Street's most closely watched market strategists, was speaking on a panel entitled Assessing Risk in the New Economy.<<<
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public.wsj.com
Rearranged for emphasis & ease of reading.
>>>Jan 28,2001
Tech-Stock Crash Provided Opportunity
To Buy Shares of Leaders on the Cheap
By Gerri Willis
The whipsawing Nasdaq has produced a real opportunity to go shopping for tech stocks.
Solid companies with demonstrated leadership positions in the industries needed to fuel the next wave of technological innovation have been creamed in the stock market, right along with the profitless dotcoms and teetering telecoms.
Five of those companies are worth taking a look at now:
... EMC,
... Broadcom Corp.,
... Cisco Systems ,
... Check Point Software Technologies,
... Qwest Communications .
Despite worries over the pace of corporate spending in a shrinking economy, storage giant EMC beat Wall Street expectations earlier this month when it reported fourth-quarter earnings 49% better than year-ago results. Chief Executive Michael Ruettgers said the Hopkinton, Mass., company had managed to increase market share.
But it is also clear that the explosion of corporate and personal data being created by the rollout of so-called broadband applications is playing a role in the company's fortunes.
While other companies lop jobs from the payroll, EMC will add 7,000 new jobs as it attempts to exploit growing demand for storage. Trading at around 75 times 2001 earnings estimates, the stock isn't cheap, but it is still attractive given its positioning in a fast-growing industry.
Broadcom, the Irvine, Calif.,
... maker of chips for the cable-modem and digital set-top box markets, bears examination, too.
... The company is poised to enter the field of telecom equipment.
...That plan -- combined with an expected rebound in semiconductor spending in the second half of this year -- may make Broadcom's current mid-70s multiple of estimated earnings look cheap by comparison.
... And it's well below the company's five-year high P/E multiple of 438.
Another stock with room for improvement: Cisco Systems, the market-share leader for a variety of networking products and an emerging leader in optical networking. Its sheer heft and range of products should shield it from market fluctuations. At a high-40s multiple of estimated earnings, it trades at a steep discount to younger upstarts in the group.
Qwest Communications has yet to rebound strongly, either. Maybe that's because investors don't typically associate telephone companies with the cutting edge of technology.
Qwest is different, though, boasting a low-cost, high-speed fiber optic network. But that's not all the Denver company has going for it.
It's also the country's largest provider of what's known as digital subscriber line technology. Its fourth-quarter earnings growth of 44% beat expectations. Qwest shares are trading at around 70 times earnings estimates, not dirt-cheap but still worth watching.
Check Point Software has found a way to tap into corporate spending on the Internet.
The Israel-based supplier of firewalls and security software reported that fourth-quarter earnings rose 172% from a year earlier, and said that it expects earnings and revenue to grow 50% in 2001.
The company commands 41% of the firewall market, more than any rival. It is planning a 3-for-2 stock split in early February. The shares lately have been trading at close to 80 times estimated earnings.
gwillis@smartmoney.com <<< |
