Tired and bored with the Braves? Bored and disappointed with your index funds? Think MSFT is bumping up against the sky? Maybe not quite yet:
moneycentral.msn.com
Excerpt:
Mark Anderson, author of the Strategic News Service newsletter and one of the most thought-provoking technology pundits and hedge-fund managers around, has three ideas for 100-baggers that are much bigger but no less compelling. All but one would normally be way out of the range of our discussion, but since Anderson is such a smart forecaster, I thought you'd like to hear him out anyway.
His first choice, surprisingly: Microsoft (MSFT), the publisher of MSN MoneyCentral. His reasoning: "They're just getting started. They're moving away from desktop software and getting into infrastructure software and services. They own a minority interest in all of the major cable companies in the world, and plan to use that leverage to sell their services deeper into the home and enterprise in the future. They face a bigger market opportunity today than they did 10 years ago." When I expressed skepticism, pointing out that a 10,000% gain would take Microsoft to a market cap of $40 trillion and would require a 59% compounded annual return vs. 57% over the past decade, his answer was: "I am suggesting that they can. I don't think people have begun to appreciate the annual cash flow that (its recent business initiatives) will bring."
Anderson's second choice: ARM Holdings (ARMHY), a fabless semiconductor maker based in Cambridge, England. Carrying a $3.7 billion market cap today, a 100-times gain would take it to $370 billion, or a tad north of Intel's (INTC) station at the moment. Formerly called Advanced RISC Machines, it designs "reduced instruction set" microprocessors and sells its ideas on a royalty basis to the likes of Nokia (NOK), Lucent Technologies (LU), Sony (SNE), Texas Instruments (TXN) and Toshiba (TOSBF).
Advantages of its intellectual property are twofold: The designs help create low-priced, super-speedy consumer products that don't use much power. And because the company doesn't make its own devices, it's unlikely ever to get smashed in the sort of inventory correction that periodically devastates high-tech hardware companies. Says Anderson: "They continue to get fantastic share in cellular and other handheld devices. They just announced a big win in video gaming (they'll power the new Game Boy Advanced from Nintendo). They're at the center of the world's fastest growing market." It's true: Gaming and handheld devices outsell personal computers today by a ratio of 3-to-1, and ARM designs are powering everything from interactive set-top boxes to cell phones, digital cameras, networking switches, embedded controllers and, my two favorites, the new Rocket E-book and the new Empeg MP3 Car Audio Player. The stock is expensive, up 395% in the past 12 months, but the best usually are.
Anderson's third choice is the intriguing complex of three telecommunications properties controlled by cellular pioneer Craig McCaw. Part 1 is Nextel Communications (NXTL), which has increasingly valuable wireless assets nationwide as well as in Canada, Asia and South America. Part 2 is Nextlink Communications (NXLK), a competitive local exchange carrier that has 15,000 miles of fiber-optic lines ringing major U.S. cities as well as a nationwide fixed-wireless footprint. Part 3 is Teledesic, a private company that aims to cover the rest of the globe with low-orbit satellites providing uninterrupted satellite Internet service. Says Anderson: "What you've got here is the next millennium's AT&T (T) -- the next giant broadband, end-to-end, global telecommunications company." Nextlink shares are up 800% in the past year, while Nextel shares are up 340%. Anderson sees the group going a lot higher as the McCaw business model begins to cook.
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