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Merrill Lynch picks top 10 techs
U.S. investment bank sees fourth-quarter rally
By Peter Bale, FTMarketWatch
Last Update: 6:27 AM ET Oct 25, 2000 NewsWatch
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LONDON (FTMW) -- Merrill Lynch said on Wednesday it expects a fourth-quarter rally in selected technology stocks, although the U.S. investment bank remains sceptical about whether the market can reach the highs of early 2000.
"It looks to us like tech could have a fourth- quarter rally following this washout," Merrill said. But the brokerage didn't expect the rally to push its tech index to highs any time soon.
"Our view is that a bottom may come in the next few weeks followed by a tech rally," it said.
'Techfolio' top 10
In a new technology strategy report, including a top10 list of stocks Merrill is calling its Techfolio, the U.S. bank says investors should focus on stocks with strong earnings growth rather than revenue growth. It says tech stocks will continue to drive productivity gains.
"Where else can you get net growth?" Merrill asks of the tech sector.
Merrill recommends an "overweight" stance on computer services, software, storage and the supply chain.
It takes an "underweight" view of Internet and Internet infrastructure stocks, semiconductors and capital equipment and wireless stocks, and urges equal weighting in communications equipment and computer hardware.
Merrill expects its top 10 to "outperform" in the next six to 12 months.
And the winners might be...
The stocks in the new Merrill list are: Adobe (ADBE: news, msgs), Cadence (CDN: news, msgs), Cisco Systems (CSCO: news, msgs), DST (DST: news, msgs), EMC (EMC: news, msgs), Nortel Networks (NT: news, msgs), Pivotal (PVTL: news, msgs), Sanmina (SANM: news, msgs), Solectron (SLR: news, msgs) and Sun Microsystems (SUNW: news, msgs).
Merrill argues that technology growth will continue to drive the creation of a so-called "Knowledge Economy" and that development of the Internet infrastructure is only 20 percent complete, giving huge opportunities to the companies leading its construction.
On developing trends, Merrill sees opportunities in a shift to |
