for what it's worth (yuk yuk), worth mag's feb issue features peter lynch's latest 12-month and 3-to-5-year 'picks' (via seven money managers). kobrick is one of the seven and his three-to-five year gem is again EMC. you'll dig that rule of 35!
(note, forgive any typos or grammatical errors; i've typed this excerpt in via a freebie hardcopy. i checked -- the feb issue doesn't appear online just yet.)
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Worth
February 1999
Lynch & Company
by Peter Lynch
Last year, I asked seven of my peers -- first-rate money managers of various stripes and inclinations -- to pick two stocks each, one for the upcoming year and one for the long term. They went at it with enthusiasm, which was no more than I expected. Not only are they good at this kind of work; they like doing it.
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Fred Kobrick
Three-to-Five-Year Pick: EMC
NYSE: EMC
Price as of 11/30/98: $72.50
Earnings Per Share (estimated):
1998 $1.44, 1999 $1.93, 2000 $2.66
EMC's business is managing the one thing we've never been short on: information. This company is the leading provider of data-storage products, software, and service for mid-range computers and mainframe systems. Many of EMC's clients are Fortune 1,000 companies, a group whose data-warehousing needs have grown exponentially as Internet- and Intranet-based systems have become more commonplace. EMC's systems are highly sensitive to anything that might threaten the integrity of their operations. The lore is that all of EMC's alarms in Japan went off 20 minutes prior to the earthquake in Kobe four years ago.
EMC has a valuable reputation as the Switzerland of its field: Its products can attach to most any system. That goes a long way toward explaining why the company has 35 percent of its market. Its only serious competition is IBM, which has a market share of 22 percent.
As for the future, management has a nice little Rule of 35. The game plan is to operate at a 35 percent annual growth rate within its 35 percent market share and bring in an annual $35 billion by the year 2001. The year-2000 problem has turned out to be a boon for EMC, because companies are feeling increasing urgency about backing up and protecting their computer systems. With mounds of free cash and very high profit margins, EMC is my largest holding and represents a terrific growth vehicle for the millennium. |
