Stock picks for investors
03:05:24, 30 January 1999
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By Steven Halpern Knight Ridder/Tribune News Service (KRT) As part of our 7th annual ''Top Picks'' survey, we asked the nation's leading advisors for their single favorite investment selection for 1999. Unlike the stocks typically featured in our column, these picks are not just buy-and-hold candidates. Rather, many offer true ''home-run'' potential and/or are trading suggestions. As such, investors should seriously consider using stop-loss points and diversification to reduce risk. This advice is even more relevant when buying stocks from the volatile technology and Internet sectors.
KN Energy's 8.25 percent pfd. NYSE(Symbol KNP) 52-week range 35-44{ Friday's close: ''KN Energy's 8.25 percent convertible preferred of 11/30/01 is our top pick for 1999. KN Energy is America's second-largest natural gas pipeline company. Technically this issue is a preferred, which pays a fixed interest of 8.25 percent of par ($43), has a set maturity date and pays secure semiannual interest like a bond. Mandatorily convertible for between 1.25 and 1.5 shares of KN common at maturity, however, the security's value will closely follow the price of KN Energy stock. Adjusted for a recent 3-for-2 split, KN common shares are now more than one-third off their highs. But with a solid asset base (70 percent regulated distribution and pipelines), trading at less than 12 times estimated 1999 earnings and still on track for powerful 15 percent-plus profit growth, the company's recovery is only a matter of time. Even a move back to the low 30s for the stock would produce a 25 percent gain for the convertible, while the huge yield rewards your wait. Buy up to 45.
_Roger Conrad, Utility Forecaster, McLean, Va. X X X Rowan Companies NYSE(Symbol RDC) 52-week range 8 9/16-32{ Friday's close: Rowan Companies provides contract oil-drilling services as well as charter aircraft services and rig construction for the oil/gas industry. The oil service industry has been devastated over the past 15 months as the Asian financial crisis and falling oil prices have hurt the bottom line. It now appears that the worst is over and oil demand should start to pick up over the next several quarters. The current p/e is 5, which is at the lower end of Rowan's historic range. The stock has also held at $9 per share, which is major support. Our target price for 1999 is 15.
_Donald Sazdanoff, The Sovereign Advisor, Lexington, Ohio X X X Schlumberger NYSE(Symbol SLB) 52-week range 40 1/16-86} Friday's close: My stock pick for 1999 is a clear-cut choice _ Schlumberger. Being a contrarian, I am constantly seeking bargains. In the depressed oil-service sector, Schlumberger easily stands head and shoulder above the rest. It's a global leader in the wellsite and drilling-service arena. It is the Rolls Royce in the industry. This dominant player holds nearly $4 billion in cash. With the ample cash reserves, Schlumberger is in prime position to acquire valuable assets at cheap prices. Camco, an energy-services company, was bought for $2.2 billion. Schlumberger will slash operating costs by $300 million in the new year. The stock price hovers near its 52-week low. The stock has been cut by more than half from its 1997 high of 94. We recommend purchase.
_Irwin Yamamoto, The Yamamoto Forecast, Kahului, Hawaii X X X DoubleClick NASDAQ (Symbol DCLK) 52-week range 13{-114| Friday's close: We strongly recommend DoubleClick as our top pick for 1999. DoubleClick is a leading provider of Internet advertising solutions. The company has served nearly 21 billion ads since 1996, and its network of sites is ranked third in terms of audience reach behind America Online and Yahoo! It currently sells ads for 230 Web sites, including Alta Vista, Mindspring and Macromedia. Customers for its DART technology, which serves ad banners on a pay-per-click basis, include NBC, The Wall Street Journal Interactive and RealNetworks. Sales in 1997 jumped to $30.6 million from $6.5 million in 1996, and have already exceeded $30.2 million in the first half of this year. Analysts estimate losses of $1.31 in 1998 and $0.87 in 1999, but expect the company to turn a profit of $0.40 by 2001. DoubleClick is a potential blockbuster.
_Jeffrey Bierman, BCM Investment Newsletter, Los Angeles X X X Bioject Medical Technologies NASDAQ (Symbol BJCT) 52-week range 27/32-2{ Friday's close: Bioject Medical Technologies has developed a needle-free injector system called the Biojector that offers nearly pain-free injections. The technology has been slow to catch on, due to its higher cost than standard syringe injections. But the potential is enormous. Merck paid $1.5 million for the right to use this technology with certain vaccines and Elan bought a 17 percent stake in Bioject and formed a joint venture to develop a glucose monitoring system for diabetics. Insiders have bought nearly 200,000 shares since March; none have done any selling. Bioject is our stock of the year for 1999. Our upside target is 3 to 5 in the next 12 months.
_Leo Hood, ProFiles Daily Fax Service, Gainesville, Fla. X X X Texas Pacific Land Trust NYSE (Symbol TPL) 52-week range 35}-59{ Friday's close: Texas Pacific Land Trust owns over 1.1 million acres (about the size of Long Island) in Texas and has been buying its stock on the open market each and every quarter throughout the past 10 years. As a result, the remaining shareholder's net asset value continues to increase. Also, as a result of fewer shares outstanding, oil and gas income and land sales will increase earnings per share throughout the next 20 years. TPL holds the all-time record of all listed NYSE companies, boasting over 100 years of consecutive annual profits. The company has no long-term debt, and its financial position is exceptionally strong. At current price levels we consider this financial powerhouse an extremely undervalued asset play. Texas Pacific Land Trust recorded 97 new oil and gas discoveries on its land throughout the first nine months in 1998 and currently has 3,038 producing wells on its landholdings. We suggest purchase.
_Francis Curzio, F.X.C. Newsletter, Glendale, N.Y. X X X (Steven Halpern regularly reviews more than 500 financial newsletters for his two investment publications, The Dick Davis Digest and Income Digest, as well as Dick Davis Online (located at www.dickdavis.com). For more information or to subscribe, call 1-800-654-1514 or e-mail comments(at)dickdavis.com)
X X X Distributed by Knight-Ridder/Tribune Information Services. AP-NY-01-29-99 1254EST
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