Money Manager Picks Internet, Drug Stocks: Bloomberg Forum
Bloomberg News
February 17, 1999, 2:52 p.m. ET
Money Manager Picks Internet, Drug Stocks: Bloomberg Forum
Boca Raton, Florida, Feb. 17 (Bloomberg) -- Technology
stocks are likely to continue to lead the market as the growth of
the Internet drives big gains in revenue, a Boca Raton, Florida,
money manager said.
The rapid growth of the Internet, increasing spending by
U.S. baby boomers, and the aging of the U.S. population are three
long-term themes expected to benefit selected companies, said
William Welch, president of Oaktree Asset Management Inc. in Boca
Raton.
Even with many Internet stocks soaring in value over the
past year, technology stocks provide the most compelling
investment opportunities, said Welch, who manages about
$110 million in assets. He cited companies with strong niches
such as At Home Corp. and DoubleClick Inc.
''We think technology will be where most of your major
growth will be for the foreseeable future,'' Welch told the
Bloomberg Forum. ''There's a revolution in technology and
telecommunications, which is the strongest theme of all.''
At Home, based in Redwood City, California, provides
Internet services over high-speed cable-television lines, a
technology Welch sees as having potential for rapid growth. Last
month, the company agreed to acquire Excite Inc., the No. 2
Internet-search service.
''The slowness of data is a big problem,'' Welch said.
''Increasing broadband levels will be crucial. We think there's a
lot of growth potential.''
DoubleClick, an Internet advertising agency based in New
York, is expected to rise as more companies increase advertising
on the Internet, he said.
Another pick, Axent Technologies Inc., which provides
security systems for corporate computer networks, will gain from
the growing interest in protecting electronic information, Welch
said. Axent is based in Rockville, Maryland.
Baby Boomers
The bulge in the U.S. population following World War II has
boosted the earnings of companies that make and sell consumer
products from diapers and toys to videocassette recorders, said
Welch.
While it will be another decade before the first of the baby
boomers turns 65, the rising number of senior citizens is fueling
growth among drug manufacturers, he said.
''The aging of the baby boom crowd will be a driving force
in the economy,'' he said.
Welch likes Merck & Co., Eli Lilly and Co. and Pfizer Inc.
among larger companies, as well as Monsanto Co., whose Searle
line of pharmaceuticals includes oral contraceptives and
arthritis drugs. He also likes Sunrise Assisted Living Inc.,
which provides health and housing services for elderly people.
The manager is avoiding health-maintenance organizations and
hospital-management companies because they are subject to greater
government regulation.
With the first baby boomers now in their 50s, more are
taking time to travel. That makes stocks of Carnival Corp., the
world's largest cruise company, and Walt Disney Co. attractive,
Welch said.
Another area he likes is oil-services companies, whose
stocks have plunged with falling oil prices. A resumption in
growth in emerging markets of Asia will benefit companies led by
Schlumberger Ltd. and Halliburton Co., he said.
''The energy area probably provides the best overall value
for long-term portfolios,'' Welch said. ''It hasn't been a fun
place to be the last two years, but long-term you are going to
make money there.''
--Steve Matthews in Atlanta (404) 526-9553 through the Princeton
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