Anthony, Here is some interesting thought about biotech stocks. Since you are a biotech specialist, what's your thought about
"Amgen Inc., Millennium Pharmaceuticals Inc. and PE Corp.-Celera Genomics Group" and your own GENE pick? Are they all for long-term buy and hold?
Thanks in advance and happy new year to all!
Allen
=======================================================
Beyond the Internet
Mr. Gardner's choices aren't for the timid. He is an unabashed fan of fast-growing young companies that are business mavericks. By his own acknowledgment, more than a few of his picks turn out to be bitter disappointments. But over the past few years, he has attracted more than 700,000 users to his Web site, thanks to a knack for spotting giant winners. For the first 11 months of 1999, his Rule Breaker portfolio was up 64%. It has averaged yearly gains of nearly 70% since its formation in 1994, benefiting greatly from early bets on America Online Inc. and Amazon.com Inc., two of the Internet economy's highest fliers.
Mr. Gardner remains as bullish as ever about new technology, but his horizons are rapidly widening beyond the Internet. Now he thinks biotechnology and wireless communications may have the greatest potential -- both for investors and the general public -- in coming decades.
"Biotechnology has the potential to extend, maybe limitlessly, the lives we live," Mr. Gardner says. Today, the average American has a life expectancy of about 75 years. But if medical advances make it possible to ward off heart disease, diabetes, strokes and cancer, he figures, life spans of 100 years or more could become common. Many investors shy away from biotech stocks because it's hard to evaluate the underlying science of each contender. But that just reinforces Mr. Gardner's belief that biotech provides some great investment opportunities.
In his Millennium Baby portfolio, Mr. Gardner recommends three biotech issues: Amgen Inc., Millennium Pharmaceuticals Inc. and PE Corp.-Celera Genomics Group. Of the triad, Amgen has the strongest track record, with a history of profitability and two top-selling drugs in production. The others are tiny companies posting losses, but Mr. Gardner hopes that brighter things lie ahead. Besides, he observes, "you have to like Millennium for the name alone."
Mr. Gardner says he's only partway through picking his wireless-communications favorites, but he expects Cisco Systems Inc. and Qualcomm Inc. to capture top spots. Both stocks have soared for years on the strengths of their core businesses: Cisco's delivery of Internet infrastructure and Qualcomm's manufacturing of a wide range of telecom gear. That's just the warm-up act, Mr. Gardner contends; he sees further gains as the companies pursue wireless initiatives.
Meanwhile, Mr. Gardner is sticking with three of his longtime Internet favorites, AOL, Amazon.com and eBay Inc., believing they have further to go. AOL already has a lofty $160 billion market capitalization on the strength of its 20 million customers in the U.S. and abroad. But Mr. Gardner thinks a market leader like AOL could add enormous numbers of users among the 500 million personal-computer owners in the world. "We value brands," he says, "and the Internet is the greatest brand-building technique we've ever seen."
Brand Leaders
Finally, Mr. Gardner encourages investors to look for companies "whose brands are so strong that they almost amount to legalized monopolies." His top three choices in that respect are Gap Inc., Coca-Cola Co. and Microsoft Corp. Other investors may quibble over those picks, he concedes, but he says brand leadership in one form or another should be an important part of investors' thinking.
--------------------------------------------------------------------------------
David Gardner's Choices Include Biotech and Wireless Companies
Company Market Cap
(in billions)* Investment Thesis
and Caveats
Microsoft $516.0 Software giant that even the Justice Department can't slow down. Or can it?
Cisco Systems 303.0 Leading builder of Internet infrastructure, pushing into wireless markets. But high valuation leaves little room for error.
Coca-Cola 166.0 Global leader in beverages, with a world-renowned brand. Signs of a slowing growth rate are troubling to some, though.
America Online 163.0 Top Internet service provider, with fast-growing profits from ads and commerce. Can it duplicate its U.S. triumphs abroad?
Qualcomm 60.0 Fast-growing maker of telecom equipment, with big ambitions in wireless markets. Stock doubled from July to November 1999; how much more upside is left?
Amgen 46.0 Largest biotech company, capable of acquiring smaller players with promise. But sales growth of its Epogen anemia drug is expected to slow this year.
Gap 34.0 People will always wear clothes -- and this retailer's fashion sense lately has been unerring. Even so, can anyone gauge the public's taste forever?
Amazon.com 29.0 Leading Internet retailer, rapidly expanding beyond its start in books. Still posting losses, though, and its eventual path to profit isn't assured.
eBay 21.0 The king of Internet auctions, gaining cachet as it lists higher-priced items.Can it stay ahead of many smaller competitors?
Millennium Pharmaceuticals 3.6 Biotech company tackling everything from diabetes to cancer. Lots of partnerships with big drug companies, but no blockbusters yet.
P.E. Corp.-
Celera Genomics 1.5 It's mapping the human genome, which could yield medically priceless knowledge. Nice, unless regulators curb profits.
*As of Dec. 1
--------------------------------------------------------------------------------
As big as Wall Street is, there's no shortage of other financial advisers, brokers and pundits with different picks and analytical frameworks for the decades ahead. Many strategists advise putting at least 10% of an equity portfolio into foreign stocks, for example, something that doesn't figure into Mr. Gardner's thinking. Meanwhile, value investors prefer companies that sell at much lower price-earnings ratios, albeit with less exciting growth prospects. And many financial planners recommend that their clients put their money in diversified mutual funds, rather than trying to pick winners on their own.
Still, Mr. Gardner's starting point -- a belief that long-term investors ought to concentrate much of their money in the stock market -- is widely seen as smart thinking. Since 1926, according to Yale University finance professor Roger Ibbotson, U.S. stocks have averaged nearly 11% in dividends and capital gains each year. That far outstrips the average returns on bonds and money-market instruments.
Message 12434941 |
