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Strategies & Market Trends : YEEHAW CANDIDATES -- Ignore unavailable to you. Want to Upgrade?

To: Ditchdigger who wrote (1627)	4/3/2003 1:57:08 PM
From: Sergio H	Read Replies (1) \| Respond to of 23958

Hi Ditch. I am looking for big things from little DFIB over the summer. Particularly interested in the patent infringement law suits as a springboard for increasing their market niche.

To: Ditchdigger who wrote (1627)	4/5/2003 11:11:29 AM
From: Sergio H	Respond to of 23958

SMALL STOCKS As Earnings Season Kicks Off, Oil, Tech, Health Get Scrutiny By KAREN TALLEY DOW JONES NEWSWIRES NEW YORK -- When first-quarter earnings season kicking off next week, what will matter isn't who you know but what you know. Small-cap energy, technology and health-care companies will probably get the most headlines because they are expected to show the best results, but that doesn't necessarily mean investors should take big stakes in these sectors. That's because at least two of the groups may start sputtering as the year goes on, and in stock picking it's not past performance but future prospects that matter. Energy companies best illustrate that maxim. The 10 sectors that make up the Standard & Poor's 600 SmallCap Index are expected to see operating earnings rise by 8.7% in the first quarter. But take out the 267% projected earnings jump by energy stocks -- gas and oil issues -- and the S&P 600's expected profit gain is shaved to just 3.9%. And many analysts predict energy stocks will start to settle down, betting the war will end during the second quarter and oil prices will drop, making these stocks not nearly as attractive as they were in the first quarter. Technology companies, whose first-quarter earnings are seen rising by 36%, are also not a favorite of some analysts. Technology has been one of the best-performing sectors so far this year, "but I'm concerned the group is going to continue suffering from downward revisions," said Gary Merwitz, head of small-cap strategy at Morgan Stanley. The sector has already been hit by such revisions. On Jan. 1, analysts were saying that technology companies in the S&P 600 would show an overall earnings gain of 60%. But that figure has been ratcheted down over the intervening weeks to 36%. The cut is one of the widest revisions among all 10 S&P 600 sectors. Also, tech's first-quarter improvement will, for many companies, translate to slim gains after last year's losses, not big earnings jumps. Health care, projected to see earnings rise by 18%, is the group with the best chance of carry-through, especially on the drug side, while hospital-management stocks may serve as laggards, analysts say. Going with the sure, or pretty-sure, earnings improvers may be the easiest path, and many investors are likely to push into oil and tech if they produce. Besides that, it will take a strong stomach to buy into the approach of Morgan Stanley's Mr. Merwitz. He likes small-cap consumer discretionary stocks, whose first-quarter earnings are pegged to be flat from a year ago; industrials, which analysts see dropping by 2%; and basic materials, predicted to see first-quarter earnings plunge by 42%. The selection of these groups is in no way random: All have in one way or another been affected by the war, either from less spending by consumers or from high oil costs that flayed industrial and basic-material stocks' earnings. But conditions are fluid, Mr. Merwitz said. As the war winds down, he sees the performance of these sectors continuing to improve because earnings will not see such dramatically downward revisions. The best bets among the consumer-discretionary, industrial and basic materials stocks may be those that are already starting to show some glimmers of improvement. The small-cap team at Prudential Securities has tried to come with candidates by bringing together companies that may beat expectations this quarter. To make the cut, the companies must have surprised to the upside last quarter, had their estimates upped by analysts over the past month and outperformed the overall stock market over the past two weeks. Prudential's candidates in the consumer discretionary group include Urban Outfitters, Ryland Group and Calloway Golf, with the latter two trading on the New York Stock Exchange. In the industrial group, they suggest Crane, also traded on NYSE. And among basic-materials shares, Prudential likes ElkCorp, Albemarle and Mineral Technologies, all NYSE stocks.