Here is Charles Paynes picks on MAY 9, 2000 in Businessweek.
"Q: What are some of those stocks with big revenue growth?
A: I like, for instance, some of the infrastructure plays -- AKAM [Akamai Technologies], NT [Nortel Networks], SDLI [SDL], JDSU [JDS Uniphase] are among my favorites."
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MAY 9, 2000
INVESTING Q&A
Staying Nimble Through the Gyrations
Wall Street Strategies' Charles Payne is a long-term bull who recommends staying fluid in today's challenged market
"It's too early to buy and hold for the long term," says Charles V. Payne, founder and CEO of Wall Street Strategies. Although he is still bullish on the market, he recommends a trading strategy to cash in on the current volatility.
That was one of the thoughts Payne expressed in a chat with Business Week Online on America Online on May 4. He continues to share the general enthusiasm for tech stocks, despite many of them being "challenged" at the moment -- and he singles out Nortel Networks, PMC Sierra, and E.piphany as three top choices. And his favorite sector is wireless.
Here are edited excerpts of the answers Payne gave in response to questions from the online audience and from Business Week Online's Jack Dierdorff and Amey Stone. A complete transcript is available from BW Online on AOL at keyword: BW Talk.
Q: Charles, when you were here in January, you expected five to six years of market growth, but you also called this a "stealth bear market." Have events since then changed your view?
A: No. In fact, it's not as stealthy as it used to be. I'm still very bullish in the long term, over the next four to five years. Obviously, there are going to be points when the market is challenged, and we happen to be in one of those moments now.
Q: Here's a strategy question -- I'm in cash. What do I do?
A: First, I'd say that was a smart move to be in cash. Secondly, I would commit to a strategy of trading the market. It's too early to buy and hold for the long term. However, the volatility is such that it's possible to make a lot of money during the gyrations.
Q: Any tips on how to trade for investors who haven't tried it before?
A: Pick a discipline and stick with it. There are many so-called "traders" who are stuck in stocks they bought months ago. Those same stocks were extremely profitable, but because greed got the better of them, these people are now facing the worst nightmare a new investor could face -- losing money on what should have been a winning trade.
That said, sell into strength, and never try to pick the top. Along the same lines, don't be afraid to take a loss. Most investors want to make money on every single trip into the market. It's unrealistic and will lead to disaster.
Q: What do you think of Go.com [GO] for the short term?
A: Go.com has been an extreme underperformer. The strategy now is to look for technology stocks that have huge revenue growth -- preferably 80% or better -- that are in really exciting sectors like the wireless space, the CRM [customer-relationship management] space, semiconductors. But there's absolutely no urgency to jump into Go.com yet.
Q: What are some of those stocks with big revenue growth?
A: I like, for instance, some of the infrastructure plays -- AKAM [Akamai Technologies], NT [Nortel Networks], SDLI [SDL], JDSU [JDS Uniphase] are among my favorites.
Q: What sector would you suggest for investment?
A: Wireless is my favorite sector right now. It's part of the natural evolution of the technology revolution. First there was the PC, then there was the Internet, and now there's wireless. On the hardware side, you've got to go with Nokia [NOK]. In wireless-application protocol, Phone.com [PHCM]. In service, I would go with Nextel [NXTL] -- the stock has been acting pretty good recently.
Q: You mentioned customer-relationship management as another exciting area right now. What are some stocks to consider in the CRM world?
A: There are a whole bunch. EPNY [E.piphany] is emerging as a leader.
Q: Charles, your comments on voice-on-the-Net stocks, please.
A: Obviously, voice-on-the-Net is a space that has yet to match the early hype. I would say the premier play in that space would be NTOP [Net2Phone], which could eventually be taken out by AT&T [T].
Q: What about the potential for interactive TV -- any ways to bet on that as a wave of the future?
A: This is another space with tremendous sizzle. LBRT [Liberate Technologies] is a way of looking at it. TIVO [TiVo] is another play. And a longer shot, but a company I know on a personal level, is IATV [ACTV].
Q: And now for a question on the elephant at the tech party -- do you think MSFT [Microsoft] would have a chance to come back this year?
A: Only if the Republicans win the White House. Everybody in the GOP wants to be the next Gipper -- it was Reagan who dropped the IBM case. I'm not sure if a Republican White House or a Republican Justice Dept. would totally drop the case, but they would certainly be a lot more sympathetic than Reno & Co.
Q: What do you see in the next year for financials?
A: The financials have hinted all year long that they want to trade higher. Unfortunately, the question of interest rates continues to cast a major shadow over the group. In that space, I like American Express [AXP], J.P. Morgan [JPM], PVN [Providian Financial], and Lehman [LEH] as probably an eventual takeover candidate.
Q: If you had $10,000 to invest, where would you put it?
A: $10,000 isn't going to get you much leverage in this market. I would put it in a depressed technology fund. There's no question the [tech] sector got ahead of itself. By the same token, growth stocks command higher multiples, and tech stocks will continue to meet the challenge over the next several years.
Q: What do you think of AT&T these days? We talked to a fund manager who had sold it to buy the new wireless issue [AWE].
A: Well, I'm not sure if that was jumping out of the frying pan and into the fire. C. Michael Armstrong has made a very big bet on cable, and so far the dice keep coming up snake-eyes. In the meantime, older businesses have plateaued, and there's no one left to fire. If cable doesn't live up to the company's expectations as the preferred pathway to the consumer, this stock has more room on the downside. So for now, I would avoid it.
Q: Lots of chat here about PCCLF [Pacific Century Cyberworks] -- any thoughts on this one?
A: PCCLF is one of the most talked-about stocks in Internet chat rooms, and it certainly has had its place in the sun. However, I'd rather go with more established names in this space, such as CHINA [China.com] or IIJI [Internet Initiative Japan]. I just believe there's too much invisible hype (read, stock promotion) behind PCCLF.
Q: Is Lucent [LU] a good stock to hold, or should I get out of it and get into something better?
A: The last time I was on with BW, I told the participants to avoid Lucent, and the stock got hammered. I still believe it's early. If you like this space, stick with NT [Nortel] or CSCO [Cisco].
Q: Is Exodus [EXDS] one to buy or hold?
A: I happen to be a big fan of Exodus. I think the company, through recent acquisitions, has addressed all of its weaknesses. I think demand for server farms will outstrip capacity in the next 24 months. Obviously, the last earnings report didn't wow Wall Street, but the stock is finding the bottom and has the ability to double from here.
Q: Another tech name, one of the giants -- AOL. Do you see it continuing to add value?
A: AOL's management knows how to add value better than any team in the Internet game. However, the Time Warner merger raises questions about how to value the company -- Old Economy or New Economy? Also, even Harry Houdini ran out of tricks, and one would wonder where they find live bodies from here. Still, I think it's a long-term hold.
Q: What are your top three stocks right now and why?
A: Nortel, for reasons explained earlier. PMCS [PMC Sierra], as a communications-chip play with huge, huge potential over the next three years. And as a wild card, EPNY, also mentioned earlier.
Q: Are these stocks "buying opportunities" now, thanks to the decline in techs?
A: I think so. I would buy some now, but wouldn't create a complete position until after the [May 16] Fed meeting. |
