Here's another good one from WSJ, notice the mention of Equant, a hot Dutch high speed network company that had a hot IPO last year:
Heard on the Street
Some Investors Are Foraging
In Europe for Hot Tech Stocks
By SUZANNE MCGEE
Staff Reporter of THE WALL STREET JOURNAL
From London to Frankfurt, some investors are trolling for an unlikely
treasure: the cutting edge of "Europe.com."
They are on the prowl for Europe's next generation of powerhouse
technology stocks -- the Internet, software, telecommunications and other
companies that could follow Germany's SAP and Britain's Vodafone into
the ranks of global technology giants. Vodafone, a mobile-phone company
that until the past couple of years was barely known outside its home
market, last month hit the big time with its $58 billion proposed purchase
of AirTouch Communications.
But unlike in the U.S., the selection of European technology stocks is slim.
Some European stock markets are thinly traded, especially for smaller
stocks. So there could be big bumps along the way, particularly in the
short run. And after a recent flurry of initial public stock offerings, investors
already have bid up prices.
Still, some analysts believe careful stock picking will reap rich rewards.
One reason: Europe isn't widely considered the best place to forage for
hot-new technology investments.
"There is still unfortunately a propensity on the part of North American
investors to denigrate the Europeans as being backward in technology, and
overlook the opportunities," says Richard Kramer, executive director and
European technology analyst at Goldman Sachs in London.
He begs to differ. Goldman's recommended list includes several
information-technology service companies such as Sema Group, an
Anglo-French company listed on the London Stock Exchange. Sema last
month won an eight-year contract to integrate technology systems for the
Olympic Games and will replace International Business Machines as the
Olympics' ranking global technology sponsor. Last month, it signed an
alliance with BroadVision, an Internet-software concern. Goldman sees
Sema's pretax profit growing by 15% annually.
"Sema has high-quality management, and it's a very strategic computing
services company that has a lot of value in it," says Goldman's Mr.
Kramer. "As its potential evolves over the coming years, it will drive share
price appreciation."
Investors also are watching Autonomy. The knowledge-management
software company, based in Cambridge, England, develops technology to
scan and categorize documents for corporate intranets and Internet Web
sites. Clients range from Scotland Yard to Rupert Murdoch's newspaper
empire. Since its initial public offering last summer on the Easdaq
exchange, a Brussels-based electronic stock market for smaller
companies, the stock has climbed 41% to trade at $5.30. Investors expect
the company will list on the Nasdaq Stock Market this year.
"If its name were Autonomy.com, it would be twice as expensive right
now," argues Derek Brown, an analyst at BT Alex. Brown in London, who
expects the stock to hit $6 by midsummer. "It's still undervalued compared
to U.S. stocks."
Outside London, investors are scanning fledgling technology stocks on
Germany's Neuer Markt, the division of the Frankfurt Stock Exchange
launched two years ago as a market for smaller stocks. Among them:
Qiagen, a Dutch company whose products can be used in gene therapy,
DNA sequencing and genomics, as well as other evolving biotechnology
markets.
"This is a company that's still a startup business, with a very bright future,"
says Johannes Reich, head of research at B. Metzler Seel & Sohn in
Frankfurt.
Another Neuer Markt stock worth watching is Brokat Infosystems, a
Stuttgart, Germany, company that has developed high-end Internet
banking software. Since going public in September at 64 marks ($37) a
share, the stock has soared to 135 euros ($152.60). But some money
managers believe it could be a world leader in its field 10 years from now,
more than justifying its hefty valuation.
Zergo, an Irish stock traded on the London Stock Exchange, is another
highflier. It develops a range of encryption software used in Internet
commerce. Last week, it signed an alliance with KPMG in which the
accounting giant will join PricewaterhouseCoopers in recommending clients
use Zergo's security systems.
Even investors who don't want to risk dabbling in Europe's often-illiquid
small-stock markets can still find bargains, fund managers say.
One is Colt Telecommunications, the top-performing stock on the London
Stock Exchange last year, when it soared nearly fivefold. Colt, which
builds and operates fiber-optic lines for high-volume business users of
telecommunications services, jumped another 44% in January.
Then there is Equant, the Dutch company that launched one of last year's
most spectacular IPOs. Equant has an extensive high-speed data network
that has given it a competitive edge and has continued to attract investors,
even though the stock has soared since its IPO last summer.
"Traditional valuation methods," says Lesley Manookian, head of
European research at Alliance in London, "don't apply to these types of
companies." |
