Here is one Strong Buy recommendation mentioned today in WSJ, but I think that is old news.
May 6, 1999
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Edward Jones's Skrainka: Investors Must Focus On Long Term
By DESIREE J. HANFORD
Dow Jones Newswires
ST. LOUIS -- Although the broadening of advances in the stock market is a positive move, Edward Jones & Co.'s chief market analyst told Dow Jones that investors should continue focusing on companies that have strong long-term outlooks.
Despite the allure of short-term successes, Alan Skrainka warned investors not to get sidetracked by securities that look good today, but might not in several months.
He said the market's broadening to include some value stocks, and not just growth stocks, is a good thing. According to Skrainka, the movement has happened for several reasons including the resumption of global growth, the bottoming out of problems in Asia, Latin America's resiliency despite Brazil's woes, and the continued strength of the U.S. economy.
"So the groups that clobbered earnings last year won't be the drag on earnings this year," he said. "Growth generally is becoming more plentiful."
Although some cyclical stocks have gained market favor recently, Skrainka said steel, aluminum and paper companies have a weaker long-term growth outlook than do companies in more dynamic sectors such as technology and health care.
"Moving data is still going to be a better business long term than moving dirt, and that's why we like an MCI WorldCom vs. a Caterpillar," he said.
Skrainka Talks Up Big Telecommunications Providers
MCI WorldCom Inc. (WCOM) has replaced Sara Lee Corp. (SLE) on Edward Jones's model portfolio. Skrainka said his brokerage firm thinks that within the technology industry, the center of gravity is shifting toward the communications side of the business and away from personal computers. He attributed the change to a number of factors, including consumers' growing preference for better Internet access rather than the latest PC to hit the market.
Skrainka said MCI WorldCom, in Jackson, Miss., is a rapidly growing telecommunications business that is the largest provider of access to the high-speed Internet backbone, which is what most consumer Internet service providers use. He also noted that the company, which Edwards Jones has a strong buy rating on, has one of the largest long-distance and data networks as well as a strong international presence.
"It's also one of the few Internet stocks we can see out there selling at a reasonable price," he said.
Within the communications-services industry, Edward Jones also has a strong buy on San Antonio-based SBC Communications Inc. (SBC). Skrainka said that if telecommunications behemoth AT&T Corp. (T) is really in local phone markets, then SBC and other Baby Bells need to get serious about entering the long-distance business.
Edward Jones has AT&T at a buy rating. Skrainka said the New York company, which recently agreed to buy MediaOne Group Inc. (UMG) and just entered a multibillion-dollar alliance with Microsoft Corp. (MSFT), has an aggressive management team that for the first time in a while will keep the company ahead of the curve by pursuing broadband and cable-market opportunities.
Skrainka said AT&T has the opportunity to step up its growth and earnings to more of a mid double-digit range from low double-digits.
Edward Jones has a strong buy rating on Compaq Computer Corp. (CPQ), located in Houston, whose shares have suffered from a drop in demand for PCs. Following a recent management shake-up, Skrainka said Compaq now needs to find an aggressive team of executives that can address the problems the company faces, including falling computer prices.
While Suspect Of Sara Lee, Skrainka Envies Walgreen
Although Edward Jones continues to think that Sara Lee, located in Chicago, is a good company with good brands, he noted that Sara Lee has had difficulty growing its business. Skrainka said the packaged-food industry has a few strikes against it, including difficulty growing internationally because of problems adapting to local tastes and culture. He also said there's been a lack of new products coming to market compared with the 1980s.
Skrainka also noted that Sara Lee had a meat recall on some of its products last year.
Although Sara Lee was dropped from the model portfolio, Edward Jones still likes a number of other companies in the consumer-staples sector. The brokerage has a buy rating on Walgreen Co. (WAG), the retail drugstore company based in Deerfield, Ill.
Skrainka said Walgreen's stock has fallen a bit mainly because of the fanfare surrounding the launches of Internet pharmacies, such as Drugstore.com. But Skrainka said the company has its own Web presence, walgreen.com, and two other factors that are important to consumers: trust and convenience. For example, Skrainka said that 50% of all prescriptions are for acute needs, which means the prescriptions need to be filled immediately.
"That gives them a significant advantage because of the number of stores they have," Skrainka said, noting the company has more than 2,600 stores in 36 states and Puerto Rico. It plans to operate 3,000 stores by 2000 and is expected to double its store base in the U.S. to 6,000 by 2010.
-Desiree J. Hanford; 314-588-8443;
e-mail: desiree.hanford@cor.dowjones.com |
