DJ Hot Stocks On Louis Rukeyser's Wall Street
By Michelle Rama
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The following companies were mentioned during the Friday, Oct. 24 airing of "Louis Rukeyser's Wall Street" on CNBC:
Kellogg Co. (K); Gillette Co. (G); United Parcel Service
(UPS); Honeywell International Inc. (HON)
The market needs time to pull back after a bull-run of several months, said Frank Cappiello of McCullough, Andrews & Cappiello. The correction is natural, as people worry about stock prices having risen too far to soon, he said.
Cappiello would sell consumer staples, like Kellogg and Gillette, saying "they aren't going to do much in the second phase of the bull market."
Instead, he recommends buying United Parcel Service, since more packages will be shipped as the economy curves upward.
Honeywell is another Dow Jones Industrial Average component that has a lot of value.
Cappiello recalls General Electric's $56-a-share bid for the company three years ago, whereas Honeywell is now trading at about $27. Cappiello doesn't expect the stock to return to that level, but "I still think there's that residual value that GE saw."
Cappiello owns all of the stocks he mentioned.
American International Group Inc. (AIG); Watson
Pharmaceuticals Inc. (WPI); First Health Group Co.
(FHCC); Statoil ASA (STO)
The Nasdaq is at the beginning of a 10% to 15% correction, according to Louis Holland of Holland Capital Management. "Earnings are mediocre relative to valuation," he said. But following the correction, Holland predicts a rally into year-end and a "20% to 25%-plus year for the stock market."
His top picks include financial-services, healthcare and some technology stocks because they "are the only areas of the market growing double-digit."
Among them is AIG, which has been able to increase prices, and is no longer "bleeding" from claim payouts. The stock is trading at the company's growth rate, and the company's management is "pristine," Holland said.
Watson Pharmaceuticals and First Health Group Co. are his top healthcare picks. In energy, he likes Norwegian Statoil ASA (STO), all of whose stocks and American depositary receipts he owns.
Ingersoll-Rand Co. (IR); HCA Inc. (HCA); ConocoPhillips
(COP)
Nicholas Sargen, chief investment strategist at Fort Washington Investment Advisors, hopes to see businesses stepping up spending and hiring, aiding the consumer who has been driving the economy higher.
Cyclicals, energy and healthcare companies, which have had very good profits and increased cashflow, will be putting their resources to work by doing just that, Sargen predicts.
He is buying Ingersoll Rand Co., which is positioned to benefit from a weaker dollar and an uptick in industry. HCA Inc. "has the potential to hand out a dividend," beginning next year, he said.
He expects ConocoPhillips to benefit from the higher oil prices.
But, if U.S. Treasury Secretary John Snow is right and the stronger economy pushes interest rates higher, Sargen sees technology, consumer discretionaries, and financials to "cool off." Technology is up 80% on the year, while consumer discretionaries and financials are up 40% to 50% on the year, Sargen said. Consequently, He would lighten positions in those sectors, such as department stores in the consumer discretionary area, which would be hurt if rates were to move higher.
Sargen owns all the stocks he mentioned during the program.
Corinthian Colleges Inc. (COCO), Omnivision Technologies
Inc. (OVTI), Sandisk Corp. (SNDK); Eresearch Technology
Inc. (ERES); Netease.com Inc. (NTES)
The current investment environment is "very conducive to making money," particularly in small-cap stocks, according to Jim Collins, Insight Capital chief executive officer.
The recent market correction is a "good pause." However, He expects to see a strong rally, since the economy is doing well.
He is looking for earnings in small-cap stocks to be up about 200% next year, which will "get the stocks moving," he said.
Among the stocks Collins is buying right now are Corinthian Colleges Inc., Omnivision Technologies Inc., Sandisk Corp. and Eresearch Technology, as well as some Chinese Internet companies, one of which is Netease.com.
Those who invest in small-cap stocks can offset volatility by diversifying their asset allocation mix to include asset classes other than stocks, such as bonds, real estate and cash. Collins predicts the technology-laden Nasdaq index will reach 2700 in two to three years, or a 20% to 30%-a-year rise.
-By Michelle Rama; Dow Jones Newswires; 201-938-4046; michelle.rama@dowjones.com
(END) Dow Jones Newswires
10-26-03 1801ET- - 06 01 PM EST 10-26-03
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