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Forbes Newsletter Watch
Some Dot-Coms Party Like It's 1999
John Dobosz, 10.16.02, 10:23 AM ET
NEW YORK - Yahoo! gains more than 50% in a week. Amazon.com up 20%. You'd think you stepped into a time warp and gone all the way back into the old millennium when the buzzwords were "Y2K" and "new economy" instead of "post-bubble economy" and "finding a bottom." But this is, in fact, October 2002 and not late 1999.
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Randy Williams Gurian, editor of Seattle-based Tech Stock Insights, told his subscribers in last month's letter about four Internet survivors that they should consider buying. For those who bought, the timing has been great.
Since last Thursday, the Philadelphia Internet Index has shot up more than 22% while the S&P has rallied 12%. Web stocks were the first to fall under the claw of the bear and the carnage in the group has been substantial. Is it time to jump back in?
Gurian won't go that far but thinks there's lots of mileage ahead on a very select list of survivors. Yahoo! (nasdaq: YHOO - news - people ), for example, returned to profitability last week, coinciding with--and perhaps fueling--the substantial rebound in stocks.
One company on Gurian's buy list: Expedia (nasdaq: EXPE - news - people ). The online travel company is "executing well and showing impressive growth," says Gurian, who tells subscribers to buy it at or below $50 and has a 12-month target on the stock of $70. Gurian also likes eBay (nasdaq: EBAY - news - people ) because of its strong growth in sales and profits. With this week's rally, Gurian advises buying eBay on pullbacks.
Amazon.com (nasdaq: AMZN - news - people ) could go as high as $25, says Gurian, who recommended it last month at $13. Amazon shares have lately traded just under $20. Gurian acknowledges Amazon's $2.1 billion in debt but says the largest Internet retailer has 34 million loyal customers and made an "aggressive march towards profitability. Gurian also likes Barry Diller's USA Interactive (nasdaq: USAI - news - people ) and says the stock could hit $35 in the next 12 months.
With the strong run in these stocks in the last few days, Gurian says to wait for weakness to make new buys. Gurian has been keen on tech stocks since 1994 and his performance has suffered in the last two years.
Other tech stocks he is currently buying include RF Micro Devices (nasdaq: RFMD - news - people ), the Greensboro, N.C.-based maker of radio frequency chips for mobile phones. Intersil (nasdaq: ISIL - news - people ), a wireless networker, and chipmaker Atmel (nasdaq: ATML - news - people ) are also buys at current prices.
The drought in corporate IT spending has whacked the shares of Sun Microsystems (nasdaq: SUNW - news - people ), which traded this week for less than $3 a share. Gurian says that Sun is "unbelievably cheap." "There hasn't been any business spending in a year and a half. It's got to come some time, and at these prices, if you have a three-to-five year investment horizon, I'd back up the pickup truck and buy as much Sun as I can."
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