05/30/2003 12:00 am EST
Here, we feature some of the more concise and interesting stock picks from the financial advisory community. Roger Conrad looks to the UK at a utility, while Neil George looks to the Brazilian market. James Dlugosch suggests an oil firm, while Larry McMillan offers his latest option picks, while Sharon Parker likes a bomb detection firm, Sheldon Jacobs picks some retirement mutual funds, and John Bollinger gives his outlook on the market.
"National Grid (NGG NYSE) has posted strong earnings in its first full year since the merger with British gas transmission monopoly Lattice/Transco," notes Roger Conrad , editor of The Utility Forecaster. "The results, which exceeded expectations for merger savings, affirm this company's emergence as a global T&D powerhouse, with major opportunities for regulated growth in a wide range of infrastructure. That includes natural gas liquids storage, which will become ever more important as both Britain and the US--home to about half the company's operations--suck down increasing amounts of the fuel. Dividends have risen 7.2% during the past year, and are on track for similar growth going forward. National Grid remains a solid value in the low 30s for growth and income."
"The way to play this turn-around in Brazil is to buy the closed-end Brazil Fund (BZF NYSE), which is run by Deutsche Asset Management," says Neil George editor of ByGeorgenewsletter.com . "The fund invests in the general leaders in the local market as well as those that are also listed in the US markets. The fund still trades at a discount to the underlying stocks by more than 13%, making it a steal that won't last for long. And while you're waiting for more price gains, the fund will keep you even happier with a near 2% dividend. All in all, it's a good play on the recovery and growth of this local market and economy. Buy the Brazil Fund up to at least $16.25 per share."
"For the quarter, profit at ExxonMobil (XOM NYSE) more than tripled as divisions up and down the vertically integrated company performed well in the high price environment. XOM posted $7.04 billion in earnings that included some accounting effects and $4.79 billion without those benefits. Either way, the results are powerful and attractive for investors. The fact that shares have only moved modestly in the quarter indicates that there remains tremendous value in XOM. Fears of lower prices have been priced into the market for several years now. Those fears have failed to materialize. Eventually, investors will reward XOM for its efforts as oil companies tend to be extremely profitable at prices above $20 per barrel. There are few experts predicting those levels as demand grows and supplies remain tight. I would buy XOM up to $40 per share and my goal price is $80."
"Here are our latest option recommendations," says Larry McMillan, editor of The Option Strategist. "First, we bought Boston Scientific August 45 calls (.BSXHI ) when the stock broke out over 49-1/2. These calls can still be bought. Also, Citigroup closed below 38-1/2, so we bought the Citigroup June 40 puts (.CRH ). Citigroup continues to hover around that level, so these puts can still be purchased as well. In addition, buy calls on Hewlett-Packard. Specifically, buy 8 HPQ July 17.5 calls (.HHYGW ) at a price of 1.50 or less. Hewlett recently broke out to the upside, apparently completing a large basing formation. Use the 17 level as a mental closing stop for these calls."
"Many are hoping the we have seen the rebirth of a bull market, that the strength we have seen is akin to a rocket motor that will carry stock prices dramatically higher," says John Bollinger, editor of The Capital Growth Letter. "That is only hope. The reality is that nowhere near enough time has passed since the broad-market peak of June 1998 or the momentum peak of March 2000. Bubbles recede very slowly. In addition, valuations are still way too high to support a new bull market. However, that doesn't mean that we can't have very tradable rallies, which is exactly what this is. On balance our expectation is that this rally can continue into midyear, at which time we will have to reassess its prospects. We remain at 70% US stocks and 30% cash and will likely maintain that ratio until midyear. Avoid bonds at all costs; we are at the end of a very long bull run and the risk/reward ratio for bonds is very poor."
"The latest addition to our portfolio, InVision Technology (INVN NASDAQ), announced great earnings on the heels of tremendous growth in sales of its explosives detection systems (EDS)," says Sharon Parker, editor of UnDiscovered Stocks. "I expect this trend to continue, fueled by government mandate to fully screen checked luggage at our nation's airports. Plus, orders are flowing in from overseas. Meanwhile, InVision's recent purchase of Yxlon should keep it on the cutting edge of EDS technology. Buy on dips to $23."
"We have added several retirement funds to our list," says Sheldon Jacobs, editor of the No-Load Fund Investor . "T. Rowe Price has developed five retirement lifestyle funds: Retirement 2010 (TRRAX), Retirement 2020 (TRRBX), Retirement 2030 (TRRCX), Retirement 2040 (TRRDX), and Retirement Income (TRRIX ). These are hybrid asset allocation funds seeking growth and income by investing a diversified portfolio of underlying T. Rowe Price mutual funds. The funds gradually reduce their risk levels as they approach their target dates. Ultimately, they become income funds, with an increasing emphasis on short-term bonds."