Price and Landis: Tech Panel Favorites
08/29/2002 12:00 am EST
While hosting the “Tech Stocks in 2003” lunch panel, InterShow chairman and panel moderator Charles Githler offered one of the more astute comments made at The Money Show. He noted that at the NASDAQ peak, some 1,200 attended the tech-stock lunch. This year, only 250 were willing to brave this high-tech arena. The panelists concurred that from a contrary standpoint, this boded well for the tech sector. Here are some high-tech favorites from two panelists – Walter Price and Kevin Landis….
Walter Price is the senior analyst and portfolio manager for Dresdner RCM Global Investors, where he is responsible for the technology area. Says Price. “From a macro standpoint, we don’t look for the economy to start acting more robustly until the fourth quarter of 2003, which is about a year from now. But we think technology stocks will begin to respond much earlier if people simply believe that business isn’t getting worse. A lot of people are now betting on things getting worse; short positions are at an all-time high in technology stocks. So if things stabilize you could see a big move in the stocks even though conditions are only moderately getting better.” Here are some of Price’s current favorites:
“Expedia (EXPE OTC) is the leader in online travel. They are growing at a compounded rate of 40%-50%. The firm's current focus is on the hotel side where there is a move away from travel agents to direct booking on the Internet.”
"Symantec (SYMC OTC) will benefit from government security spending. They are very well positioned with the leading computer anti-virus product as well as intrusion detection products to monitor attacks on networks.”
"UT Starcom (UTSI OTC) is a US-based company that serves China’s telecom industry. It is bringing connectivity to Chinese towns and villages. It has made its numbers for nine consecutive quarters and is growing 30%-40% a year. We think it will get recognized as a key part of infrastructure spending for many less-developed countries, not only in China but other parts of Asia, South America, and eventually India. We think at 12 times earnings, this is a really good price to buy the stock."
Kevin Landis is the founder and chief investment officer for Firsthand Funds, and manages three funds - Technology Value, Technology Leaders, and Technology Innovators. Says Landis, “Yogi Berra – when asked about attendance at Yankee games - once said, 'If people don’t want to come to the ballpark, no one is going to stop them.' The same can be said for tech stocks; if people don’t want to buy, no one is going to stop them. That’s what’s going on right now. Normally, the stock market is supposed to anticipate what happens in the real world. Stocks are supposed to crack and fall before the economy slips into recession, and they are supposed to rebound in anticipation of a recovery. I think we’re in a really unusual circumstance right now. Things are actually getting better; in our view, we’re in the early stages of a recovery. We’ll let the economists argue over whether we’ll have a double dip, but what I find interesting is that companies are telling us that business is stabilizing. And while more and more cpmpanies are saying that business is getting better, it hasn’t yet shown up in the stock charts.”
“Among our current favorites are several small, and highly-speculative companies. They have very little coverage on Wall Street, which means we’re early to these ideas. One favorite is Aeroflex (ARXX OTC). The company is a specialty military contractor. They basically make all the guidance systems that go into missiles. When shooting breaks out and you see a missile on CNN, that’s a $10,000 re-order for Aeroflex, because they made the avionics that went into the missile. It takes several years for a company to get qualified to get into this business. There is a limited pool of companies who can still supply these products, as most industry players left this business when peace broke out ten years ago.”
"PEC Solutions (PECS OTC) is a little company in northern Virginia. They do IT consulting for the government. They tie together disparate islands of computing, such as the national fingerprint system. Post 9-11, we have heard horror stories such as high jackers getting their visa approval sent to them months after the event due to the inability for government computers to interact. The government needs to do a lot of work to revamp their IT systems.”
"Websense (WBSN OTC) can be called a ‘Big Brother’ stock. The company makes software that allows you to keep track of all the Web sites that your employees visit. Importantly, it keeps track systematically, so you don’t get accused of looking over someone’s shoulder. It allows you to block access to certain sites, such as hate groups or pornography. This can be very important in the work place because the employer can get sued if one employee does something that creates a hostile work environment for another. This company is growing very rapidly. It looks like a classic growth company that has ignored the recession.”