HI-TECH WINTER/SPRING 2001

THE HUNT FOR REAL TECHNOLOGY BARGAINS

Last time we wrote:
Bulls are hoping that support at 3300 and at worst case 3000 is solid .
Bears are looking forward to at least 3000 or 2800 or lower.

Leaving aside short term trading opportunities, where will technology stocks be next quarter and second quarter 2001? Our six to 12 month trading range for Nasdaq is 2200 to 3850.

Our advice is:
INVESTORS SHOULD NOT BUY AND HOLD STOCKS IN 2001 THAT ARE:
1) Not Profitable
2) P/e over 38
3) More than 25% more than Morningstar Value

VALUE WITH GROWTH
Just as stocks with 200 P/E are taboo now, so too will the 100 P/E stocks be next year.
Obviously this eliminates many technology stocks. Furthermore, old-line technology companies such as Rockwell (ROK), Texas Instruments (TI), United Technologies (TUX) and IBM will generally outperform as investors look increasingly to VALUE (Remember the Jupiter and Saturn conjunction last May) with GROWTH, TMT (Technology, Media, Telecommunications) stocks included.

TECHNOLOGY UPGRADES/DOWNGRADES

We reiterate an Outperform rating on IBM

First Buy
Dell (11/10).

From Accumulate to BUY
Compaq (CPQ), Xerox (XRX)

From Hold to Under Perform
Hewlett Packard (HP)
Lucent (LU)

INTERNET STOCKS

Greed, stupidity and insanity no longer rule the day for Internet stocks. Fear and self-incrimination has take over.

Since the IIX broke 400, we are raising our rating on Internut stocks from "Dump" to "Sell".
This will remain in force until Yahoo reaches 33 or the Fall of 2001 whichever comes first. Naturally it is profitable to continue to trade BOTH sides (with an obvious bias to the downside) on such premium Internuts as AOL worth 34 and YHOO worth 24.
Note: We have added Earthlink (ELNK) to our potential buy list.

When do we changing our tune and become buyers? When there is Value to be found. So that means sometime between Today and 2008! :)

Good Companies, Good Horoscopes

We divide "Good" Technology companies into two categories:

1: The Best- Buy near 52 week lows or 68% correction from March 2000 highs, whichever is higher,
2. The Rest- Buy at 80-90% correction from March 2000 highs.

In no case, buy for higher than 33% of business valuation if investing for the long term. You can find a value pricing model at the Morningstar web site.

COMPUTER HARDWARE COMPANIES

As predicted computer pricing will continue to fall taking it with it the bottom line of most companies. However, the worst will be over soon and we recommend accumulating on weakness IBM, Compaq (CPA), Dell, Samsung (SSNGF) and Xerox (XRX).

COMPUTER SOFTWARE

We have begun long term investing buys (on dips naturally) among the following three majors:

Adobe (ADBE)
Computer Associates (CA)
Intuit (INTU)

We have added Real Network (RNWK) to our Watch list for potential buys.

TECHNOLOGY FAVORITES

We have added Compaq to our core Technology holdings. We recommended selling Sun and Oracle and will not rebuy them until they approach value pricing. However, these technology favorites are recommended for accumulation upon weakness, or if your mandate MUST invest:

Compaq (CPQ)
Intel (INTC)
International Business Machines (IBM)
Motorola (MOT)
Oracle (ORCL)
Sun (SUNW)
Sony (SNE)

While we will continue biannual updates on selected computer stocks here, serious investors and traders can receive more timely updating on our Wall Street, Next Week premium Subscriber premium channels. Please see our Computer Stocks for current investment views as well as timing recommendations at our Daily Market Commentary.
Platinum subscribers may also visit Future Technologies.

PREVIOUSHI-TECHS POSTINGS

Return To Main Menu