Brenda Buttner and was joined by: Gary B. Smith, RealMoney.com columnist; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; and Meredith Whitney, Fox News business contributor.
It's been a year of war, threats of terror, and big scandals on Wall Street (search). Yet stocks are taking off!
Tech has been on a tear, helping the Nasdaq (search) make a gain of 23 percent this year. How long can this rally last? Can it take the Nasdaq to 2000?
Meredith said there is no doubt in her mind that the Nasdaq will hit 2000 this year. She sees a stunning similarity between now and the fall of 1998, when the Nasdaq began its phenomenal run.
Tobin is also bullish. He said the past 9 quarters have been bad, but there has been a complete turnaround in the past two weeks.
Pat isn’t as optimistic as Meredith and doesn’t think the Nasdaq will hit 2000 this year. He said the one big difference is that in 1998 there hadn’t been a multi-year overspending on tech-which is still being worked off. Also, he is not seeing a real increase in IT spending. Finally, he made the point that earnings drive prices and earnings are not coming in for tech.
But Gary B. agrees with Meredith. He charted the Nasdaq since July of last year and said that it not only seems likely, but logical, that the Nasdaq will hit 2000 by the end of the year. In fact, he said 2000 is the next and only area of resistance.
Scott said Nasdaq 2000 is not going to happen this year because stocks are overpriced. He has found very few stocks in the Nasdaq he wants to buy and businesses have to get better to justify higher prices.
Tobin, Scott, and Meredith stayed on to pick the best tech stocks to own for the rest of the year.
Meredith started things off by choosing semiconductor, Intel (INTC). She said that semiconductors have the best fundamentals in tech and that this blue chipper is the best in the group. Tobin said Intel is not growing its PC business and he would rather buy a stock that is going to grow. Scott thinks there are better semiconductor stocks to buy. (Intel closed on Friday at $20.67.)
Scott picked satellite company, PanAmSat (SPOT), because it handles 98-percent of the on-air business for satellite television and is reasonably priced. Toby said even though it’s a lousy business, he likes the stock because it is starting to make money. Meredith thinks the long-term fundamentals for this stock are positive, but she was skeptical about the sector as a whole. (PanAmSat closed on Friday at $18.85.)
Tobin chose SICOR (SCRI), a generic drug company. He thinks it is undervalued. He said the company’s earnings have grown 50-percent in the past three years. Also, he believes the generic drug bill will be passed in August, and this will create a huge increase in generic drugs. Toby thinks the stock will be at $40 in a year. (SICOR closed on Friday at $21.42.) Scott likes this pick because the company is unique and does injectable generic drugs. Meredith likes SICOR and thinks the whole sector will do well.
Gary B. says he has found the hottest stocks for this summer. But would Pat agree?
The first sizzling summer stock Gary B. chose was St. Paul Companies (SPC). The stock recently broke out of a “bowl” that it had been in since the beginning of the year. Since it broke above this resistance he thinks the stock is headed for the mid $40s. (St. Paul Companies closed on Friday at $36.51.) But Pat didn’t agree. He is bearish on St. Paul Companies because the company has had poor results in the past couple of years and its past sins are still on the books.
Gary B’s next hot stock for the summer was Mediacom Communications (MCCC). He said it’s a strong stock that is getting stronger. He likes that Mediacom recently broke through a downtrend it had been in since the end of 2002, and thinks the path of least resistance is up. He believes it should easily move up another 20 percent. (Mediacom Communications closed on Friday at $9.75.) But once again Pat didn’t agree. He said the cable company is behind the technology curve and its small size could hurt its bottom line. He added that the company is not a likely takeover target, which could give its price a boost, and there are better cable companies out there.
Lastly, Gary B. chose Nationwide Financial Services (NFS). He said this stock has also struggled to break free from resistance. It has been in a slight downtrend since the beginning of the year. But Nationwide recently broke through this resistance, and the Chartman said it is now set up to gain 20 percent. (Nationwide Financial Services closed on Friday at $32.21.) But still Pat didn’t agree. He said Nationwide is not on investors’ side. The company is helped out because Americans are getting older. But the bad news outweighs the good and Nationwide will be hurt by the dividend tax cut and has a big exposure to death benefits.
Meredith's prediction: Rate cut disappoints & stocks sell off; great chance to buy!
Gary B's prediction: S&P 500 gains 10 percent more by end of summer; but that is the top
Scott's prediction: Best of the rally is over; stocks flat until the fall
Tobin's prediction: Pfizer (PFE) is Viagra for your bottom line; up 25 percent by year end
Pat's prediction: Toby has right industry but wrong company; Novartis (NVS) up 20 percent