DISCLAIMER : THE FOLLOWING "Forbes of FOX Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Forbes of FOX Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
David Asman: Spam (search)! You can't delete it from your email box fast enough! So should you be buying the stocks the stocks that fight spam?
We'll start with two companies that can make spam disappear! Network Associates (NET) and Symantec (SYMC)
Bill Baldwin, editor: It would be great if you could put a price tag on your mail box and charge spammers for every item they send you. Since AOL would never go for that.. I think the next best thing is to invest in companies that think they can control spam. Even if they can't, I think they're going to sell a lot of software. Network Associates is one of them, Symantec is another.
David Asman: Are they priced well at the moment?
Bill Baldwin: No, they're ridiculously overpriced, but BUT.. this is a growth industry!
David Asman: Bruce you have another anti-spam stock?
Bruce Upbin, senior editor: Internet Security Systems (ISSX), I'll throw them into the mix. They're coming through some troubles right now, so the stock may be a little cheaper than those others.
David Asman: Do you have any price targets for any of these stocks?
Bruce Upbin: I'd buy ISSX at around $10 or $12, and Bill's stocks are overpriced, but I'd buy Symantec below $60.
David Asman: Lea, are there any of these stocks that are priced right for the market?
Lea Goldman, senior reporter: I think Check Point Software (CHKP) is priced right right now. They're an Israeli-based company, they specialize in firewalls. They're sitting on a half-billion dollars in cash right now. They're going to make a play into other venues like anti-spam, anti-virus.
David Asman: What happens if you get the perfect anti-spam software, and then the spammers come out with something better, and you're wiped out?
Lea Goldman: Precisely! There's no silver bullet, you're never going to be able to get rid of spam entirely. No prosecution, no legislation. Deal with it. Get a good service.
David Asman: Now Mike, is that why you're a humbug about these stocks?
Mike Ozanian: That's one of the reasons. One of the reasons Lea's stock, Check Point, is priced right is the company's earnings are supposed to go down the next two years. So that's why the price is good. As Bill eluded to, the other companies are very expensive. Bruce's stock is earning 1 percent on his shareholder's money, I could do better in a CD. I mean, if you're going to go with risky stocks, put it in a biotech company like Genentech (DNA), where at least they're trying to find a cure for cancer.
David Asman: Bruce if you had your choice, biotech or anti-spam, which would you choose?
Bruce Upbin: I'd rather buy wireless stocks. People are going to be using their cellphone more, and avoiding their email inbox.
David Asman: But with the spam stocks, should we get in now, or wait for the prices to calm down?
Bruce Upbin: Wait until they calm down.
David Asman: Bill, you agree?
Bill Baldwin: No, I think there's going to be more money thrown at this. Look at Microsoft. They spend all this money trying to protect their own software from viruses, and there's still a huge and growing industry for anti-virus software.
Lea Goldman: As soon as the market picks up, the money is going into security. These IT budgets have been cut back for the last three years, they're ready to spend.
David Asman: So its not just anti-spam, these companies are doing other stuff too, like anti-virus. Mike did we sell you yet?
Mike Ozanian: Nope. The only tech stock that I'd pay a lot of money for would be something like Microsoft -- it had a monopoly. None of these companies have a monopoly that's worth this high a price.
Makers and Breakers
David Asman: This week our guest stock picker is Duane Roberts, from Dana Investment Advisors, his firm owns Affiliated Computer Services and AutoZone.
Affiliated Computer Services (ACS)
Duane Roberts: MAKER
They're a leader in an area called business process outsourcing" which means they help integrate technology into the business that they're in.
David Asman: They're now trading around $48, how high do you think it will go?
Duane Roberts: We can see this stock in the upper 50s, we've got a target of $57.
Elizabeth MacDonald, senior editor: MAKER
This is a great pick. They're big on scanning and digitizing all sorts of documents. They've got terrific free cash flow, and their debt is going down.
Jim Michaels, editorial vice president: MAKER
If you get mad at companies that send jobs abroad, you're not going to like this company. They were a pioneer in sending jobs abroad. But unfortunately, that's why I like it. They've got a cost advantage over their competitors, and a guaranteed growth at a market multiple.
AutoZone (AZO)
Duane Roberts: MAKER
Its the only auto parts store with a national footprint. It's a very fragmented industry still, we see lots of room for consolidation. The company's been growing earnings over 30 percent a year, we see 15 percent going forward.
David Asman: Its trading at $96, near its 52-week high now, how high do you see it going?
Duane Roberts: We see going to $108.
Elizabeth MacDonald: BREAKER
I see it going into the red zone. It has been on a big acquisition spree, its free cash flow is plummeting in the last recorded period, as well as its operating cash flow. I see big problems for this stock.
Jim Michaels: BREAKER
I don't like this stock because half their earnings gains come from buying into their own stock. They bought in their own stock at $25-30 a share. Its $100 a share now, that buying in the stock won't work.
Duane Roberts: the cash flow is still pretty impressive and strong, and that's how they've been funding the stock buy-back. But they have been increasing the leverage with the stock repurchases but we think they're leverage still looks attractive.
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