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Recap of Saturday, May 4:Costco; Danaher

Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:

Bob Sellers, guest host: Bob, some are finally talking accountability on Wall Street. What do you think?

Bob Lenzner, national editor: Some big executives on the financial services forum are now saying that any CEO who sells shares of the company the year before the company goes bankrupt should return the profits to the company.

Bob Sellers: Is that going to happen Elizabeth?

Elizabeth MacDonald, senior editor: I think this is one of the lamest PR gambits I've ever seen. What about these big Wall Street guys who touted these fake stocks that eventually fell. Are they going to give that money back?

Bob Lenzner, national editor: That is a problem. They're trying to disassociate themselves from some of the scandals. They're tainted. Merrill Lynch is tainted as well, and the head of Merrill Lynch is on this financial services forum. Do I think they're ever going to get this, no. But they're taking a stand.

Bob Sellers: Okay. Bruce you think the sun is setting on Sun Micro?

Bruce Upbin, senior editor: Yes. Last week, Sun Microsystems (SUNW) announced that their number two guy, Ed Zander was going to leave the company. This is the fifth lieutenant to defect the company. The stock is at a 52-week low. Things could not look worse.

Chana Schoenberger, staff writer: So, what does this mean for Scott McNealy?

Bruce Upbin, senior editor: He's going to go back to running the company but there's very little he can do. He's boxed in by Dell and their prices.

Bob Sellers: It's gotten hit. How much lower can it go?

Bruce Upbin, senior editor: It's still slightly overvalued if you look at the earnings because they don't have any earnings.

Bob Sellers: Well, who needs earnings, right Elizabeth? What do you have for us?

Elizabeth MacDonald, senior editor: I've got Yankee Candle (YCC), which has been a great play for the consumer goods market. They're near their 52-week high of 25. This is a typical Wall Street hype story. Their figures just don't add up. The national candle association, and yes there is a national candle association, says that the last three years the market has not grown. So I would watch out.

Bob Lenzner, national editor: Why isn't there entry into the candle business by anybody? Anybody could enter this business.

Bob Sellers: Chana, Peter Lynch says buy something you can understand. Is Yankee Candle something that people should buy because they can understand it?

Chana Schoenberger, staff writer: Well, I don't know how many people are going to really need candles to move forward.

Bob Sellers: Okay Chana. What have you got for us?

Chana Schoenberger, staff writer: Panera Bread (PNRA) is a sandwich shop for yuppies. They're the former Au Bon Pain. The company sort of morphed over into Panera. Two of their competitors which were private have just filed to go public, Cosi and Fresh Enterprises. The thought is that Panera is going to go even higher in stock run-up after these companies offer IPO's.

Elizabeth MacDonald, senior editor: I would run away from these. These stocks are going to crater within 2 years.

Makers & Breakers

Costco (COST)

Michelle Clayman, New Amsterdam Partners: MAKER

Costco is both a revenue story and a cost story. On the revenue side, the warehouse club concepts are getting more share from the super centers and they're doing it by keeping their costs very low. So that means that you'll get revenue growth and you'll also get profit growth.

Bill Baldwin, editor: MAKER

I agree with Michelle. I think the future in retailing belongs to giant, super efficient, cheap skate retailers. Costco and Wal-mart will be these retailers.

Elizabeth MacDonald, senior editor: MAKER

I like it too. Warren Buffet is famous for quoting Mae West with "Too much of a good thing can be wonderful." Costco is expanding into the mid-west and into China. They're a cheap stock. Their P.E. is cheap relative to the sector.

Bob Sellers: Well, what if we say that they've got all the customers they're ever going to get. So, what's the upside?

Michelle Clayman, New Amsterdam Partners: They've got unit growth. They forecast 10% growth from new stores next year. So that means they're going to bring in more shoppers. People who haven't had access to Costco before.

Danaher (DHR)

Bob Sellers: Okay, you also brought along Danaher. Tell us what they do.

Michelle Clayman, New Amsterdam Partners: MAKER

Danaher makes Craftsman Tools but they also make process and environmental controls. Non-tech capital spending is picking up quite nicely and will continue to pick up. Danaher really is a play on that.

Elizabeth MacDonald, senior editor: BREAKER

It's trading at $70 near it's 52-week high. It's 5-year average Earnings Per Share, EPS, growth is only a third of the rest of the sector. I wouldn't buy this stock. I would stay away from it.

Bill Baldwin, editor: MAKER

Forbes once dismissed the take-over people who run this company as "Raiders in Short Pants." Well, they've got long pants now and they're doing a fabulous job. There's one more thing that makes me really like this company and that is I like their tools. I have a basement full of wrenches and those socket sets.

Bob Sellers: So if you had to pick just one of your stocks Michelle, which one would it be?

Michelle Clayman, New Amsterdam Partners: Maybe I'd go for the Costco just because it sold off recently. It's relatively an attractive buy.