Recap of Saturday, August 3:Pfizer; Duke Energy

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

David Asman: Mike let's go to you first. Takeover plays?

Mike Ozanian, senior editor: There's a lot of companies out there that are really cheap right now because the markets plunged so much. And you have these new accounting regulations that Congress is trying to pass. I think a lot of these companies are going to use this cash and management is going to buy these companies back themselves. So if you're an investor you're going to want to buy these companies because their values are going to go up. Some companies to look out for are Tommy Hilfiger (TOM), Cabot (CBT), Cooper Industries (CBE), Fluor (FLR), Lubrizol (LZ).

Elizabeth MacDonald, senior editor: What about Merrill Lynch (MER)? There's been a lot of rumors that they're going to be a take-over candidate.

Mike Ozanian: I don't know. Financial companies are a little harder to figure out. But the old economy companies with simple products have simple cash-flow to generate.

David Asman: Okay, well new economy and cable stocks. Elizabeth how are cable stocks doing?

Elizabeth MacDonald, senior editor: Many think that cable has won the broadband race. But Jim Chanos, the sleuth on Wall Street who uncovered the Enron problem, says stay away from cable. Companies like Cox Communication (COX), Comcast (CMCSK) and Cablevision (CVC) are companies to keep an eye on.

Mike Ozanian: This whole cable industry has built themselves around the fallacy of not worrying about earnings. When capital expenditures slow down eventually these companies will be profitable. Well guess what, capital expenditures have never slowed down.

Elizabeth MacDonald: The cash flow that they're getting in per subscriber is way too low to serve a per subscriber debt. You have to look at the numbers per subscriber. It's $220 on average free cash-flow and we're seeing debt anywhere between $1000 to $2500 for some companies.

David Asman: Chana Schoenberger, Homeland Security?

Chana Schoenberger, staff writer: Equifax (EFX) is one of the big three credit bureaus. They were just hired to run a database for something called the Regulatory Data Corp.. The Homeland Security Act required them to do these "Know Your Customer" screens. They have to know who has accounts at their banks and make sure that they're not giving accounts to people who obviously shouldn't have them. Equifax is going to take the public information, not credit information, and they're going to make sure none of those people get accounts.

Mike Ozanian: What's the stock price now? Is it cheap or expensive?

Chana Schoenberger: It's down from its high. Its high was in the thirties and it's trading now in the low twenties.

David Asman: Okay now we're going to San Francisco where Quentin Hardy is. Back in May Quentin you gave Stanley Works (SWK) a big spanking for trying to set up shop in Bermuda. They got pressure from Congress too and now they're staying in the U.S..

Quentin Hardy, Silicon Valley bureau chief: I think it's great. I was glad to see this morning their stock open up in a down market. Character counts. This helps them. Next week Congress will be passing Homeland Security bills. Provisions will be passed giving government contracts to people who are in Bermuda. The big company I would look out for is Accenture (ACN).

Makers & Breakers

Pfizer (PFE)

Stephen Leeb, Leeb Capital Management: MAKER

Pfizer is the biggest drug company by far. The world is getting older in the U.S., in Europe and even in China. That means a greater demand for drugs.

Elizabeth MacDonald: BREAKER

I would've bought Pfizer before the merger but then I'm thinking wait, they have problems with patent protection challenges. And also pressure from the government to cut costs. I sometimes wonder if bigger is better.

Jim Michaels, editorial vice president: BREAKER

It's a fine company but I don't want any stock at 25 times earnings. Also the politicians are at full cry against the pharmaceutical industry.

Stephen Leeb, Leeb Capital Management: Okay let's say you're right. Cut Pfizer's growth rate down to 10 percent. Wall Street says this company will be able to increase earnings by about 15 percent a year for the next 10 years. Let's say they only increase by 10 percent. It's still a very good stock.

David Asman: Okay Stephen let's move on to your second pick.

Duke Energy (DUK)

Stephen Leeb, Leeb Capital Management: MAKER

Duke Energy is probably the most conservative utility in the country. They're yielding 4 percent based upon their Carolina utility. And they have a growth kicker based on energy trading.

Jim Michaels: MAKER

This is my kind of stock. They've got 10 times earnings. Some nice growth in the company. And almost 5 percent yield.

Elizabeth MacDonald: BREAKER

I'm a breaker on this stock. I don't know about how conservative they are. They said they didn't have these same problems as Enron but it turns out they did. They had a lot of mirror trades going on as well as revenue rebound trades. I think there's more problems brewing for this company.