Recap of Saturday, March 1Equifax; Forest Labs

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

David Asman: Melanie Wells, I hear you’re the foremost authority of Coke at Forbes, what’s the deal?

Melanie Wells, senior editor: Coke’s (KO) got its groove back.  The company had lost its way after Roberto Goizueta died in 1997.

David Asman: He was the former Cuban American head who was really dynamic, made it a great company….

Melanie Wells: He was a marketeer.  Now they have a new marketeer and he is repairing relations with bottlers, with consumers, rolling out new products.  They’ve got a water deal which will help them out in the price war that’s coming in bottled water, they’re doing well.  It’s a good buy now.

David Asman: Pete, what do you think of Coke?

Peter Newcomb, senior editor: Melanie wrote a cover story about Pepsi (PEP) a month ago and how they’re going great guns.

Melanie Wells: Pepsi is losing it’s focus.  They’re worried about getting caught in the obesity trap, so they’re talking about healthy stocks.  Coke is not having to worry about that.  They’re focusing on what they do.  They do beverages.

David Asman: All right, speaking of comebacks, Quentin.  How about the tech sector?

Quentin Hardy, Silicon Valley bureau chief: That’s right.  In the latest issue of Forbes, tech sector is all about the big tech companies, IBM (IBM), Hewlett-Packard (HPQ), and Sun Microsystems (SUNW) have their act together to bring hardware, software and consulting strategies to bring bigger efficiencies to the data center.  H-P now guarantees in some contracts a 20 percent cost savings in what the customer was paying in their old internet technology spending.

David Asman: IBM?  Sun W?  What do you like?

Peter Newcomb: I like H-P.

David Asman: What would you pick if you had to pick between those three, Quentin?

Quentin Hardy: I would pick H-P because they got beat up this week, and I want the bad news baked in when I buy a stock, right?  Now I think H-P has a good strategy here, and I think they’re going to have some contract wins in a big way off this strategy.

David Asman: Chana Schoenberger, let’s talk about shoes.  Sneakers.

Chana Schoenberger, staff writer: Reebok (RBK).  Reebok is the number four sneaker-maker, and they are having somewhat of a comeback.  They’ve decided that a big part of their strategy is urban males.  Those are boys between the ages of 12-18.  And it’s really important to get those kids to buy your really high-priced sneakers (over $100.)

David Asman: For this, they need Jay-Z, the rapper?

Chana Schoenberger: That’s right.  He has inked this deal with them that he is going to be designing a shoe that’s coming out in April.  It’s sort of a white, European-style number.

David Asman: Quick Melanie, what do you think?  You’re shaking no.

Melanie Wells: Reebok is trying to be too many things to too many people.  Jay-Z may be a hot rapper, but he doesn’t say performance.  At the end of the day they are a sneaker company, and even if I am wearing sneakers as a fashion statement, I want to know that they can help me do sports.

David Asman: Now we have to go to the Billionaire Issue, the cover story in Forbes, this is it.  It’s out now, and Internet moguls are making money again, and what does that mean, Pete Newcomb, for Internet stocks?

Peter Newcomb: It must be time to buy Internet stocks.  Call me crazy, but both eBay (EBAY) and (AMZN) were up sharply, so Wall Street must see something they like.  Must be time to get in.

David Asman: Quentin, what do you think?  Is Internet back?

Quentin Hardy: Pete, can I call you crazy?  Look, Amazon just had its annual profitable quarter.  They go three down, then they come up at Christmas.  I just don’t see this as a sustainable business.

Peter Newcomb: They have a huge market presence; they’ve got a great brand name.  I think it’s a go-to site.

Makers & Breakers

Equifax (EFX)

Patricia Powell, president of Powell Financial Group: MAKER

They are a credit rating company, but they are also doing background checks.  They are a beneficiary of the U.S. Patriots Act that no one is paying much attention to right now, in that there is an awful lot more going on right now with background checks.  Not just for employees, but try opening up an Internet bank account.  You’re going to have your background checked.  This is a company that is 100 years old, solid, and the reasons to buy it are numbers, numbers, numbers.  Low price earnings multiple in relationship to many of the companies out there today.  Good earnings and good potential.

Bill Baldwin, editor: MAKER

I’m totally enthusiastic about this stock.  It’s a maker.  The reason I think it’s true is that we are living in a deadbeat society.  There are a lot of deadbeats out there.  Banks have been all too ready to lend to people on credit cards and on mortgages, people who can’t pay back.  They need Equifax.

Mike Ozanian, senior editor: BREAKER

There may be a lot of deadbeats out there, but I’m a breaker on the company.  It’s borrowing a ton of money to buy back stock, and they’re using that stock to pay executives and employees that are redeeming stock options.  I think that’s always a bad sign for a company.

Forest Labs (FRX)

Patricia Powell: MAKER

This is the numbers all the way.  This is a traditional growth company.  Great earnings growth, great revenue growth, nothing in sight that I can see, except that it’s expensive.  You have to be a little careful about the price.

Mike Ozanian: BREAKER

I think it’s a great company, but I think everybody knows it’s a great company.  The stock is up sevenfold in the last five years, and relative to it’s earnings it’s twice as expensive as other big drug companies, so it’s a little too pricey for me.

Patricia Powell: It’s not a big drug company.  It’s got $2 billion in sales.  You can’t compare it to Merck (MRK) or Pfizer (PFE).  This is a much smaller company with a lot of room for growth.

Bill Baldwin: BREAKER

I’m going to join with Mike in being a breaker on this one, because I think there’s going to be a giant price backlash against the whole drug industry.  These people are going to be torn down along with the MedCos.

Patricia Powell: I understand, and I think you’re right which is why I’m really nervous about Pfizer and it’s why I’m really nervous about Merck and the other big ones.  I think when you look at the product line that this one has; I think you have some other opportunities.  If you look at their anti-depressants, these markets can make us all depressed.  They have a growth market going here.  You also have something unusual in their anti-depressants in that they have less side effects, including sexual dysfunction.