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In Focus: Safe havens?
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November 30, 2000: 12:53 p.m. ET
C.E. Unterberg Towbin's Finnerty comments on pharmaceuticals, techs
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NEW YORK (CNNfn) - Some solid places to park money do exist, despite the drop in tech stocks, according to Brian Finnerty, head of Nasdaq stock trading, C.E. Unterberg Towbin.
Finnerty, a guest on CNNfn's In Focus, favors pharmaceuticals like Pfizer and Merck (MRK: Research, Estimates), but he's also sold on technology stocks like Dell (DELL: Research, Estimates).
Valuations are reasonable now, Finnerty said, so it might be a good time to revisit some technology stocks.
In Focus airs daily on CNNfn's network at 12:10 p.m. The following includes comments made both during the show and in the pre-show interview.
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Semiconductor stocks are overdone. I'd be buying them. I like Intel but more than that I like communication semiconductors like AMCC and PMC Sierra.
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Brian Finnerty
head of Nasdaq stock trading
C.E. Unterberg Towbin |
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CNNfn: The Nasdaq is off about 4.6 percent this morning, its ninth loss in 10 days -- it's down about 39 percent for the year and down 49 percent since it highs in May. Are we getting close to a bottom here?
Finnerty: Yes we are. We went back 10 years and looked at the 200-week moving average, which is 2,469, and that number has never been broken -- the Nasdaq has never gone below that number. So there's big support there.
This morning we got to 2,570 -- within 100 points, so we came pretty close. The last time we got this close was Oct. 1998 during the Asian crisis and the Long Term Capital debacle, and look at the rally we had after that. I suspect we're getting close to a bounce off an extremely oversold condition.
Regarding the fiber optic sector, since Labor Day that group is down 65 percent - Nortel, JDS Uniphase, Corning, etc. Back in Sept. they were trading at 75 times next year's revenues -- now they're at 15 times next year's revenues. That's a big change in valuation.
These stocks were overextended and now they're overdone on the downside. Valuations are reasonable now and you have to buy these stocks.
CNNfn: What about other tech sectors where there have been huge losses, like PC, chip, and Internet stocks? Would you be buying those too?
Finnerty: Dell (DELL: Research, Estimates) is a great buy here. It's holding up pretty well today. It's less affected by this whole thing than Gateway is.
Gateway's pre-announcement raises issues of growth, but Dell and Compaq are less affected. Consumer PC sales for Dell are less than 15 percent of their revenues compared to 50 percent for Gateway. I'd be buying Dell.
Semiconductor stocks are overdone. I'd be buying them. I like Intel but more than that I like communication semiconductors like AMCC and PMC Sierra (PMCS: Research, Estimates). Lehman lowered its rating on PMCS and is saying slower growth, but that's only for a few quarters and after that they're off to the races.
CNNfn: : Are there any safe havens out there?
Finnerty: The drug stocks like Merck and Pfizer (PFE: Research, Estimates). People are using pharmaceuticals as a safe haven. And any stock that you don't have to explain to a 4th grader, like McDonald's – 'old economy,' basic business stocks. That's why the Dow is only down 8 percent for the year while the Nasdaq is down 36 percent.
CNNfn: : Cash at U.S. equity funds in October was up 10.2 percent from the end of September -- do you see the big mutual funds continuing to sell?
Finnerty: Big mutual funds are close to being done. They're selling in anticipation of big redemptions at the end of the year.
But if the Fed gets easier and the election mess gets resolved, then we'll have a big rally.
CNNfn: What are your favorite stocks here?
Finnerty: Corning (GLW: Research, Estimates), New Focus (NUFO: Research, Estimates) and PMC Sierra (PMCS: Research, Estimates).
-- CNNfn's Carmina Perez contributed to this report. 
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