A stockbroker shares Reagan's high regard for high technology
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If anyone on Wall Street has a feel for the pulse in high technology, it should be DQ Securities. DQ was formerly part of Dataquest, which is owned by A. C. Nielsen. Dataquest, in Cupertino, Calif., does market research for the companies that line the increasing number of Silicon Valleys springing up around the country.Skip to next paragraph
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For example, before Apple Computer's introduction of Lisa, its newest computer, Dataquest surveyed the potential market and analyzed the new machine. Within days of the introduction, Dataquest had written a 38-page research report concluding that the new computer was ''the first product of a new generation,'' and that whether or not it was successful, most new office systems would be compared with it.
DQ Securities, which was spun off from Dataquest, buys such material from its former parent and immediately sells it to some of the 200 institutional clients it deals with. The clients pay for the research with soft dollars - that is, by giving orders to DQ to buy or sell stocks.
For the conservative investor, DQ likes International Business Machines. ''Ever since the antitrust settlement,'' Mr. Schacter said, ''IBM has been a very aggressive company - marketing-wise and price-wise. You just can't compete against a company with its resources.'' Wall Street obviously agrees. The stock has nearly doubled in the past year.
For the less conservative investor, Mr. Schacter has other favorites. He particularly likes Hewlett-Packard, noting, ''They have the best product development around.'' H-P, he adds, is well managed and very strong financially. It sells to the scientific and engineering segments of the market, which are less likely to be influenced by the economy.
Aside from these two companies, which might be considered the creme de la cremem of high technology, DQ is partial to companies involved in the office of the future, telecommunications, and personal computers.
In the telephone communications business, Mr. Schacter believes suppliers of telephone equipment, such as TIE Communications, will perform quite well. ''TIE has 11 percent of the key systems, while Bell has 56 percent of the business. With deregulation, TIE will get a higher percentage.'' On the retail side Schacter likes Tandy Corporation. He also likes Mitel Corporation, which sells PBXs (switchboard systems), priced at the higher end of the price spectrum.
As the high-tech business expands, DQ thinks the manufacturers of semiconductors, such as Intel Corporation, will also do well. And as the semiconductor business expands, manufacturers of equipment to test semiconductors will likewise see their order books expand. Thus, Schacter recommends that investors buy GenRad, Teradyne, Varian, Perkin-Elmer, and GCA. All of these products must be distributed, so DQ likes Avnet, a company Schacter calls ''an efficient distributor'' of high technology.
When does he think these stocks will become overpriced? ''Who knowsm where they're going?'' he said. ''In the case of the semiconductors, their earnings could grow at 50 or 100 percent a year.''
Maybe the next Silicon Valley to spring up should consider locating on Wall Street. It looks like fertile ground.