Techs: Bear Market Survivors
BOSTON — Top-of-the-line technology stocks have become the new "blue chips" for investors in the 1990s, and analysts expect them to stay that way.
"Large-cap technology stocks are the places to be during this period of market uncertainty," says Stephen Dalton, technology analyst with First Capital group, a subsidiary of First Union Bank, in Philadelphia.
Mr. Dalton likes Dell, Microsoft, Intel, Compaq, and WorldCom.
Many of the best-known high-tech firms, he notes, while not escaping the recent downturn, have weathered the financial roller coaster better than others.
Among the reasons:
1. Concerns about lower or reduced earnings due to the global currency and monetary crisis had already been discounted for many technology stocks.
2. The hi-tech revolution shows no sign of abating, especially with the expansion of the Internet.
If you plan to invest in the tech sector, think "blue chip high technology," says Henry Blodget, who covers Internet companies for CIBC Oppenheimer in New York. Larger technology companies have a steadier income flow, he says.
Blodget finds long-range potential in Dell, Intel, and Microsoft, even though they are expensive compared with other stocks.
The momentum behind Internet companies is "compelling," adds analyst Keith Benjamin, with BancBoston Robertson Stephens in San Francisco.
He likes the major Internet players: AOL, Yahoo!, Amazon.com, E*trade and Lycos. (Read his views at www.internetstocks.com).
Blodget, however, cautions about buying smaller, lesser-known high-tech firms. You might "wait until the market calms down before jumping in."