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Stock picks by the pros
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October 12, 1999: 12:35 p.m. ET
Yahoo!, AOL, Firstar all get positive ratings from analysts
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NEW YORK (CNNfn) - Some Internet and financial services stocks, among others, got the thumbs up from money managers and analysts Tuesday. Here are some of the stocks recent guests on CNNfn are buying and why:
As third-quarter earnings results start rolling in this week, Internet-related companies may come in with a bang, notes Frederick Moran, Internet strategist at Jefferies & Co.
"What we're now seeing is the entry into third- quarter earnings results which look very powerful," Moran said. "Last week, we had Yahoo! (YHOO) come in with outstanding numbers, even beating the whisper number. They're always the first. They set the tone. And now, next week, we will see a slew of other Internet companies come in with pretty powerful numbers."
AOL (AOL) is another strong brand, says Moran. "AOL is the Internet play out there. It is the only fully integrated Internet player in the space. It basically has multi-brands across different areas of the Internet. And their flagship AOL Internet service continues to show very, very powerful subscriber growth."
Moran's other pick, merged ISPs EarthLink/MindSpring, don't "necessarily have to compete head-to-head with AOL. AOL's got about 21 million users worldwide today. Earthlink-MindSpring has about 3 million users. There are plenty of disconnects from AOL and internal growth in the ISP sector for MindSpring (MSPG) and Earthlink (ELNK) to get to 5 million subscribers combined next year."
"This is a business that is very early in its development, it has big growth ahead," Moran said. "And Earthlink-MindSpring is well-positioned to capture a share of that growth."
Dean Eberling, analyst at Putnam, Lovell, De Guardiola, gives "buy" recommendations to three brokerages that issued strong earnings reports Tuesday -- Donaldson Lufkin & Jenrette (DLJ), Paine Webber (PWJ) and Merrill Lynch (MER). Eberling gives Merrill, which closed Monday at 67-3/4, a $100 price target.
"We have been saying for some time that a bank is not a bank," says Diana Yates, banking analyst at A.G. Edwards, "and I think you are will hearing more of this, you know, look back at the Fed and what they had to regulate had 10, 20 years ago, it's totally different from a bank today, with the full financial service mix of products."
Yates rates two banks even more unusual than most. One is Firstar (FSR). "Their earnings are coming out today. They're in the midst of merger activity, they have grown their franchise from $6 billion to $75 billion with acquisitions here in St. Louis. The ... numbers will tell us more in the next say 12 months as they fully integrate (different) franchises."
Yates also likes Wells Fargo (WFC), saying "it's a buy-rated stock. It is very well-diversified, coming through very strongly on the integration side. This is the former Norwest and Wells Fargo coming together."
"You have probably been hearing about how well they've done as far as integration goes, how steady and slow they've gone," Yates added. "The ... earnings here are really core earnings, not about ... stretching by security gains or one-time items. Their reserves are strong, the future looks strong for them."
The views presented here are solely those of the analysts quoted. They do not represent the opinions of CNNfn on whether to buy or sell shares of a particular stock.
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