What are the bargains in this volatile market? It depends on who you ask.
Mary Meeker and her colleagues at Morgan Stanley Dean Witter & Co. picked 16 Internet-related stocks Wednesday, which they said investors should bet on after the big slide in technology stocks over the last month.
Meanwhile, rival brokerage A.G. Edwards & Sons Inc. said its analysts are advising clients to broaden their investment horizons by simply looking "around the house." The firm announced its top picks in the consumer products sector, which A.G. Edwards is over-weighting in its equity portfolio strategy.
Both brokerages recommended sticking with companies they consider sector leaders.
Although A.G. Edwards' analysts do not believe the entire consumer group is poised for sizable gains, they are targeting big brand-name companies that they think can benefit from sales growth domestically and overseas.
Its picks include Anheuser-Busch Cos. (ticker symbol: BUD), the world's leading brewer. "Shares are undervalued," its analyst wrote, "and we view this as an opportunity for aggressive investors to buy."
The analysts also selected soft drink and snack food marketer PepsiCo Inc. (PEP), saying it "deserves a premium valuation to its peer group of food companies."
Sara Lee Corp. (SLE), the apparel and food company whose varied brands include Playtex and Jimmy Dean, made the list as well. "With current prices 40% below its 52-week high, we recommend Sara Lee as a buy for conservative investors."
Kimberly-Clark Corp. (KMB), whose personal care products include Kleenex and Huggies, rounds out the A.G. Edwards list. "We believe the newly reorganized company now offers an asset base with greater productivity and higher return potential," the brokerage's analyst wrote.
Morgan Stanley's recommendations include Internet portal Yahoo Inc. (YHOO), online broker Charles Schwab Corp. (SCH), software maker Vignette Inc. (VIGN) and network equipment maker Lucent Technologies Inc. (LU).
The firm's Internet index fell as much as 45% from its March 9 record, and more than half the companies in the industry never will recover from the slide, Meeker and seven of the brokerage's other Net analysts wrote in a report. Still, growth in Net usage shows no signs of slowing, and many companies will continue to benefit, they said.
Investors should "bet on a portfolio of leaders, put the seat belts on and hang on," the analysts wrote.
