Zacks.com Announces That Gregory Spear Highlights the Following Stocks: Symantec and L3 Communications.

CHICAGO -- In the post-bubble environment, investors need to be more agile as opposed to buying and holding. Gregory Spear picks stocks to take advantage of "mini-manias" in the security space and offers some top picks. Read about Symantec (NASDAQ:SYMC), and L3 Communications (NYSE:LLL). Greg Spear is editor of the Spear Security Industry Analyst newsletter. Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=84

Here are the highlights from the Featured Expert column:

Symantec (NASDAQ:SYMC) If you have surfed the net recently you know it is getting more treacherous. Not only do we have to worry about ordinary viruses, worms and Trojan horses, but spyware, pop-ups and other denizens of the Net are ubiquitous. Unlike viruses, spyware does not just track one's Internet usage; it can take away a user's ability to control one's computer.

In our view, Symantec, with operations in more than 35 countries, is the best way to play the Internet insecurity game. The company is well known in the antivirus business via their retail anti-virus product called Norton. Symantec competes directly with McAfee (NYSE:MFE) in this domain, but they have managed to munch on McAfee's lunch by making a product for the home user that is very user-friendly and automatically updates virus definitions. In late July Symantec reported a revenue increase of 48%, with diluted earnings up an impressive 106% over last year's fiscal first quarter. Symantec's gross margins remained high, at 82%. The real profit driver, however, was a boost in operating margins from 20.3% to 32.5%. Incredible. In addition, the company's business model is scalable. While it increased both R&D and marketing significantly, Symantec's GS&A costs fell by 8%. Furthermore, despite the huge increase in revenues, there was no 'channel stuffing;' i.e. both inventories and accounts receivable fell in the last quarter. It doesn't get much better than that. With Microsoft entering the anti-virus field there is sure to be increasing competition concerns down the road, especially if Microsoft can auto-market anti-virus software via its operating system or its browser. Meanwhile, technically, the stock has also been an exceptional performer in bear and bull market alike. Since January 2000, its 250+% return has outranked all of its mid- and large-cap technology and software rivals. That makes SYMC a particularly attractive play in uncertain times.

L3 Communications (NYSE:LLL) Companies such as L-3 that depend on contracts from the U.S. government (L-3 gets about 90% of its revenue from foreign and domestic government-related business) often sell at a discount to market multiples because of the unpredictable nature of politics and policies. Furthermore, many companies in the defense sector have such highly specialized areas of expertise that they become dependent on winning specific large contracts, such as a missile defense system or a new fighter jet, and this makes them additionally vulnerable. It is rare to find a company whose major objective is to support other prime defense contractors in a broad array of products and services, in addition to developing its own commercial business. This approach gives L-3 a unique level of diversification that has enabled the company to maintain steady growth year after year. As we have noted at various times, the US military is undergoing a rapid technological transformation as it attempts to integrate recent advances in electronics and information technology. Simply put, L-3 offers an amazing variety of products and services that facilitate this transformation. If you want a play on homeland security as well as the new electronic battlefield, advanced surveillance, Unmanned Aerial Vehicles (UAVs), cargo, passenger and vehicle inspection, crisis management systems, etc, etc, L-3 has it all. L-3 operates in 4 business segments.

L-3 has an unusually consistent and strong record of sales and earnings growth over the last few years, both above 30%. This is 7-8 times the industry average. For the second quarter of 2004, sales from the company's government businesses increased by 39.5% to $1.5 billion, while commercial revenue increased 18% to $178 million. Earnings per share were up 42% in the first half of 2004. L-3 has a target of 20% annual growth - 10% through internal growth and 10% from acquisitions, so the company spent more than $1 billion last year to acquire various businesses. As of June 30, 2004, L-3 had $228 million in cash, an increase of $93 million year over year while reducing debt. Technically, the stock is at all-time highs and this makes it somewhat vulnerable to profit taking. We expect a pause here and then new highs later in the year. The company is in the sweet spot in terms of market capitalization, so that significant growth in share price is possible. A 20% grower in all economic environments deserves a premium valuation, so we see PE expansion, as well.

Read Gregory Spear's complete commentary, along with the other cross currents affecting the market, by clicking: http://at.zacks.com/?id=85

About Zacks Featured Experts

To be a successful investor you need professional advice. Experts who know what they're talking about and can help you achieve your financial goals in good markets...and especially in bad ones will help you improve your portfolio. That is why Zacks Investment Research has assembled the best investment experts in the business to offer their powerful advisory newsletters to you on all the major investment topics: Stocks, Mutual Funds, Bonds, Options, Futures etc.

Recommendations from Featured Experts Highlighted in FREE Investment Newsletter

The best way to tap into the powerful advice from these experts is through our free weekly e-mail newsletter, "Profit from the Pros". Each week we highlight several Featured Experts in this free e-mail newsletter. Get your free subscription to "Profit from the Pros" at: http://at.zacks.com/?id=86

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 to compile, analyze, and distribute investment research to both institutional and individual investors. The guiding principle behind our work is the belief that investment experts, such as brokerage analysts and investment newsletter writers, have superior knowledge about how to invest successfully. Our goal is to unlock their profitable insights for our customers. And there is no better way to enjoy this investment success, than with a FREE subscription to "Profit from the Pros" weekly e-mail newsletter. For your free newsletter, visit http://at.zacks.com/?id=87

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.