Bill Martin and Matt Ragas Highlight the Following Stocks: Intel, USA Interactive, Expedia, Frontier, SkyWest, AirTran, Continental, and Southwest.
CHICAGO--(BUSINESS WIRE)--March 21, 2003
Don't let this war shake the foundation of your investments. There are still plenty of opportunities to profit and Bill Martin and Matt Ragas are here to point out several areas that could mean big things for your portfolio. Get their takes on Intel (NASDAQ:INTC), USA Interactive (NASDAQ:USAI), Expedia (NASDAQ:EXPE), Frontier (NASDAQ:FRNT), SkyWest (NASDAQ:SKYW), AirTran (NYSE:AAI), Continental (NYSE:CAL), and Southwest (NYSE:LUV). Click here for the full story exclusively on Zacks.com: http://featuredexpert2bw.zacks.com/
Here are the highlights from the Featured Expert column:
Bill and Matt have long made no bones about the fact that even after the washout of the past three years, they still find many blue chip stocks, especially in the tech sector, sporting bloated legacy valuations. Along this same theme, Mike Tarsala of CBS MarketWatch had an interesting column recently, which argues that a number of well known tech blue chips are currently overvalued or at least fully valued, based upon 2004 estimates. One of the names his column looks at not surprisingly is chip giant Intel (NASDAQ:INTC), which Bill and Matt previously said looks like an interesting short at the right price, given its premium, legacy market valuation and limited growth prospects.
With this in mind, Bill and Matt wanted to highlight the section from Tarsala's column on INTC, which includes fund manager David Halford's estimates for INTC: "Halford assumes slightly more modest growth for Intel -- hardly any growth in 2003, and 30 percent growth in 2004. Based on Halford's estimates, Intel would earn about 80 cents a share in 2004 -- a penny more than consensus. Placing a multiple of 25 times earnings on the stock, which is more than Intel's historical PE of about 12 times earnings -- the company's price target at the end of 2004 would be $20 -- close to its current price of $18.25."
Bill and Matt think awarding INTC with a 2004 PE of 25 is extremely generous. Why do Bill and Matt sound so skeptical that INTC can earn 80 cents in 2004? For starters, INTC's EPS growth rate over the past five years has been -6% and sales have risen only 5% over the same period. How's that for flat or no growth!
USA Interactive (NASDAQ:USAI) announced plans to acquire the remaining 46% stake in travel site Expedia (NASDAQ:EXPE) that it didn't already own. Bill and Matt both believe this is a good long term move for USAI shareholders. Bottomline, they believe the recent drop in USAI below the $25 level, which they've said before looks like a great medium to long term entry point into this stock, is another opportunity to pick up a great secular growth stock at a very compelling valuation.
On Monday in their "War Playbook" post, Bill and Matt noted that they were "starting to look at to look at long opportunities in the airline industry since they believe that the industry is rationalizing itself for recovery." A few of the beaten down airline names Bill and Matt are currently watching in this volatile, high risk group include: Frontier (NASDAQ:FRNT), SkyWest (NASDAQ:SKYW), AirTran (NYSE:AAI), Continental (NYSE:CAL). They remain short low cost leader Southwest (NYSE:LUV) in the Tiger Woods portfolio, given its nose-bleed valuation (a 35 PE) and the overall overhang in the industry, but are ready to cover our LUV short at a moments notice.
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|Date:||Mar 21, 2003|
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