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INVESTools Advisory
A Free Digest of Trusted Investment Advice To unsubscribe from this free newsletter, please see below. In This Issue: 1. B2B E-Commerce Leader Turns Profitable (FMKT) 2. Insider Buys Indicate "Grossly Oversold Prices" (VTA) 3. Mutual Fund Trading Strategy Shines Amid Turmoil (CSVFX) 4. The Latest Addition to a String of Tech Stock Hits (MTON) 5. Harmon's Top Stocks and Sectors for 2002 (MSFT) *************** A Word from our Sponsor ******************* NEW REPORT: Top 10 Picks for 2002 (+36% in 2001!) Despite a slumping economy and shaky stock market, Frank Curzio's 10 Bulls-eye Picks for 2001 gained a whopping 36%. Now Curzio has selected 10 stocks with incredible potential for 2002. Get these 10 red-hot picks today! Click here: http://www.investools.com/c/go/FXCP/FXCP-mtxth0124?s=S200 *********************************************************** INVESTools Advisory By John Brobst, INVESTools.com 1. B2B E-Commerce Leader Turns Profitable (FMKT) Despite recent gains, Internet stocks excite few investors these days. That's why Carlton Lutts is buying. His newest pick is FreeMarkets (FMKT), a maker of B2B marketplaces for a number of major sectors. For instance, aerospace giant United Technologies saved 17% by using FreeMarkets to hold over 2,000 auctions representing $1.5 billion of purchasing contracts. Automotive parts and accessories supplier Visteon is another major customer. Instead of trying to supplant a company's purchasing department, FreeMarkets aims to provide a valuable tool for buyers to do their work. The company's 1,000+ employees put in a lot of effort to learn a client's business and ensure that the auction site is tailor made and user friendly. FreeMarkets also adds value by actively seeking out qualified suppliers and creating detailed requests for quotes. Lutts says financial results show that FreeMarkets' model is working. The firm projects an operating profit of $0.05 to $0.09 per share for Q4 and $0.22 for 2002. Investors jumped on the news and quickly bid up shares from $15 to $25 in December 2001. "It has held those gains well, and thus we rate it buy," he says. "Investors have a hunger for real earnings, and FreeMarkets is turning the corner on profitability." For more on Carlton Lutts' advice see "Cabot's Sector Inspector," January 4, 2002. Momentum advisor Carlton Lutts profiles the profit potential of one top-performing stock each week. For a free 30-day trial go to: http://www.investools.com/c/go/CABI/MTXTH-cabi012402?s=S601 ---------------------------------------------------------- 2. Insider Buys Indicate "Grossly Oversold Prices" (VTA) Substantial insider buying at Vesta Insurance Group (VTA) tells insider watcher Richard Cuneo that management sees a bargain. Last November, the firm reported a decline in net operating earnings for the quarter. Shares quickly dropped 50%, and insiders just as quickly grabbed the stock. Cuneo says this indicates management sees "grossly oversold prices" and "the first indication of insider enthusiasm year to date." Vesta would have reported a profit from continuing operations for the quarter. But a pre-tax charge of $30 million to settle securities litigation pushed a $1.3 million gain to an $18.2 million loss. Management sees final court approval for the settlement by the year's end. In the mean time, the firm is in good financial shape and plans to repurchase over six million shares. Cuneo says the buyback plan combined with the aggressive moves of insiders make Vesta "a solid candidate for inclusion in our Risk Portfolio." He recently added shares and maintains a buy recommendation. For more on Richard Cuneo's advice see "Commentary and Insider Index Rankings," January 16, 2002, Vickers Weekly Insider. Richard Cuneo provides the most up-to-date information on transactions and holdings of corporate officials, significant shareholders and institutions. For a free 30-day trial go to: http://www.investools.com/c/go/VICK/MTXTH-vick012402 ----------------------------------------------------------- 3. Mutual Fund Trading Strategy Shines Amid Turmoil (CSVFX) Investors spent the past two years unlearning the lessons of the booming late 1990s. For instance, one lesson was to buy on dips as those who did this lost mightily since early 2000. Janet Brown's strategy continued to outperform even when the market turned south. She invests in top mutual funds while they are performing well and nimbly moves to others when the original choices no longer perform the best. By doing this, she profits regardless of what kind of fund is currently in favor. One of the funds Brown advises buying now is Columbia Strategic Value (CSVFX). "While many growth funds found the transition to value difficult, CSVFX delivered spectacular performance since its fortuitous inception in November 2000," she says. That could be because of what Brown calls "a growthy complexion" to a fund whose main objective is value. One third of the fund's portfolio is short-term growth and special situation opportunities while the rest is traditional value. By value, fund managers mean P/E and price-to-sales ratios less than those of the S&P 500 index. Current holdings include infrastructure industries like transportation, cement, natural gas and others likely to benefit if government decides to refurbish after neglect in the late 1990s. For more on Janet Brown's advice see "The Complete NoLoad Fund*X," January 2002, No-Load Fund*X. Janet Brown offers leading insight on no-load and low-load mutual funds, including advice on when to upgrade to the winners. For a free 30-day trial go to: http://www.investools.com/c/go/NLFX/MTXTH-nlfx012402 ---------------------------------------------------------- 4. The Latest Addition to a String of Tech Stock Hits (MTON) The portfolios of investors who bought Geoff Eiten's top monthly tech stock picks have performed admirably over the last year. Sample gains include +22% since July 2001 on Extreme Networks, +144% since May 2001 on OmniVision Technologies, +37% on ADC Telecommunications since April 2001, and +39% since March 2001 on Portal Software. Eiten's latest tech stock pick is Metro One Telecommunications (MTON). The firm provides directory assistance and information services to telecom providers like Sprint PCS, AT&T Wireless, Nextel, Verizon Wireless and Cingular Wireless. Metro One charges its clients $0.75 to $1.40 per call plus airtime for each use of its services. The firm handled roughly 218 million calls during the first six months of 2001. Eiten is bullish about Metro One as competitive pressures force carriers to bundle more and more services into one package, and the firm's directory assistance service is the best of the breed. Last quarter saw revenues grow 42% to $60 million while net income ballooned 174% to $7.6 million. Eiten just issued a buy recommendation. For more on Geoff Eiten's advice see "Technology Stock Watch," January 2002, OTC Growth Stock Watch. Geoff Eiten advises on high-growth, low long-term debt, niche-oriented firms with sales of $5-100 million. For a free 30-day trial go to: http://www.investools.com/c/go/OTCG/MTXTH-otcg012402 ---------------------------------------------------------- 5. Harmon's Top Stocks and Sectors for 2002 (MSFT) Before discussing his best bets for year 2002, Steve Harmon lists what he believes the year will not be about. "Not Internet. Not wireless. Not e-commerce. Not infrastructure. Not fiber optics," he says. Instead, he predicts 2002 will be about practical solutions. "Technologies that make businesses run better, cut costs and improve earnings. Everything else is hype." Harmon predicts manufacturing-intensive firms like Ford will continue to lay off tens of thousands as technology takes over many aspects of the supply chain and labor. That means growth in fields like automation, robotics and procurement systems. "This is all heavy lifting and the companies most likely to benefit are gorilla technology solution providers," Harmon says, including Microsoft (MSFT), Intel (INTC), IBM (IBM), Oracle (ORCL), Cisco (CSCO) and Texas Instruments (TXN). Harmon also reiterates his buy sign on the Nasdaq QQQ series trust shares (QQQ) designed to mirror the performance of the Nasdaq 100 index. QQQ gives substantial exposure to technology and healthcare, sectors that Harmon calls "engines of the recovering economy." He advises maintaining stop loss limits of 10% on QQQ, 15% on large cap techs and 20% on everything else. For more on Steve Harmon's advice see "Harmon New Technology Stocks," January 2002, Broadband Investor. Steve Harmon puts investors at the forefront of the convergence of technology, entertainment, communication, commerce and fiber-optics. For a free 30-day trial go to: http://www.investools.com/c/go/BRBN/MTXTH-brbn012402?s=S601 *************** A Word from our Sponsor ******************* Top Wall Street Watcher Ben Zacks: +51.7%/year 5-Year Gain! Moving with the best and brightest of Wall Street's big- money machines earned Ben Zacks a +51.7% five-year average annual gain. Start outperforming long-term. Get Zacks' latest 13-stock buylist with your FREE 30-day trial: http://www.investools.com/c/go/ZAKS/MTXTH-zaksTB1?s=S600 *********************************************************** Disclaimer The INVESTools Advisory is published solely for informational purposes and does not solicit nor offer to buy or sell any stock, mutual fund or other security. It does not attempt or claim to be a complete description of the securities, markets, or developments referred to in the material. All expressions of opinion are subject to change without notice. The information is obtained from internal and external sources which INVESTools considers reliable, but INVESTools has not independently verified such information and INVESTools does not guarantee that it is accurate or complete. INVESTools does not undertake to advise anyone. INVESTools, its employees, and/or officers and directors, may from time to time have a position in the securities mentioned and may sell or buy such securities. 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