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Stay on top of the market with Prudential Securities and Dow Jones. Click on the url below to learn how you can receive a 1-year subscription to The Wall Street Journal or BARRON'S, FREE! http://www.money.com/prudentialsecurities ***************************************************************** SIVY ON STOCKS from money.com November 15, 2000 The ultimate election play The timely case for Diebold, a leading maker of bank ATMs and high-tech voting machines. Plus the latest non-events at the Fed and responses to reader comments. By Michael Sivy Dimpled and pregnant though they be, the hanging chads are swinging once again. Now it looks as though the legal terrain is favoring Bush. I've written about the consequences to stocks of a Bush victory (see "Election correction" [ http://www.money.com/money/depts/investing/sivy/archive/001103.html ] ), and I've considered the implications of a Gore victory (see "The tech wreck continues" [ http://www.money.com/money/depts/investing/sivy/archive/001113.html ] ). I want to appear timely, but I'm running out of scenarios (Nader or Buchanan? That's a bit far-fetched). Still, there may be money to be made on this mess, and I cast my vote for Diebold, a mid-cap Ohio company. I last recommended Diebold [DBD], the leading U.S. producer of bank ATM machines, in early February, when it was trading at $22 a share ("see "Deja vu") [ http://www.money.com/money/depts/investing/sivy/archive/000202.html ]. At the time, the company had just come off a string of bad news: The Asian financial crisis in 1998 had crimped foreign sales, and Y2K fears (remember them) hurt sales in the second half of 1999. Plus, all the bank megamergers, which resulted in many branch closings, cut into domestic business. Nevertheless, Diebold's earnings have steadily risen, and the stock is up to $28.75, a 30% gain since February. Here's the election play: Through its Brazilian subsidiary, Diebold also makes voting machines. In October, some 100 million Brazilian voters cast ballots using Diebold terminals, which promise speedy, accurate results and claim to eliminate confusion (the terminals also come in special versions for the physically challenged). So when U.S. state and local governments start rushing to upgrade their voting machines, who could be better positioned than Diebold? With annual earnings growth projected at 13% over the next five years and a 2% yield, Diebold trades at 14.5 times this year's estimated earnings and 12.8 times next year's projected results. * * * The Federal Reserve Open Market Committee met today to consider changing its interest rate policy. The FOMC not only kept rates unchanged, it also maintained a tightening bias -- that means the Fed is still allowing for the possibility of raising interest rates. It would do so to fight inflation, which remains a threat largely because of the tight labor market (with unemployment below 4%) and the runup in energy prices. But if the economy continues to slow, Fed-watchers think the FOMC could go to a neutral stance in December and start cutting rates early next year. * * * I have received more e-mail than usual in response to recent columns (my thanks to everyone who sends stuff in), and I'd like to respond to two particularly pointed comments. First, I'd like to clarify my piece from October on stock options (see "The right way to use stock options"). I do not advocate options trading for individual investors. I think most people should concentrate on stocks, bonds and mutual funds and leave options and futures to professional trading desks. The nature of the market causes options to be consistently overpriced, so it is generally a bad choice to buy options. That said, there may be an advantage to selling them. Typically, small investors can do this most safely by selling call options on stocks they already own when that boosts their profit potential. But as some readers pointed out, you can still lose money on such "covered writes" if the stock drops enough. Second, I am not, as some readers have suggested, a shameless apologist for the Democratic party. I think investors should consider the market impact of political developments in as detached a manner as possible. I have, however, enjoyed telling my colleagues that I am viewed online as a crazed liberal. ### Post your comments on Michael's column at: http://www.money.com/depts/investing/sivy/index.html To subscribe or unsubscribe to Sivy on Stocks, go to: http://www.money.com/email/ Earning Releases and Calls For the latest corporate earnings releases and online conference calls click on: http://money.ccbn.com * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Special Internet Offer!!! Sign up for a RISK-FREE issue of MONEY MAGAZINE at http://www.money.com/subscribe2 Or if you prefer call our toll-free number 1-800-544-4594 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * We may, from time to time, contact you with offers for Time Inc. products and services which we think may be of interest to you. If you would prefer us not to contact you in this manner, AND YOU DID NOT INDICATE THIS PREFERENCE AT THE TIME YOU SIGNED UP for the Sivy on Stocks online newsletter or any other Time Inc. online newsletters, please let us know by sending us an e-mail at <no_solicit@money.com<. Additionally, from time to time we may provide your e-mail address to carefully chosen companies whose offers we think may be of interest to you. If you would prefer us not use your e-mail address in this manner, AND YOU DID NOT INDICATE THIS PREFERENCE AT THE TIME YOU SIGNED UP for the Sivy on Stocks online newsletter or any other Time Inc. online newsletter, please let us know by e-mailing us at <no_transfer@money.com<.
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