FRONT PAGE
September 8, 2000
StockHouse News Desk
By Craig Stanley (ccooperberg@stockhouse.com)
StockHouse Columnist
Top Picks: Five Hot Picks In High Tech, Telecom and Internet
Toronto, ONT, September 8 /SHfn/ -- The Transamerica Agent Plan has about half its $6.8 million under management invested in technology stocks. Of that, approximately 70% is in Canadian tech plays. The mix seems to be working since the fund has returned an incredible 104.4% as of July 31.
Fund manager Marc Jackson, who is also vice-president for investments at Transamerica Life Canada, takes a bottom-up perspective to stock picking. "I'm really trying to find companies that are leaders in their fields," he says. "We're looking for the types of companies that are going to dominate the business that they're in, whether it's a niche or big market."
The companies in which Jackson invests fall into a range of valuations. "Sometimes, you can buy a stock that looks like a really high multiple today," he says. But if the company achieves its projected growth and meets its milestones, investors will be rewarded.
He picks five Canadian technology companies that have the potential to head higher.
GT Group Telecom [T.GTG.B] is a competitive local exchange carrier that is building a cross-country network to provide telecom services to small and medium-size businesses. A lot of GT Group Telecom's business is generated on the data side, says Jackson, where there is the highest level of growth. There is no news in particular that will drive the stock, but as the company builds out, investors will take notice. "I think as their business model unfolds and it gets closer to cash-flow break-even, it will do a lot better," he says. Over the next six to 12 months, Jackson believes the stock could head about 30% higher. On Thursday, GT Group shares closed at $25.50.
Intrinsyc Software [V.ICS] is an embedded systems firm based in Vancouver. Since August 10, when the stock was trading at $2.70, it has gained more than 46%. Its stock hit an all-time high of $9.10 on February 24, and Jackson believes it can hit those levels once after consolidating recent gains. "This is a company that has some pretty neat technology in embedded systems and it's one that I think is going to grow significantly over the next two, three, four years," he says. Intrinsyc finished down $0.50 on Thursday, to $6.50.
AT&T Canada [T.TEL.B] is a timely buy right now because the Canadian government will likely set guidelines regarding foreign ownership before the end of the year. This will help give the stock support, suggests Jackson. "If the market does well and they continue to execute on their business plan, it will do well," he says. AT&T Canada's second-quarter results reported on July 26 showed heavy losses that disappointed investors. However, Jackson says it is important to remember that the company is still in start-up mode. AT&T Canada was created in June 1999 from the merger of AT&T Canada Long Distance Services, MetroNet Communications, Netcom Canada and ACC TelEnterprises. Jackson says the less than impressive EBIDTA was a reflection of "the old AT&T business" focused on long distance. He says the Metronet side is doing well and underpinning the stock's value. Jackson expects the stock to easily reach the $65 to $70-range over the next few months. At Thursday's close, shares were down slightly to $48.50.
BCE Emergis [T.IFM] is among his top Internet picks. "I think the deal they have with Ariba [ARBA] in Canada is going to be one that helps drive revenue growth here." Jackson believes the stock could still gain near-term if the overall market rises. "If the market is flat to down, the stock will probably tread water," he says. However, in the next 18 to 24 months, the stock "has significant upside from here." Shares closed at $88.80 on Thursday.
Wireless Matrix [T.WRX] has interesting technology and is well-positioned in its space, says Jackson. "There could be some announcements of contracts that could drive it." He is watching for significant revenues to start mounting from its wireless data and fax services. Wireless Matrix currently services the oil business, but Jackson says over the next three to six months, investors should see announcements relating to other businesses. Within six to 12 months, Jackson expects the stock to easily hit its 52-week high of $18.95. The stock closed at $17.70 on Thursday, capping a strong run that began on August 30, when shares soared from levels around $14.
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