BNN's portfolio manager interviews are a great repository of investment ideas from across the asset management spectrum. Today we feature Goodried's Don Lato. During the October 14, 2010 appearance, Lato, portfolio manager, and well-known BNN regular, discussed his 3 top picks for the coming period.
Lato's first top pick is Research In Motion (RIM-T, 49.45) He said, there is "room for more than one player in the market," and RIM has "been in the penalty box for better than 2 years." Lato stated that the company is "still producing tremendous earnings and revenue growth" and "trading at 8X next year's earnings." Not to be overlooked is the fact that "Blackberry Messenger (BBM) has been a huge win for them in keeping their customer base and expanding into the consumer market."
Lato likes mining equipment maker (both underground and surface mining), Bucyrus International Inc. (BUCY-Q, 74.120) Lato said "Mining equipment is a big China play," and "35% of [it's] revenues come from of global coal mining." He added, "China has enough coal generated electricity plants planned that equals total amount of currently established coal plants in the US." The stock is currently trading at 14X earnings.
Finally, he likes internet giant Google (GOOG-Q, 540.93) "It's reported earnings beat estimates by $1 a share" and, Lato added, he expects "to see earnings estimates going up for 2011. He added that Google is now "getting $2.5 billion of annualized revenues out of the non-search display market, in addition to its core business.
Report Card (How Did Last Year's top picks Do?)
Apple (AAPL-Q, 302.31) A top pick since Oct 21/09. Up 47%. Lato thinks Apple is still a very cheap stock. They're reporting earnings Monday and he expects them to blow the numbers away. He has a short-term target of $325. 2010-10-14
Cisco (CSCO-Q, 23.070) A top pick since Oct 21/09. Down 4%.) This didn't go as expected despite an increase in earnings year-over-year. Great global presence. Cheap at 13X earnings and looking at 17%-20% earnings growth down the road. Still a buy.
Shoppers Drug Mart Corp (SC-T, 38.810) A top pick since Oct 21/09. Down 10%. Ontario legislation on generic drugs took the wind out of this one. They managed to fight their way back off the lows. Will probably be dead money for a bit longer. Still a Hold.
