Bruce Mushial of
June 23, 2000

Opening Remarks

Sage Host: Please welcome Bruce Mushial, senior technical analyst at

Bruce Mushial: Good morning. I'm glad to be here again. What I'd like to do this week is similar to what we did two weeks ago, where you provide me individual stocks that you want an opinion on, and I'll do my best to offer an opinion based on technical and fundamental analysis.

The Chat

Question: What do you think the Federal Open Market Committee (FOMC) will do at their meeting next week, and what effect will their decision have on the financial markets?

Bruce Mushial: I think there's a good probability the FOMC will pass on raising interest rates in the June meeting. This should be very positive for stocks.

Question: What do you think of Compuware Corporation [CPWR] and Carnival Corporation [CCL]?

Bruce Mushial: Let me pull up their charts. Compuware is towards the bottom of its recent range. It actually looks attractive at these levels. It may move up slightly and then lower before it climbs. Earnings look positive for the coming year. I am noticing that there are a large number of analysts that have a hold rating on the stock. Currently, there are three analysts with strong buys, zero buy recommendations and eight analysts with a hold recommendation. This is fairly unusual, and would concern me. Before I bought the stock, I would want to know why so many analysts have a hold recommendation. Carnival I can't give a technical opinion on, but looking at the fundamental information, earnings look good for the coming year. For the current year they're expecting $1.75 per share, next year $1.97. There are two strong buys and 13 buy recommendations. It looks like an interesting stock to do more research on.

Question: What is your opinion of major integrated oil company Conoco Inc. [COC.B]?

Bruce Mushial: Earnings actually will be lower next year than this year. Analysts' ratings are strong with five strong buys and six buys. The oil sector stocks are generally going to do well because of the higher price of oil currently. Probably a stock to do more research on. Probably a reasonable buy.

Question: Do you think it's likely that Nabisco Group Holdings Corp. [NGH] will be bid up to $31 per share by Carl Icahn?

Bruce Mushial: I haven't been following Nabisco Holdings. In a buyout situation almost anything is possible. Try to keep your head screwed on, these could be very volatile times. Don't get ahead of your brain.

Question: Do you expect momentum buyers to continue to push Rambus Inc. [RMBS] to higher levels?

Bruce Mushial: Rambus had an amazing story over the last week. Currently, it's trading at $134 in the premarket. We would all love to see Rambus go back to $400. I think we're a little too high at this level, and rather than chasing the stock, it's probably more prudent to buy it on the next pullback.

Question: Will the US Airways Group, Inc. [U]/UAL Corporation [UAL] merger most likely be blocked due to antitrust concerns?

Bruce Mushial: There is a good chance that the Justice Department will have concerns about the merger. They may have to sell certain routes before it is approved. The airline mergers probably spell bad news for consumers. Reduced competition probably will allow for higher profit margins, which will be good news for shareholders.

Question: Does it make good business sense for British food conglomerate Diageo plc [DEO] to spin off of its Burger King unit?

Bruce Mushial: I don't really have an opinion on this.

Question: Currently, what are your three most favored stock situations?

Bruce Mushial: It depends if we're looking at long-term or short-term. Recently the Stock Traders Press has made a number of recommendations that have done quite well. In six weeks, we're up over 25 percent on Incorporated [PCLN]. I think for the long-term, The Home Depot, Inc. [HD] looks very attractive here. We also like Solectron Corporation [SLR]. Short-term trading in this market has been very difficult. The market has been extremely choppy; a lot of short-term investors are getting whipsawed.

Question: Is it time to lighten up on oil service stocks?

Bruce Mushial: Oil service stocks have run up. It may be time to lighten up on positions. Relatively high oil prices are probably here for the coming year, and a number of stocks will benefit from those higher prices. There is also going to be a natural gas shortage in the Northeastern part of the country, and there will be a number of industrial companies that will be hurt by this due to higher prices.

Closing Remarks

Sage Host: Thank you for joining us today, Bruce! We appreciate your insights!

Bruce Mushial: America Online, Inc. [AOL] members can check out our Web site at for a trial subscription to both our long-term and short-term research reports. Next week's format will again look at individual stocks, and I encourage members to prepare their questions.

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Thanks to SageCrystl for hosting this chat.

First Editor: SageGrits
Final Editor: SageMojo

Transcript has been modified by Sage Online. Neither Sage Online nor its editors guarantee the accuracy of content or necessarily support the opinions expressed therein.

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