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Tech Stocks That Are Plugged In

Inside Wall Street


Hooray for the mid-cap technology stocks--they're catching up. They have helped boost the NASDAQ lately. "It's just the first leg of a long rally," says Gruntal's tech guru Vivek Rao. "It's the sector to seek undiscovered companies with solid track records in fast growing markets--and low valuations."

Three such stocks: Crystal Systems Solutions (CRYSF), Mapics (MAPX), and MRV Communications (MRVC). They are still cheap, he argues, because their 1998-99 price-earnings ratios are way below their long-term earnings-growth rates. For instance, Crystal's p-e based on estimated 1999 earnings is 18, while its annual earnings-growth rate is at least 30%. Ditto for MRV and Mapics.

Crystal, trading at 18, is a "pure play in Year-2000 and euro-currency-conversion services," says Rao, for which it has developed sophisticated software. He expects Crystal to earn 76 cents a share in 1998 and $1 in 1999, up from 44 cents in 1997. His target price: 38.

Mapics is a major provider of enterprise resource planning (ERP) software that combines data for manufacturers on financials, inventories, labor, and purchases in one package. Mapics is benefiting from the rising demand for ERP solutions, says Rao, by targeting the 450 companies that use IBM As/400 systems--such as Bristol-Myers Squibb and Philips Electronics. Rao, who expects earnings of 78 cents in 1998 and 98 cents in 1999, says the stock, now at 18, is worth 26, at least.

MRV is major player in high-speed networking and fiber-optics--making products that improve the performance of data and telecom networks. Among its big-time customers are Intel, Fujitsu, and Digital Equipment. Rao expects MRV to earn $1.23 in 1998 and $1.72 in 1999. Now at 28, the stock should hit 43 in a year, he says.BY GENE G. MARCIAL

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