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MSC.Software: Poised to Catch the Tech Bus

Tech stocks that haven't yet joined the rally are sparking investors' interest. One such is Big Board-listed MSC.Software (MNS), which makes software that simulates the performance of products before they are manufactured. They help producers build more cost-efficient aircraft, autos, and electronics equipment. In a slow economic recovery, "the game is about improving productivity," says Joseph Battipaglia, chief investment strategist at Ryan Beck, which owns shares. MSC's tools should meet pent-up demand for productivity enhancers.

MSC, trading at 7.95 a share, is down from its high of 11 a year ago. But Battipaglia figures it's worth at least 10, based on the turnaround in its operations and its improved balance sheet and cash flow. So far this year, he notes, cash flow has risen to 17 cents a share, up from 2 cents last year. Any lift in the economy or in tech spending will surely be a boon to MSC, he adds. Analyst Richard Davis of investment outfit Needham, who rates MSC a buy, figures it will earn 47 cents a share in 2003 and 72 cents in 2004, compared with a loss in 2002.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. By Gene G. Marcial

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