Goldman, Sachs & Co.
STOCK PICKS: Oracle (ORCL), Siebel Systems (SEBL), Amdocs (DOX)WHY: In an uncertain investment market, Sherlund says, stay with the big names. While putting money on smaller Internet companies may lead to big payoffs, it's just too risky right now. Sherlund's favorite big boys of business software can give investors a taste of Net valuations without the fear factor.
Sherlund's first pick, Oracle Corp., is the poster child for big companies that "get" the Internet. "It's not exactly a name that's undiscovered, but it's a very good name," he says. Oracle, now trading at $71, has what every e-business needs--database packages and programs for linking businesses together. That helped revenues jump almost 17%, to $9.7 billion last year. The risk? Oracle's big-ticket sales sometimes fluctuate, leading to unpredictable quarters, says Sherlund.
Siebel Systems Inc., Sherlund's second favorite, is among Oracle's chief rivals. Siebel makes big, companywide software for managing and forecasting sales. Like Oracle, it has made the leap from old, back-office technologies to the Net. Siebel's revenues jumped an eye-popping 103%, to $959 million last year. It has done even better on Wall Street. While Siebel's stock is off its $175 high-water mark for the year, it has settled around $120, up more than six times from its 52-week low of $18.
Sherlund calls his third pick, Amdocs Ltd., his "favorite stock of the year." Another fast-grower, Amdocs makes billing software for telecom companies and, more important, for Internet service providers. "Somebody needs to do all the billing for these services," he says. Amdocs' revenues jumped nearly 70%, to $854 million last year. With Amdocs trading around $60 after hitting $96 less than three months ago, Sherlund smells a bargain.