| BUSINESSWEEK ONLINE : MAY 17, 1999 ISSUE | ||||||||
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| INSIDE WALL STREET
Why Neon Looks All Set to Glow In spite of the recent surge of cyclical stocks, Patricia Chadwick, chief investment strategist at Invesco, is convinced that growth issues, led by high tech, will spearhead the advance into the next century. Cyclicals with strong earnings growth, she adds, will help broaden the market's rise. Chadwick doesn't expect capital spending on technology to abate anytime soon: Companies worldwide must keep up with new developments to remain competitive. In that vein, Chadwick, who also heads research at Invesco, which manages $94 billion in assets, thinks the Internet will remain a fertile source of opportunity. Her approach: Invest in unsung suppliers to Net companies. Among Chadwick's top picks is Neon Systems (NESY), a little-known software maker whose products make it easier for businesses to participate in E-commerce. Neon's main product line, called Shadow, lets client/server and Internet-based applications read, write, ''talk to each other,'' and use data on mainframe computer platforms. Neon has sold its products to more than 200 companies, including Exxon, Merrill Lynch, Motorola, Sears Roebuck, and Texaco. Neon's stock isn't exactly cheap, concedes Chadwick, but she says it is still undervalued. The stock, which went public at 15 on Mar. 8, 1999, soared to 57 by Apr. 1 but has since retreated to 35 7/8, as Net stocks slumped. The stock is still trading at a lofty price-earnings ratio of 95, based on next year's projected profits. But Neon's top- and bottom-line growth is impressive, she notes. Revenues are expected to grow from $29.5 million in the year ending March, 2000, to $45.5 million in fiscal 2001. Earnings should jump from 42 cents a share in 2000 to 71 cents in 2001. Institutions have yet to discover Neon. Chadwick thinks that once they do, it could climb back to its high of 57. BY GENE G. MARCIAL _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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RELATED ITEMS Why Neon Looks All Set to Glow CHART: Software for the World of E-Commerce INTERACT E-Mail to Business Week Online | |||
