Q–The technology stock group has been banged around so much lately that I now wonder which of the software stocks are considered attractive by Wall Street analysts. What’s the lowdown?
A–Software stocks have suffered a pounding, but not a knockout punch.
Industry powerhouse Microsoft Corp. currently leads the group with 13 “strong buy” and 13 “buy” recommendations from among 30 Wall Street analysts who follow it. Meanwhile, Oracle Corp. boasts 17 strong buys and four buys, while Informix Corp. has 13 strong buys and six buys.
BMC Software received nine strong buys and six buys, and Computer Associates International earned nine strong buys and one buy.
“While software earnings projections have been down this year, there have been very modest downward earnings revisions for a number of the best-known companies,” observed Peter Crays, data researcher with I/B/E/S International.
He pointed out that the current lofty price/earnings ratio of 49 (based on 1995 earnings) of software stocks is projected to decline to 36 percent in 1997.
Q–I am 38 years old and my individual retirement account is earning just 3.5 percent in a bank. I’m thinking about moving this money into some mutual funds. What’s your opinion of Harbor Capital Appreciation Fund? I want a better return without sacrificing investment principal.
A–Reality check: You must assume some risk if you wish to improve returns.
Due to the technology holdings that make up more than one-third of its portfolio, this fund has been under pressure lately. But it hasn’t suffered a loss for any of the past five years.
The $1.4 billion Harbor Capital Appreciation Fund gained 31 percent over the past 12 months to rank in the upper one-third of growth funds. Its three-year annualized return of 21 percent places it in the top 12 percent of its peers.
Top recent holdings in its portfolio of 68 stocks were Cisco Systems, Hewlett-Packard, Boeing Co., Intel Corp., Microsoft Corp., Reuters Holdings, Tellabs Inc., Computer Associates International, AMR Corp. and America Online Inc.
“This is an aggressive fund that invests in volatile kinds of industries, even though this primarily involves stock of large, well-established companies,” related Deborah Weiss, analyst with the Morningstar Mutual Funds investment advisory. “For someone with a long-term investment horizon, it is well worth considering.”
This “no-load” (no initial sales charge) fund based in Toledo, Ohio, requires a $2,000 minimum initial investment.
Q–I’m going to be using my frequent-flier bonus miles this summer but am getting concerned about blackout dates. How does this work?
A–Traditional blackout dates, meaning days when frequent-flier bonus awards can’t be used to travel, vary from airline to airline. A carrier might typically designate 22 such days, including the Thanksgiving, Christmas, Easter and New Year periods.
Such blackouts are usually for just one or two days in a row, according to Randy Petersen, editor of Inside Flyer magazine and the Official Frequent Flyer Guidebook.
But blackout days are not the same as “capacity-controlled” awards. That’s when the carrier has made just a certain number of seats available on given days for frequent-flier awards. Typically, about 10 percent of an airplane’s seats are available for award redemptions, added Petersen.
“Remember when using frequent-flier flight awards that the early bird gets the worm, so you have far fewer problems if you book six months in advance rather than two months in advance,” counseled Petersen. “It’s smart to find out how much an actual flight would cost, so that you you can decide whether to use your award for the flight or simply pay the fare.”
Inside Flyer magazine, 4715-C Town Center Drive, Colorado Springs, Colo. 80916, costs $33 for an annual subscription. The Official Frequent Flyer Guidebook, available in bookstores, is $14.99.
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Andrew Leckey, who co-anchors the two-hour “Today’s Business” program each weekday morning on the CNBC cable television network, answers questions only through the column. Address inquiries to Andrew Leckey, “Successful Investing,” Suite 367, 76 N. Maple Ave., Ridgewood, N.J. 07450.
