The Stocks the Funds Are Buying

We all know which stocks have made Wall Street's Buy List. What I want to know -- and I'm guessing you do, too -- is who's doing the buying. Which funds are buying Wall Street's most popular stocks this week ... and how does their judgment compare with that of our Motley Fool CAPS community?

Here's our latest group of contenders:

Company

Currently Fetching

CAPS Rating

Yucheng Technologies

$16.38

****

Global Sources

$32.25

****

Qiao Xing Universal Telephone

$11.84

****

Ninetowns Internet Technology

$5.37

**

City Telecom HK

$7.81

*

China Technology Development Group

$9.68

**

Sources: Motley Fool CAPS, Yahoo! Finance.

List-topper Yucheng Technologies, which provides software and IT services to China's banks, only has two fund fans. But they're both great funds from a terrific fund shop, T. Rowe Price (Nasdaq: TROW  ) . Allow me to introduce you:

  • T. Rowe Price International Discovery (PRIDX), a no-load winner that has absolutely pounded the benchmark MSCI EAFE by almost 10 percentage points a year since 1997. And that includes three years of double-digit losses from 2000 to 2002. Wowsa.
  • T. Rowe Price Global Technology (PRGTX), a four-star fund whose relatively new manager, Jeffrey Rottinghaus, is routing the S&P 500 by more than eight percentage points in 2007.

Both of these funds interest me, but International Discovery interests me more. Trouble is, you can't buy most of its stock positions without resorting to the Pink Sheets. (That's not as bad as it sounds.)

So, we move on. Here's a look at the top five stocks Rottinghaus is holding in Global Technology:

Company

Currently Fetching

CAPS Rating

Microsoft (NASDAQ:MSFT)

$31.16

**

Google (NASDAQ:GOOG)

$639.62

**

Cisco Systems (NASDAQ:CSCO)

$32.68

*****

Hewlett-Packard (NYSE:HPQ)

$52.87

****

American Tower (NYSE:AMT)

$42.72

**

Sources: Morningstar, Motley Fool CAPS.

This strikes me as a strong, though risky, portfolio. Consider Google. Even though DoubleGoo is doing less evil and reported a blowout quarter, investors have come to expect nothing less than perfection from the search giant. That's a dangerous situation for an investor.

But what if more upside is still to be had? CAPS All-Star NakoQuant explains why it might happen:

[Google is] the fulcrum in an important, winning market. Internet advertising is growing at a healthy rate, and is likely to continue to do so for quite some time. More importantly, [it] is the centerpiece of the Internet for many users. They will be able to monetize this in many ways.

I'll add that the Street has consistently shot low when it comes to estimating Google's earnings. And yet, if you take the Street's current arm-waving at face value, DoubleGoo trades for just 32 times its projected 2008 earnings, resulting in a very modest 0.94 PEG ratio. Intriguing, no?

For me, it often helps to see what superior stock pickers are buying. If that describes you, too, then consider looking at Champion Funds. Fool expert Shannon Zimmerman's picks are up 15% on their respective benchmarks as I write. Check out the entire portfolio with a free, no-risk trial.

That's all for now. See you back here next week, when we once again look at the funds behind the fantasy.


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