July 22, 1999

Midyear Winners
by Rick Munarriz (TMFEdible), David Marino-Nachison (TMFBraden), and Paul Larson (TMFParlay)

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What's Here

  • Introduction
  • AT&T & Broadband
  • Pharmaceutical Unrest
  • Online Financial Svcs.
  • Internet Stocks
  • InterNOT Stocks
  • See You Later, CEOs
  • Big Winners
  • Big Losers
  • Market Returns
  • Fool Portfolio Returns
  • One of the great stock stories of 1999 has to be VISX (Nasdaq: VISX), a maker of laser vision correction systems. Revenue and earnings have boomed along with demand for the company's systems -- and training in the use of the systems, which can fix nearsightedness, farsightedness, and astigmatism in a quick, essentially painless procedure that removes offending tissue from the cornea and takes effect almost immediately. First quarter revenues and earnings nearly doubled year-ago levels, and investors have been rewarded handsomely in 1999. VISX appears to have been freed for even further upside thanks to its benevolent Uncle Sam: a Federal Trade Commission judge dismissed a government antitrust case charging VISX with patent fraud in early June (although the government has appealed). Two others to watch are laser competitor Summit Technology (Nasdaq: BEAM), up 403% this year, and June Foolish Double KeraVision (Nasdaq: KERA), another vision correction company with a non-laser nearsightedness treatment, which has advanced 21% so far in 1999.
    Gain: 262% through 6/30

    The future's so bright, Sunglass Hut (Nasdaq: RAYS) has to wear shades -- or is that shades.com? While the online sunglasses site generated sales of just $371,000 last quarter, it has earned the company the eyeballs of investors. This is not to say that things aren't also going quite well at the offline retail level. As the world's largest specialty retailer of sunglasses, Sunglass Hut has prospered with same-store sales up 5.8% so far this fiscal year. A big reason why is that the company is opening up mall kiosks that combine its Watch Station concept with its popular namesake stores. So shareholders have the time. They have the vision. And now they have the sun-bright stock.
    Gain: 146% through 6/30

    Some semiconductor companies aren't just chips off the old block. LSI Logic (NYSE: LSI) has thrived by being a specialist in a commoditized sector. Providing the thinking chips for everything from digital cameras to set-top boxes to network switches and routers, LSI, The System on a Chip Company, has made it hip to be chip. March revenues soared 41%, providing the company with its fourth consecutive quarter of revenue growth.
    Gain: 186% through 6/30

    After being one of 1998's best buys on Wall Street, the nation's largest electronics retailer Best Buy (NYSE: BBY) has continued to make shareholders happy. Propelled by low interest rates, a vibrant economy, and a new operating focus on slimming down excess inventory, Best Buy's margins have been growing. Combine these increased margins with vibrant same-store sales and an expanding store base and it's easy to see why the company's profits have shown explosive growth. Net income for the first quarter was roughly triple what it was in 1998's first quarter, and the company has indicated that more positive comparisons are on the way. It should come as little surprise that the stock has gone the same direction as the company's profitability -- skyward. Best Buy was also featured in a Dueling Fools this past May.
    Gain: 120% through 6/30

    It has been a good year to be an Internet venture capitalist, and few public companies better exemplify this good fortune than CMGI (Nasdaq: CMGI). The high-profile incubator of Internet companies has continued its stunning successful run of buying Internet start-ups, fertilizing and growing them, then selling to the public at much higher prices. Among the company's successful investments in the past have been Lycos (Nasdaq: LCOS), the fourth most-visited site on the Web, and GeoCities, the sixth most-visited site. CMGI has plans to buy from Compaq (NYSE: CPQ) a controlling stake in the Alta Vista search engine, now at #10 on the Media Metrix Web ratings, in order to turn the search engine into a "Mega Portal" for the company's numerous incubating firms. CMGI has been a very exciting company to watch over the past few years, and the excitement is not likely to wane anytime soon.
    Gain: 328% through 6/30

    Go2Net (Nasdaq: GNET) operates a network of websites focused on personal finance (Silicon Investor and StockSite), search (MetaCrawler), commerce (HyperMart and WebMarket), auctions (Haggle Online), and games (PlaySite). After starting 1997 at #77 on the Media Metrix ratings, the company's network had climbed the charts all the way to #24 by the beginning of the year. In May of this year, the company's combined portfolio of sites was up to #15 on the charts with an impressive 8.5 million unique visitors, more users than online auction king eBay (Nasdaq: EBAY). Volatility shared with almost all Internet stocks aside, Go2Net's stock has largely tracked the growth in the firm's visitors. Also helping guide the stock higher was a major investment by billionaire Paul Allen. Like CMGI, Go2Net has a dynamic portfolio of websites under its wings and is a company worth keeping on the radar.
    Gain: 939% through 6/30

    With online advertising a major source of revenue for thousands of Web-based businesses, this is a major market to be tapped. DoubleClick (Nasdaq: DCLK) has moved swiftly and smartly to capture a significant portion of that online advertising market. The company's proprietary DART technology collects data on the behavior of Internet surfers and then uses it to target ad placement. The company also helps measure site traffic and ad effectiveness, providing information to both Web publishers and advertisers alike. The firm's sales in the first quarter were up 139% versus 1998, and the company's margins are expanding, too. While DoubleClick has yet to turn profitable, Wall Street is clearly betting that positive earnings are only a few clicks away.
    Gain: 312% through 6/30

    All it takes is the retirement of one Michael Jordan and the whole league gets shaken up -- just look at this year's Chicago Bulls-free NBA finals. Think of athletic shoe and gear maker K-Swiss (Nasdaq: KSWS) as 1999's Portland Trail Blazers: young, lean, and willing to do things its own way. Portland was just one series away from the championship stage, and K-Swiss has posted similarly impressive gains this year in the face of disappointing year-to-date performances from Nike (NYSE: NKE) and Reebok (NYSE: RBK). Long associated with tennis, K-Swiss has affected a young, hip approach, staying off the cutthroat basketball court and courting up-and-coming athletes in sports ranging from baseball to running to cycling and snowboarding as its spokespeople. Its first quarter revenues more than doubled and U.S. futures orders for the summer season look similarly promising. Investors are cheering for this April Foolish Double like an Australian Open crowd for Woodbridge and Woodforde.
    Gain: 246% through 6/30

    What beeps, whirrs, requires two "AA" batteries, and chalked up big-time gains in the first half of 1999? If you said Tandy (NYSE: TAN), go claim your remote-controlled car. Tandy, the corporate namesake for the 6,600-store Radio Shack chain has been a quiet success story this year. While sales were up a healthy 14% in the first quarter, that number was carried, unsurprisingly, by a 23% boost in sales of cellular phones and PCS, a trend that has extended into the summer: same-store sales are up 14% through June year-over-year. Computer sales have also been strong. Tandy made an interesting move in May, agreeing to buy telecommunications cabling services provider AmeriLink Corp. (Nasdaq: ALNK) in a play to add phone, cable, and Internet access installations to its offerings. The trimming and refocusing appears to be working -- Computer City, sold almost a year ago, doesn't appear to have done many favors for buyer CompUSA (NYSE: CPU). Tandy, originally a leather company, has never been the most glamorous of corporate names, but as one of the busiest and most experienced retailers of popular consumer technologies, it has cobbled together some pretty good returns for investors.
    Gain: 137% through 6/30

    When it comes to digital wireless communications, investors have put their faith in Qualcomm (Nasdaq: QCOM). The company has seen strong demand for its code division multiple access (CDMA) phones -- particularly its nifty Thin Phone. In fact, the demand that powered the company to a 23% rise in year-over-year fiscal Q2 revenues has continued and even accelerated -- Qualcomm told investors in May it expects to meet and possibly exceed Wall Street's Q3 estimates. Qualcomm, by the way, was added to the S&P 500 Index on July 20. Network operator Sprint PCS (NYSE: PCS) has also been a big winner, grabbing 146% in 1999 as the advent of cooler phones have made them more crucial to a wardrobe than watches. Sprint has not only seen its subscriber base boom but has inked a few notable deals, among them a pact with Nokia (NYSE: NOK) to offer Web-capable phones and partnerships with Lucent (NYSE: LU) and Nortel Networks (NYSE: NT) to build out its wireless network.
    Gain: 454% through 6/30

    Check the Daily Double Archives for other recent winners.

    Next -- Midyear Losers