Smartphones And Internet Ads Drive Growth And Portfolio Picks

• On 7:50 am EST, Tuesday November 10, 2009

67 WALL STREET, New York - November 10, 2009 - The Wall Street Transcript has just published its TWST Large Cap Growth Report offering a timely review of the sector to serious investors and industry executives. This 38 page feature contains expert industry commentary through interviews with award winning Portfolio Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Recovering Economy -- Domestic and Global Recovery -- Increasing Dividend -- Relative Opportunity & Opportunity Cost -- Downside Protection -- Bullish on Growth -- Valuations -- Effects of Healthcare Reform -- Development of New Products -- Innovation -- Growing Earnings -- Acquisitions -- Technologies -- Quality Control -- Equity Research Capabilities -- Sustainability and Predictability of Earnings Growth -- Source of Earnings -- Canadian Banking -- Dividend Cuts -- Discretionary Stocks -- High Volatility -- Concentrated Portfolios -- Undervalued Stocks -- Demand for Steel -- Increasing Production -- Growth -- Coal Mining Operations -- Surge in Consumer Spending -- Increase in Viewership -- Unit Volume -- Foreign Income -- Tax Rate

Companies include: Abbott (ABT); Amazon (AMZN); Amgen (AMGN); Apple (AAPL); AutoZone (AZO); BHP Billiton (BHP); Bank of Montreal (BMO); Baxter (BAX); Broadcom (BRCM); CVS Caremark (CVS); Cameron International (CAM); Changyou (CYOU); China Telecom (CHA); China Unicom (CHU); Colgate-Palmolive (CL); ConocoPhillips (COP); Dell (DELL); Discovery Communications (DISCA); Emerson Electric (EMR); Express Scripts (ESRX); Genzyme (GENZ); Gilead Sciences (GILD); Goldman Sachs (GS); Google (GOOG); Guess? (GES); INVESCO (IVZ); Intel (INTC); JCPenney (JCP); Kohl's (KSS); Las Vegas Sands (LVS); Lowe's (LOW); Magna (MGA); McDonald's (MCD); Medtronic (MDT); Microsoft (MSFT); Monsanto (MON); Morgan Stanley (MS); Myriad Genetics (MYGN); National Oilwell Varco (NOV); Noble Corp (NBL); Nokia  (NOK); Nuance Communications (NUAN); Palm (PALM); Peabody Energy (BTU); Petrobras (PBR); Priceline (PCLN); Procter & Gamble (PG); Qualcomm (QCOM); Ross Stores (ROST); Schlumberger (SLB); Shaw Communications (SJR); Sysco (SYY); Texas Instruments (TXN); The Gap (GPS); Thomson Reuters (TRI); Time Warner (TWX); United States Steel (X); Visa (V); Vmware (VMW); Wal-Mart (WMT).

In the following brief excerpt from just one of the in depth interviews in the Special Report, top tier money managers discuss the outlook for the market for investors.

MARK P. HILGENDORF, CFA is Director of Equity of Kellogg Asset Management, LLC. He joined Associated Wealth Management in 1995 and has over 21 years of investment management experience. Mark is currently the Director of Equity for Kellogg Asset Management, an affiliate of Associated Banc-Corp and is a co-manager of the Associated Common Stock Fund and the Associated Select Equity Portfolio. He has earned the designation of Chartered Financial Analyst. During his academic career at the University of Wisconsin - Madison, Graduate School of Business he was accepted into the Applied Securities Analysis Program (ASAP) where he received focused training on investment research and portfolio management. Mark is a member of the CFA Institute and the Milwaukee Investment Analysts Society.

MARK D. TUMPACH, CFA is a Portfolio Manager & Research Analyst at Kellogg Asset Management, LLC. He joined Associated Wealth Management in January of 2002 and has nine years of investment Management experience. Mark is currently a co-manager of the Associated Common Stock Fund and a research analyst focused on health care. During his academic career at the University of Wisconsin - Madison, Graduate School of Business he was accepted into the Applied Securities Analysis Program (ASAP) where he received focused training on investment research and portfolio management, and was a co-manager of a large-cap equity portfolio. Mark has earned the Chartered Financial Analyst designation, and he is a member of the CFA Institute and the Milwaukee Investment Analyst Society.

TWST: Any other areas of growth that you've been finding?

Mr. Hilgendorf: I would also add technology, where we still see several solid secular trends in place. Google (GOOG) comes to mind as still benefiting from a migration of advertising from more traditional means to the Internet. Obviously the majority of advertising is still through traditional media but an ever-growing percentage is through the Internet. Although overall advertising growth has been negative, paid click growth, the unit volume of advertising based on viewers clicking through to different sites, has still grown in the mid-teens rate for Google in recent quarters. The cost per click, what advertisers are willing to pay for click-throughs, has some economic sensitivity and is showing some modest improvement. Unit volume continues to march forward for paid clicks, but now we believe that you're going to start to see some better pricing for those clicks, and Google will be the primary beneficiary. We also foresee in the imminent future YouTube turning profitable. It is still a tremendous vehicle for viewership, but has been a challenge to monetize.

Another secular theme for us is the smartphone market, with the two primary vehicles in the portfolio being Apple (AAPL) and Qualcomm (QCOM). Apple's iPhone has been a tremendous hit, but because of the way they account for it, only 25% of iPhone revenues have actually flowed through the income statement. There was just a change in the accounting so they'll recognize that revenue sooner. I don't know what the market reaction will be to that because it's not a change in cash flow, but Apple's earnings estimates for next year will move from around $7 to over $9 just because of this accounting change. We've viewed Apple's earnings with a normalized iPhone revenue stream. No matter how one accounts for it, the iPhone will continue to be a tremendous product going forward as smartphone penetration expands worldwide. As for other products, incremental market share continues for Macs versus PCs. The US share is now 8% for the Macs, which was 2% to 3% years ago. Worldwide I believe they are at 5%; but Apple is really getting the mind share of a younger generation as the go-to product. We continue to believe that even though Macs are higher priced, which is a little tougher for consumers to handle right now, you get what you pay for with these superior products. Finally, although Apple will see little growth from iPods, it's a great cash cow for the company.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 38 page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

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