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David Brady on WBBM's Portfolio Doctor
WBBM 780's Newsradio

Chicago, February 1st, 2007: WBBM Newsradio 780's Portfolio Doctor for 2/1/2007 is David Brady, President Brady Investment Counsel, Chicago, Il. A listener to WBBM's Noon Business Hour submitted three stocks for examination. Here is the assessment:

Companies submitted: Xerox Corporation (XRX-$17.23), Exxon Mobil Corp. (XOM-$74.37), Cisco Systems, Inc. (CSCO-$265.72)

Overview: All three are great companies. If you have a long-term investment horizon and a low tax basis, then we recommended that you hold all three. You can add to your portfolio by purchasing different companies that are capable of increasing earnings per share (EPS) and are underappreciated by Wall Street. Companies that fit these critera are given in the text below.

Recommendations assuming that you are an active trader:

1. XRX: "Sell. We have owned XRX and had good success. The company has been successfully repositioning itself to meet the demands of the color printing world by driving sales of color imaging, investing in new technology and reducing operating costs. In addition, cash flow generation is good and it is being used to buy shares. But, the shares are fairly (not fully) valued and the new focus is fully understood. Recommend buying Motorola (MOT-$19.77). The shares are down after poor fourth quarter 2006 operating results. The company has an outstanding brand and is in great financial shape. There is nearly $3.75 per share in net cash. This makes the shares very attractive. Finally, Carl Ichan sees value."

2. XOM: "Sell. Our oil price forecast is that they have peaked for the current cycle. This will make it challenging for the XOM, and all other producers, to meet short-term sales and earnings targets. If you favor the Energy sector, then consider oil services companies such as Baker-Hughes (BHI-$68.79) or Schlumberger (SLB-$63.73). Oil producers will have a tough time improving on 2006 results. Fortunately 2006 results were "off-the-charts" good. That means the producers have a lot of cash to invest. Service companies such as BHI and SLB are first in line to benefit. You can also consider companies outside the Energy sector that will benefit from stable or declining oil prices. These would include energy dependant companies from either the Industrial or Materials sectors. Our top picks include United Parcel Service, Inc. (UPS- $73.04) and Alcoa (AA-$32.71)."

3. CSCO: "Hold. Will benefit from the increase in technology investment spending that we forecast will occur over the next year. Caution, our total return expectations are good not great for the shares. More aggressive investors can consider Yahoo (YHOO-$28.29) the company should benefit from the roll out of its new search tools. Also, our top small cap Tech sector pick is Xyratex (XRTX-$20.86). Be patient with this one as the year-over-year earnings comps don't get easy until the company's November quarter."

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