Editor's note: In this column, I will review a new technology stock every month and add it to a mythical CU fund. We'll track how the fund does over time and compare it to such benchmarks as the S&P 500 and the Dilbert Fund.
Forget about the recent IPOs. By the time you can sell off without substantial penalty, everyone else has flipped and stocks are only valued marginally higher than their offering price. The stocks I like are what I call post-flippers-solid companies that have been through the wild fluctuations of the early months and are ready for a steady climb.
An example is Net Perceptions [NASDAQ: NETP], which IPOed in April 1999, shot up to 30 on the first day, later dipped to 10 and has since made a steady climb to the mid-50s behind solid e-commerce technology. The key is knowing that they have solid technology and the leadership to penetrate and dominate the market with it. You also have to know a little about the market for the technology. It could be the greatest thing since the semiconductor but so far ahead of its time that it never realizes its potential.
Of course, now it's too late for NETP, except as a long-term stock. Day traders will want to buy stocks valued in the teens and hope for a climb into the 30s over six months or so. That will be our implicit criterion for the stocks I review in this column.
The good news for day traders is that there are several stocks I could point to every month that fit that criterion. This month, I'm betting on Xybernaut [NASDAQ: XYBR]. Based in Santa Monica, Calif., Xybernaut is the leading wearable-PC manufacturer. At press time, the stock was trading in the teens, and analysts project it will trade around 28 within six months. I think these projections are conservative, and here's why.
A couple of years ago at Fall Comdex, a guy all decked out in computers was handing press people materials in the parking lot between the Las Vegas Convention Center and the Hilton. He couldn't afford a regular booth in the show (who can these days?) but I'll bet he got better exposure for free than he could have gotten out on the floor. We exchanged business cards and I've since been getting all of Xybernaut's press releases. It turns out he's the CEO of Xybernaut-Edward G. Newman. Following the company as I have, it seems a week doesn't go by that it's not landing a big contract with the likes of IBM or forming a strategic partnership with the likes of Sony.
Company history aside, its Mobile Assistant IV is a full-blown 233-MHz Pentium worn on the belt and accessed entirely by voice and an eye piece that simulates a 14-inch monitor. It also has a touch screen for editing and other command assistance. While I don't think consumer adoption of wearables will happen anytime soon, there are a number of vertical industries in which hands-free, wearable computers are needed. An example is a warehouse inventory specialist, who needs to be able to dictate a lot of information into a database while using both hands to move product. Framingham, Mass.-based International Data Corp. estimates the growth of the commercial market for wearable computers will exceed $600 million by 2003. As the dominant player in this market, Xybernaut should get most of this business.
So all you day traders, check out Xybernaut and wait six months before selling off part of it. Hold on to the rest until 2003 because the market for wearables will only get better over time.
