In an interview with Barron’s, Zachary Shafran, Asset Manager of Waddell & Reed Science & Tech A (NASDAQ: UNSCX) and Ivy Science & Technology A (NASDAQ: WSTAX) feels that the world should brace for a greater crisis in clean water availability. He feels the impact may be much higher than the periodic shortages of crude. Shafran’s pick in this sector – Pentair, Inc.(NYSE: PNR). Shafran feels that the market is yet to assess the right value for PNR.
Pentair provides pumps and filters to both smaller pools / spas and big municipalities. Shafran feels that there is a huge replacement market for both pumps and filters as the existing infrastructure is worn-out. The pumps of Pentair have filtration capabilities that can handle any task, big or small, with ease. Shafran says that Pentair has recently worked out a system which can recycle used laundry water. This recycled water could be used to water lawns or trees.
Shafran expects Pentair to earn $1.40 a share in the current year. While he feels that Pentair is more US centric, greater growth lies elsewhere. He feels that Pentair has the potentiality to grow close to 20% every year. Currently, Pentair trades at $30.50. Pentair’s 52 week high lows are $34.27 - $ 17.23. Shafran reckons that Pentair may touch $ 40 a share in the next 12 – 18 months.
Then, Shafran talks about the upside in Alliance Data Systems Corporation (NYSE: ADS), where his fund has a large holding in ADS. ADS provides private label credit cards to retailers. Despite the market’s misgivings, Sharfran feels that ADS does much more than offer credit cards. ADS has the knack of applying the data and information gleaned from the credit card usage to design loyalty incentives. Shafran says that ADS has recently helped Citigroup Inc. (NYSE: C) by creating its Thank You network. ADS is doing the same for Visa Inc. (NYSE: V). In the current year, Shafran expects ADS to earn an EPS of $5 a share. This could increase to $6.5 a share by mid 2010. Shafran’s target for ADS: $80 a share pretty soon.
Regarding Telvent Git, S.A (NASDAQ: TLVT) Shafran’s price target is $50 a share. Currently Telvent trades at $30.75 a share. Telvent is into real-time corporate operating systems.
In Health care, Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) seems to catch Shafran’s eye. According to Shafran, Vertex’s Telaprevir may have a lot of potential. Currently, Vertex is conducting advanced clinical trials on Telaprevir to treat hepatitis C.
Shafran expects Telaprevir to hit the market in 18 months. If that happens, Vertex may earn $ 7 a share. So, Shafran’s upper price target on Vertex is $70 within a year. Currently, Vertex – which is reporting losses – trades at $ 38.54 a share.
Then, Shafran explains why he is bullish about Cree, Inc.(NASDAQ: CREE), a company where his fund has a significant stake. Cree produces LED based offerings. Shafran expects Cree to achieve a growth rate higher than 20% yearly for the next 5 years. He expects the stock to touch $60 a share in 12 months. Currently, Cree trades at $47.93 a share.
Finally, on Aspen Technology, Inc.(OTC: AZPN), Shafran is enthused by the change in its management. Aspen offers integrated software and services to chemical, petroleum and pharmaceutical industries. Aspen’s software offerings received good praise from its customers.
Shafran says that Aspen has an order book of over $1 billion and its market value is less than $1 billion. In the next two years, Shafran expects Aspen to earn $1 a share. His expectation: AZPN could climb to $20 a share. Currently, Aspen trades at $9.48 a share.
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