Vadim Zlotnikov made his reputation as a semiconductor analyst, but as general portfolio strategist for Sanford C. Bernstein in this post-bubble era, he's largely in favor of anything but chips: retailers, a railroad, and a pharmaceutical company are among his current picks. And one company he's down on? None other than the 800-pound gorilla of silicon.

Vodafone

"Probably the most controversial bet we have right now.

"Number one or number two in virtually every market. Relatively low amount of debt compared to its peers. Clearly a survivor, and very attractively valued. So as the new wireless services come out, they're a winner."

Union Pacific

"I wanted to find a cyclical area of the market which is levered to volume growth, but does not require reinflation, because pricing has been very bad across the economy. Railroads essentially are moving things. They have a tremendous amount of fixed costs, and even a little bit of a volume pickup translates into a strong earnings growth on the order of 10 to 12 percent.

"So while it has had a move, it is still very attractively valued at something like 12 times earnings, and it could see earnings growth in the low teens.

Liz Claiborne

"It has been decimated, and also one of the things that happened last year is kind of important. Retailers have dramatically reduced their inventory levels, so sales of some of the apparel vendors, appliance vendors, were quite depressed last year.

"As we move through this year, you have a lot of easier compares. And because the customers for Liz Claiborne have low levels of inventory, there's not as much need for discounting. Liz Claiborne has a very broad product line addressing multiple markets, and there is probably some opportunity there for some modest margin expansion."

Federated Department Stores

"Federated had very slow growth last year, yet despite that slow growth, it's been able to manage its business very well. Really, the point of Federated is this: to the extent an economic recovery comes, the high-income households -- which have thus far stayed from spending because they've been hurt the most by the stock market -- must come back. So it's a true cyclical play, and it's one of the stocks that is sufficiently attractively valued to buy it. And you wait until the high-end consumer comes back, which hopefully will be within the next 12 months, and then you do make money."

Wyeth

"The pharmaceuticals are under tremendous pressure. The generic (drug makers) are capturing an increasing share of the market. There is going to be some pressure on drug prices. There is some economic sensitivity as consumers are required to pay more and more of the cost of the drugs.

"So you want to look at some of the companies that have a rich pipeline, that still have reasonable valuations and that could conceivably experience 15 to 20 percent growth over the next couple of years. I think Wyeth is one of the companies that could have that.

"There are still some risks associated with approval of new manufacturing facilities that must happen in order for the stock to work. But at least there is a rich pipeline, there's strong demand for its products, and it's one of the few areas where you can still buy growth at reasonably attractive valuations."

Vadim Zlotnikov's Pans

Intel

"The biggest issue for Intel is that it has been a leader, it is still priced as a leader, yet its leadership role is deteriorating. Its end markets are no longer as attractive, and its ability to grow in those end markets has been hurt. So it will take time for them to transition to a new strategy."

Craig West's and Alex Hittle's picks

All-Star biotech analysts West and Hittle are focused on the alphabet as they research stocks for A.G. Edwards. Specifically, the duo prefers its ABCs:

Amgen

"The leading biotechnology company based on its revenues, earnings and market cap. Aranesp, Kineret and Neulasta products have launched. Neulasta approval was ahead of schedule in the first quarter of 2002. Compendium listing for Aranesp in cancer paves way for reimbursement. Merger with Immunex poised to close as both sets of shareholders have approved.

"Recent pullback has been an over-reaction to concerns that the Immunex purchase will not be accretive given the strong competition to Enbrel that will be coming from ABT's rheumatoid arthritis drug D2E7. We believe Enbrel sales will miss AMGN's aggressive goal of $2.4 billion in 2004 (our expectation: $2 billion), but that the firm should still show earnings growth of around 20 percent. As investors focus more on Aranesp, we believe the shares will rebound."

Biogen

"A relative value play among the large profitable biotechs. Shares rose nicely after May 23, 2002 FDA dermatology advisory panel voted 10-2 to advise FDA to approve psoriasis treatment Amevive. Then June 7, 2002 gave it all back by preannouncing lower-than-expected quarter and year due to slowing sales of flagship multiple sclerosis drug Avonex -- third negative preannouncement in the last year.

"Twelve to 18 month milestones: CDP 571 (Crohn's disease) data mid-2002; Amevive (psoriasis) approval where FDA Complete Response Letter of June 14, 2002 lends credence to late 2002/early 2003 launch; and one-year look at Antegren (MS) Phase 3 data in second-half 2003. Be prepared for continued choppiness as marketing war unfolds between Rebif and Biogen's multiple sclerosis product Avonex. While Avonex difficulties may crimp the shares, hitting the above milestones should lead to outperforming Biogen's peer group."

Chiron

"Research efforts focused in three major business areas: therapeutics, vaccines, and blood screening. Procleix system (a.k.a. NAT, a blood screening system) beginning to boost earnings per share following Feb. 28 approval. This approval provides a highly predictable $100 million boost to Chiron's 2002 top line. Absence of products up for FDA approval reduces regulatory risk.

"Novartis (NVS) owns approximately 42 percent of the company. Recognized as a technological leader. Well-capitalized with approximately $1.2 billion cash (i.e., hunting for acquisitions at a time when values are down and cash is king). This is our pick for investors unwilling to stomach the risks of FDA non-approvals or pipeline failures."

West and Hittle also favor one biotech niche as a group:

Gene Therapy

"Sector is extremely inexpensive –- 11 main gene therapy companies have a combined enterprise value of approximately $400 million -- a conservative valuation model for the 25 products these firms now have in clinical trials indicates a plausible value near $2.1 billion. Combined with release of proof of concept clinical data in 12 to 18 months makes for a compelling story. We strongly suggest investors buy these stocks as part of a "basket" due to the high level of uncertainty."

Of the Gene Therapy Eleven, West and Hittle cover four stocks, all with "buy" or "strong buy" ratings: Avigen; GenVec; Onyx; and Vical. Read more about Onyx in "A.G. Edwards' Martha Stewart Portfolio." The analysts' views on the other three are summarized below:

Avigen

"Avigen represents the premier AAV (adeno-associated virus) company with the first potential cure for hemophilia patients. This name sports: a real product soon to deliver Phase 2 results (second half - 2002), a collaborative agreement with Bayer for that product, a seasoned and knowledgeable management team, a premier manufacturing process and facility, a healthy balance sheet and a strong intellectual property estate.

"And it sports one last thing: an attractive price. We note the possibility for outperforming our $13 price target if the Coagulin-B clinical data comes out strong."

GenVec

"Strong TNFerade data presented at American Society of Clinical Oncology showed only one patient in 21 with progressive disease after treatment, while four of 21 showed complete responses. In the second half of 2002 we expect the company will: a) initiate Phase 1 trials of its macular degeneration product, PEDF, b) initiate Phase 2 TNFerade trials in pancreatic and esophageal cancer, and c) release Phase 2 trial data for BIOBYPASS, a treatment for Coronary Artery Disease and Peripheral Vascular Disease."

Vical

"Our price objective of $17 per share is based on the company bringing its lead oncology product, Allovectin-7, onto the market in 2004. Data on pivotal phase 3 trial of Allovectin-7 expected in second half, 2002."

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Since the July 5 program originally aired, several viewers asked about Genentech, often identified as the "D" among popular biotech stocks because "DNA" is its ticker symbol. It was not originally listed as a pick because the A.G. Edwards analysts' latest report has a "hold" rating on the stock; however, for those interested, here's how West and Hittle viewed Genentech in their most recent summary of the sector:

Genentech

"Recent setbacks include Tracleer failing in trials for CHF, and a second delay in the Xanelim (psoriasis) filing (now scheduled for end-of-year 2002). Xolair (asthma) and Avastin (cancer) remain as possible 2003 launches. Although we are confident the drug will reach the market, a 2003 Avastin launch requires strongly positive data in a breast cancer trial where the treatment regimen (Avastin plus Xeloda) was not explored in Phase 2 trials. "We continue to believe that Genentech represents a prime piece of biotechnology real estate, and a core biotech holding that investors will want to acquire, but in this environment we do not want to get in front of the Avastin data."