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Squawk on the Street

Analyst Watch: Look to These Mobile Data, Retail Stocks


U.S. stock index futures pushed higher ahead of the open Friday as another batch of mostly positive earnings reports indicated that Wall Street could continue the previous day's aggressive 2 percent rally.

Here's what guests on today's Squawk on the Street are watching before the opening bell:

Dennis Wassung, portfolio manager for Cabot Money Management, says the firm likes two stocks in the mobile data space right now. The area presents "significant investment opportunity."

Here's what he has to say about these two stocks:

Acme Packet supplies a key set of next-generation Internet infrastructure technology. As the Internet is being used more and more for interactive communication applications (Skype calls are a perfect example — voice and video calls over the Internet), “session border controller” (or SBC) technology is required to accommodate these interactive sessions.  Acme Packet is the leader and pioneer in this emerging, high-growth infrastructure segment.

Aruba Networks sells wireless network infrastructure hardware and software — but in the wireless LAN — or “WiFi” part of the market. Aruba sells into industries such as healthcare, education, and financial services, among others, as mobile workforces in these sectors increasingly need wireless access to their organizations’ secure networks.  Importantly, a new industry standard called 802.11n is driving a significant upgrade cycle and a new market opportunity for Aruba; and increasingly, larger enterprises are looking to deploy secure, high performance wireless networks — in some instances instead to implementing wired networks - to the benefit of Aruba.

"Investors should also look at retail now as a contrarian play," Wassung says. "We expect the retail sector to outperform in the short-term."

He particularly likes Amazon.com spacer saying it is "the leading online retailer, and is positioned to continued to grow as more consumer spending moves online. Today, online retail only represents about 4 percent of total U.S. retail sales ($143B of $3.67 trillion total), and the percentage should continue to grow. With an expanding set of product segments and a leading brand, coupled with an emerging “ousourced web services” business, we expect the 17 percent pullback in AMZN to be an opportunity to buy an industry leader."

What's he avoiding right now?

"We would sell or underweight healthcare and utilities," Wassung says. "These sectors could be negatively impacted by regulation looking forward and hinder stock performance and cast uncertainties on the sector looking forward."

See more of what these and other analysts and money managers have to say, and get the latest financial news. Watch Squawk on the Street every weekday morning starting at 9 a.m. ET.


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Disclosure: Cabot Money Management owns all of the stocks mentioned above. Wassung personally owns shares of AMZN.