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When blood flows on Wall Street some investors think it's time to pick through the carnage for bargains.

While hardly anyone is bold enough to proclaim the Great Correction of 1998 over and jump head first into a buying frenzy, many local investment advisers say the summer sell-off has beaten down some stocks so far that they're beginning to look like good buys.

Not surprisingly, most of the bargain shopping has been centered around a handful of sectors that have been hit hard during the market's plunge -- namely, banks and technology companies.

And drug stocks, which have held up remarkably well during the summer turmoil, also are a popular choice of local investment advisers, who like the pharmaceutical firms for their long-term growth potential and their ability to keep chugging along in a world filled with economic and political upheaval.

"Even though the market is down by 17 percent overall, you have a lot of stocks that are down 30 percent or 40 percent," said Nicholas Verbanic, a portfolio manager at Elias Asset Management Inc. in Williamsville.

"We think the hit a lot of these companies has taken has been overdone," he said.

But even though some local investment advisers said they're starting to see what looks like deeply discounted prices on some stocks, they're still wary about doing too much buying too soon.

Unlike previous market drops during the 1990s, when investors quickly reacted by buying more shares during the dips, the mood is much more cautious during the current downturn, which also has been much sharper than any of the previous drops in recent years. The local advisers still fear that the overseas economic turmoil and President Clinton's political and legal problems could lead stocks even lower.

"We don't know where the bottom is," said Ronald M. Roche, a senior portfolio manager at Robshaw & Julian Associates in Amherst.

"We're still a little cautious on some of the techs and the financials, even though they've been so creamed," said Mary Collins Demske, the president of Niagara Investment Advisers in Buffalo.

That's why many investment advisers said they'd ease into the battered stocks that have caught their eye a few shares at a time. By buying a little now and a little more later, an investor may not get the stock at its lowest price, but they also are guaranteed that they won't purchase their entire stake just before another big drop.

"You may not want to jump in with both feet," said Rosemary A. Ligotti, senior vice president at Moors & Cabot Inc. in Amherst.

With that in mind, let's take a look at some of the sectors that look attractive to local advisers.

Bank and financial stocks.

These are drawing the most interest from bargain hunters. Without a doubt, bank stocks have been among the hardest hit during the last two months amid fears that a weakening U.S. economy could hurt earnings, while the foreign turmoil in Russia, Latin America and Asia could lead to big losses on foreign loans that go bad.

As a result, big multinational banks have taken a nasty beating. Citicorp, which traded at 24 times earnings in mid-July, has plunged by 46 percent and now sells for just 12 times earnings.

That makes Citicorp look like a bargain, said Verbanic, who also likes NationsBank, Travelers and Merrill Lynch stock.

"We think these will be able to rebound very quickly," said Verbanic, who thinks investors have overreacted to the potential foreign loan problems. "In a lot of cases, these stocks have lost 40 percent to 50 percent from their peaks over the last two months."

But even regional U.S. banks, which do little business outside the country, have been hammered.

"They were kind of like the baby that was thrown out with the bath water," said Ms. Ligotti, who said she prefers regional banks like Granite State Bank in New Hampshire, Huntington Bancshares in Ohio and Independent Bank in Michigan.

"They don't have any of the problems the large banks do."

Ms. Ligotti thinks the merger wave will continue in the consolidating U.S. banking industry and doesn't see the regional banks' basic business falling apart either.

"Many of them are increasing their dividends. Many of them are buying back their shares," she said.

Roche likes municipal bond insurer MBIA Inc., which is off 26 percent since mid-July after being down as much as 39 percent on Sept. 10, because of fears about the company's international exposure, which has turned out to be fairly light.

Drug and health care stocks.

These have held up remarkably well during the summer meltdown, and it's those defensive characteristics that are a big part of their current appeal. Demographics are another selling point, as the growing number of elderly people drives up sales of prescription drugs, medical devices and other health-care services, regardless of how strong -- or weak -- the overall economy is.

"The baby boomers are getting older and the older people are living longer," said Ms. Ligotti, who likes Pfizer, Merck & Co., Lilly and American Home Products.

"The demographic trends really bode well for these pharmaceutical stocks," said Verbanic, who recommends Merck and Johnson & Johnson.

Ms. Ligotti also likes telecommunications stocks, many of which also have fallen harder than the overall market.

"The world wants information," she said. "They want it faster, they want it cheaper and they want it better."

Both Ms. Ligotti and Roche like MCI WorldCom, which recently acquired MCI Communications and is down about 15 percent since mid-July. Ms. Ligotti also likes telecommunications service provider Winstar Communications, cable television provider Cox Communications and TV networks Paxson Communications and USA Networks.

Ms. Demske cited a handful of stocks she now views as undervalued, including consumer products giant Gillette, which is down 30 percent from its 52-week high; American Airlines parent company AMR Corp., which is off 38 percent; and oil services firm Halliburton, which is down 47 percent.

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