Q. My wife and I are retired and would like to invest in telephone company stocks. We hear they are very safe. What do you think about Southwestern Bell?
A. Perhaps this isn't the best choice to ring up.
The stock of Southwestern Bell Corp. (around $50 a share, New York Stock Exchange), which provides telephone services in Kansas, Arkansas, Missouri, Oklahoma and Texas, should perform only about in line with the overall stock market the next six to 12 months, predicted Greg Sawers, analyst with Sanford C. Bernstein.
Because he doesn't consider Southwestern Bell a stellar stock likely to take off in value, Sawers has assigned it only a neutral ranking.
"You should view every stock from an investment perspective, not just as a safe haven," advised Sawers.
"If you are seriously interested in some good telephone company stocks, I'd look to NYNEX Corp. or Bell Atlantic Corp., whose prospects are brighter than Southwestern Bell right now."
Q. It seems that none of my investments are going anywhere. I am thinking about unloading Safety-Kleen Corp. Should I do it now? Should I wait until the stock market has a strong rally?
A. While it's probably safe to hold this stock, don't expect to clean up in a potential market upturn.
Safety-Kleen Corp. (around $38, NYSE), a firm in waste treatment and recycling of hazardous materials, is a fairly priced stock of a company with strong earnings potential, said Vishnu Swarup, analyst with Prudential-Bache Securities.
"Yet I don't really think that Safety-Kleen will be a stock that rapidly outpaces the market if and when there is a rally in the market," said Swarup. "On the postive side, it has a very strong market presence in hazardous waste removal, while on the negative side, it is a fairly newly traded company up against truly strong competitors such as Waste Management."
There are other positives. Since the company acquired 80 percent of the now wholly owned Breslube oil recovery operation in 1987, its volume has increased significantly. In addition, its fluid recovery business is also advancing.
Its pioneering cleaner system service, in which solvent is used to de-grease car or industrial parts, is still going strong as well.
Q. What are your thoughts on McGraw-Hill Inc.? I'm getting sick of this stock.
A. Don't become ill over this stock, but don't expect miracles either.
McGraw-Hill Inc. (around $46, NYSE), a company that publishes books and magazines and is in education/information services and public television, has had its share of problems. It has encountered major difficulties in all phases of restructuring and in putting into place its new operations system.
"I'd hold on to your McGraw-Hill stock for now, taking a wait-and-see attitude, but I wouldn't invest any new money," said Jim Goss, analyst with Duff & Phelps. "Operating earnings have been somewhat better this year, but there remains doubt as to whether the company will really achieve the restructuring gains it says it will."
Q. I am a small investor, but my family has many shares in a company called Airlift International. We don't get any reports from this company. Can you let us know something about this investment?
A. The idea behind this firm didn't really take off.
Airlift International, a Miami-based air cargo carrier, filed for bankruptcy protection in 1981, but the court didn't confirm its plan of reorganization under Chapter 11 until early 1989.
"At the time of bankruptcy reorganization, there was no stockholder equity," said Robert D. Fisher, vice president with New York-based R.M. Smythe & Co. "Unfortunately, your family's shares are worthless."
Q. We spent a few thousand dollars buying Seagate Technology a year or so ago.
I was told it was a good investment, but it didn't turn out to be so. Should I keep Seagate or sell it?
A. This stock was washed away by recent world events.
Seagate Technology (around $7.50, over the counter), leading maker of Winchester disc drives for microcomputers, is a volatile stock that isn't for the faint of heart.
While its most recent earnings were better than expected, economic worries tied to the Middle East crisis have definitely hurt the stock.
"Seagate Technology is trading near its low for the year, but should show some recovery if upcoming earnings are good," said Sharon Conway, based in Chicago with A.G. Edwards & Sons Inc.
"Longer-term, Seagate has an edge on smaller firms in its purchasing and pricing, so I'd hold on to its shares for now."
Q. What do you think about Baxter International? Do you think its restructuring moves will pay off? I've been disappointed with it.
A. You're right to expect more.
Baxter International (around $24, NYSE), a worldwide supplier of hospital supply products and home care products and services, has underperformed other stocks in its industry this year.
Nonetheless, it is a stock well worth holding or buying, according to Dean Witter Inc., which believes Baxter's massive restructuring program will provide benefits.
The company recorded its best operating profit gains since 1987 in the second quarter of this year. Reorganization should begin to take more dramatic effect in the third and fourth quarters, carrying through into 1991, Dean Witter predicts.
However, Dean Witter also cautions that growth in sales are harder to predict once the reorganization is completed.
Andrew Leckey answers questions from readers through his column. Address inquiries to Andrew Leckey, Chicago Tribune, 435 N. Michigan Ave., Chicago, Ill. 60611.