Toys 'R' Us is worth toying with

Leckey Q&A

January 02, 1991|By Andrew Leckey

Q. Everyone keeps telling me to dump all my retailing stocks. However, I'm particularly fond of Toys "R" Us and don't want to sell. Do you agree?

A. This is still a stock worth toying with.

Hold your shares of Toys "R" Us (around $22 a share, New York Stock Exchange), operator of toy supermarts and department stores, because its international stores are handily outperforming the lackluster results of its U.S. stores, said Barry Bryant, analyst with Prudential-Bache Securities.

The company owns 98 overseas stores, with strong growth in Asia and Europe. Meanwhile, its 450 domestic stores are suffering from slowing sales due to the troubled U.S. economy.

"Retailers in general are suffering from slower store traffic and jTC fewer shoppers, but Toys 'R' Us has managed to enjoy strong growth," explained Bryant. "It will weather this economic storm and continue to be an excellent retailer."

Q. What are your thoughts on Manor Care? Is this a good stock to hold?

A. It's worth keeping, but not based on the prospects of its main business.

Manor Care (around $17, NYSE), owner and operator of nursing homes and lodging facilities, is a stock worth holding because of an impressive $75 million spent this year on acquisitions of lodging companies, said Todd Richter, analyst with Dean Witter Reynolds Inc.

"Manor Care knows that the nursing-care business cannot maintain good earnings, even though it is the best in the business from a management and quality standpoint," said Richter. "I am recommending that you hold your shares mostly because of its diversification moves."

Manor Care owns the Quality Inns, Rodeway and EconoLodge chains.

Q. What are your thoughts on Fuqua Industries?

A. This stock is suffering from a run-in with the weak economy.

Don't invest right now in Fuqua Industries (around $10, NYSE), a firm in consumer products and color processing, advised Robert Collins, analyst with Raymond James & Associates.

The company's Snapper Power Equipment division, which manufactures high-ticket lawn and garden equipment, is sensitive to the economy and should feel the results of recession.

"On a positive note, I personally expect that we are approaching the ending months of this slowing economy, and we should therefore see more positive returns for Fuqua in 1991," said Collins, who recommends waiting on the investment sidelines for now. "The company's photofinishing business, which provides the majority of its revenue, is a real plus."

Q. I was wondering if you can tell me about the NVF Co. My husband left me with quite a few shares, but I don't see or hear anything about the company.

A. Unfortunately, you'll need quite a few shares for your holdings to amount to much.

NVF Co., 6917 Collins Ave., Miami Beach, Fla. 33141, is still in existence and manufactures fibers, plastics, thermoplastics and fine paper. Its stock is traded in the over-the-counter market, currently for only 1 cent bid and 5 cents asked, according to Robert D. Fisher, vice president with the New York-based R.M. Smythe & Co. stock search firm.

Q. Every year I get so confused as to what and how much I can deduct for my medical expenses. Can you refresh my memory?

A. You can take your medical expenses for you and your dependents as an itemized deduction. However, you can only deduct them to the extent that they exceed 7.5 percent of your adjusted gross income, said Robert Greisman, tax partner with Grant Thornton.

"The IRS permits you to claim as an expense the diagnosis process, curing treatment, prevention process and drugs prescribed for your benefit," said Greisman. "You can itemize your transportation required to receive medical attention, as well as the insurance premiums you pay annually."

Q. I own 10 shares of Edisto stock. Is this worth keeping, or should I get rid of it and at what price?

A. There isn't a lot of energy in this stock's performance.

Edisto Resources (around $10, American Stock Exchange), formerly Natural Resources Management Corp., offers some promise for the long run but is no great shakes for the present, said Sharon Conway, based in Chicago with A.G. Edwards & Sons Inc.

The company explores for oil and gas and develops properties, mainly in Texas, Oklahoma, the Appalachian Basin and the Gulf Coast. It also owns a pipeline construction subsidiary, which has been inactive, and a small oil service manufacturer.

"After a high price run-up, Edisto Resources shares have come down due to the company's significant debt load," said Conway. "Cold weather and better pricing may help this winter, but we consider the company to be mediocre among the independents."

Q. I've been following a stock called General Host. The price is low. What are its prospects?

A. The seeds for future success have been planted at this company.

General Host (around $5, NYSE), through its Frank's Nursery and Crafts subsidiary and 80 percent-owned Calloway's Nursery, operates the nation's largest chain of stores devoted to gardening and crafts.

After a few difficult years in the mid-1980s, General Host is making a comeback. Earnings are increasing as cost-cutting efforts and more focused marketing take effect.

"At the current price, General Host shares are trading below book value," observed Richard Wholey of Chicago-based Wayne Hummer & Co. "This, combined with the earnings rebound under way, makes General Host stock an attractive low-priced speculation."

Andrew Leckey answers questions only through his column. Address such inquiries to Andrew Leckey, Chicago Tribune, 435 N. Michigan Ave., Chicago, Ill. 60611.

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