'Reality check' by management gives boost to Coors stock

Leckey Q&A

May 08, 1991|By Andrew Leckey | Andrew Leckey,1991 Tribune Media Services, Inc 435 N. Michigan Ave., Chicago, Ill. 606ll.

Q. I always go for the underdog, and in this case, I' considering investing a small amount in Adolph Coors, Clas B stock. After being dogged with so many problems, is its luck changing

A. Any recent improvements aren't a result of luck, but rather a long-overdue reality check by top management.

Purchase shares of brewer Adolph Coors, Class B (around $22 a share, over the counter) because the company has finally "wisened up" by beefing up its marketing, getting along with unions, expanding its product line and selling its product nationwide, said Joe Frazzano, analyst with Oppenheimer & Co.

It's true that first-quarter earnings of $6.3 million were down 18 percent from a year ago due to recession and the Persian Gulf War according to the company. But there's definite promise for the future said Frazzano

" There are now nine Coors beverage products vs. two brands a decade ago and its moderately priced Keystone brand has done quite well," said Frazzano,who notes that the Coors family controls the voting shares and a substantial potion of the non-voting Class B stock.

Q. I want to invest in Coca-Cola Co. I know it is an excellent company,but do you think it will do for the long haul?

A. Coke is definitely "it" as an investment.

Coca-Cola Co. (around $53, New York Stock Exchange), the leader in the beverage market, enjoys huge recognition and success both here and overseas, noted George Thompson, analyst with Prudential Securities. In fact, international sales now constitute more than 70 percent of company profits

" It makes sense to purchase shares of Coca-Cola," said Thompson " This is an excellent campany should continue to be a blue-chip investment, increasing worldwide expansion of its seven product lines."

Whenever Coca-Cola consumption lags in any part of the world there are more than enough markets to make up for it.

Q. My wife and I own 366 shares of Boeing and have had them since the early 1970s. Were'concerned about Boeing with so many U.S carriers filing for bankruptcy. Should we sell before it's too late?

A. No one can clip this aircraft manufacturer's wings.

Don't sell your shares of Boeing Co. (around $46, NYSE), for it remains the dominant player in its industry with an immense global presence, said Wolfgang Demish, analyst with UBS Securities.

"Boeing works with more than 150 airlines worldwide and about 25 percent of it's sales come from U.S. government contracts," explained Demish."An example is the recent 2 billion project for a new U. S Army helicopter along with United Technologies Corp."

The company's earnings potential is excellent and its stock price reasonable, so you should consider buying more shares, said Demish

Q. I recently found a 1,000-share certificate for Majestic Film Productions Ltd. among my husband's possessions.Is it worth anything?

A. There was little majesty to this firm's results, and your shares, unfortunately, are worthless.

Majestic Film Production Ltd is no longer in existence, its corporate charter canceled about the time of the 1987 stock market crash.

No market quote is available for the stock, since the company likely just issued the stock for a private offering, explained Robert Fisher, vice president with the New York-based R.M. Smythe & Co. stock-search firm.

Q. I am considering buying a very small company. The prospectiver seller has only provided his audited tax returns.How can I assume these documents are true?

A. Be sure to get necessary backup data. The company should also have a set of records, consisting of its cash receipts, disbursements, checkbooks and purchasing journal, that will indicate the details of its money, said James Schlesser, tax partner with Deloitte & Touche.

" These documents should be summarized monthly and put into a general ledger," Schlesser explained. " At year-end, the firm should have a trial balance that summarizes it activities,and either this or the general ledger are normally used to prepare income taxes."

To review the accuracy and validity of the company's tax returns you simply must examine those documents.

Q. What should I do about my shares of Interface Inc., which dropped substtially over the past year?

A. Interface Inc. (around $4.50, OTC), the largest manufacturer of carpet tiles, has been hit hard by recession.

However, its longer-term outlook is much better, said Richard Wholey of Chicago-based Wayne Hummer & Co.,who expects earning growth to resume the double-digit pace which had characterized the firm since it went public in 1983.

" At the current price, Interface seems to be a bargain," said Wholey." Hold those shares for they could easily double over the next few years from their current depressed levels."

Q. Could you provide me with the earnings prospects for Telephone Data Systems stock

A. Telephone & Data Systems (around $37, American Stock Exchange), an independent telecommunication company operating in 27 states, has high-quality earnings that will probably remain flat the remainder of this year, said Sharon Conway, based in Chicago with A.G. Edwards & Sons Inc.

The company, which has a radio paging unit and an 86 percent stake in U.S. Cellular, faces losses at its cellular division due to construction and training expenses. But there's room for strong growth in long-term cellular revenue nonetheless, likely to result in a decline in many fixed costs.

"Acquisitions of small rural phone companies should help T& DS's telephone sector," predicted Conway." As far as the stock price is concerned however, it will probably continue to reflect general market action for the near-term."

Andrew Leckey answers questions only through his column.Adress such inquiries to Andrew Leckey, Chicago Tribune, 435 N. Michigan Ave., Chicago, Ill. 606ll.

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