There's plenty snap, crackle,pop in Kelloggs' stock

Leckey Q&A

May 29, 1991|By Andrew Leckey | Andrew Leckey,Tribune Media Services, Inc.

Q. My broker has been raving about Kellogg Co. stock and what a bargain it is.I don't think a stock selling at what seems such a high price can be a bargain. What do you think

A. There's still plenty of snap, crackle and pop in this stock's prospects.

You can't evaluate a top-quality stock like Kellogg Co. (around $94 a share, New York Stock Exchange) strictly on a dollar basis, but must consider how much of a premium it's selling at vs. the overall stock market, advised Roger Spencer, analyst with PaineWebber Inc.

"It's true that Kellogg is selling at a slight premium to the market, but it really should be selling at a lot higher premium," explained Spencer " Therefore your broker is correct and the stock is attractively priced."

This convenience food products firm hold 38 percent of the domestic cereal business and 50 percent of the overseas market.It owns famous brands such as Kellogg's Corn Flakes, Rice Krispies,Pop-Tarts and Eggo.

Because it is in a business with few expenses and solid profimargins,Spencer considers Kellogg stock timely for purchase.

I bought 65 shares of Centel when it was the hottest stock to own.I don't Know anymore if I should continue to hold,or move on to bigger better things.

A. You might find bigger, but not necessarily better.

A dramatic run-up in stock price could be in the cards for Centel Corp. (around $32, NYSE), the electronic and communication systems firm, predicted James McCabe,analyst with Nomura Securities

" Centel has two wonderful businesses in its cellular and telephone service divisions,so I would hold your current shares and buy more," said McCabe."The cellular division is benefiting from a strong expansion program and the telephone division is boosted by deregulation."

My family owns several hundred shares of Pfizer, but we keep reading about all the latest developments at Merck and other drug companies.Should I be investing elsewhere?

Hold your shares of drug manufacturer Pfizer Inc. (around $55, NYSE) because it is a fairly-valued stock featuring excellent long-term prospects, said Barbara Ryan, analyst with Prudential Securities.

Its important product names include Procardia in carddiovascular drugs,Minipress in antihypertensive drugs, Visine eye drops,Ben-Gay pain relief ointment and Coty cosmetics.

" We expect Merck and Bristol-Myers Squibb to outgrow Pfizer in the short run and and therefore have buy recommendation on both of those stocks," added Ryan. " However,current owners of Pfizer have no real reason to sell."

I am 60 years old and in the process of selling my home for $ 430,000, which provides me with a $ 350.000 gain. Since this is my only source of future income, I really can't afford to pay a lot of taxes. What is my outlook?

Since you are over 55 years of age, you can take advantage of the $125,000 exclusion which the Internal Revenue Service provides for homeowners selling their home at that age or older, said Barbara Pope, tax partner with Price Waterhouse.

"Therefore, with a $350,000 gain, your taxable gain will actually be $225,000," explained Pope. "However, if you were to decide to purchase another home, your taxable gain would be lower."

For example, if you purchased a home for $ 200,000, the IRS would deduct the purchase price from your previous home's selling price.From that difference, it would deduct your 125,000 exclusion and come up with a taxable gain of $ 105,000, Pope pointed out.

What do you think about a stock called Galveston Houston. I'm thinking of adding to my position.

Buy more shares of Galveston Houston (around $5, NYSE) while the share price is so low, for the company appears to be on the rebound, said Richard Wholey of Chicago-based Wayne Hummer & Co.

The firm makes valve actuators and steel casings for the energy markets, as well as excavation buckets for consruction, mining and other earth-moving industries.

" Galveston Houston almost went bust in the early 1980's when energy prices collapsed, but a sweeping restructuring saved the company and returned it to health," noted Wholey. " As proof of its new lease on life, the company's per share earnings nearly doubled last year and its backlog increased 67 percent"

I bought 500 shares of Capital Associates Inc. two years ago and have never recieved a dividend. What's your opinion of this stock? Is it worth retaining?

Capital Associates (around 50 cents, over the counter), a full-service leasing company, is not a stock to hold if you're interested in dividends, since they're unlikely to be paid for the foreseeable future, said Sharon Conway, based in Chicago with A.G. Edwards & Sons Inc.

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