Gap's stock wears well as chain continues expansion

Answering the mail

June 26, 1991|By Andrew Leckey | Andrew Leckey,Tribune Media Services

O. What are your thoughts on the Gap Inc. as an investment? I This clothing chain's shares are wearing well.

A. This clothing chain's shares are wearing well.

Buy shares of Gap Inc. (around $61 a share, New York Stock Exchange) because it has handled recession well with its reasonably priced sportswear and continues to open 100 new Gap stores each year, said Bill Smith, analyst with Smith Barney, Harris Upham. Its GapKids and Banana Repuplic divisions have also been expanding its popular product line, he addfed.

"It's true that April sales figures weren't strong, reflecting a 1 percent decline since 1988," said Smith. "However, the long-term prospects are excellent."

O. What's your opinion of Gerber Products? We have 150 shares and haven't known how long we should hold on.

A. This famous company is returning to its "babies are our business, our only business" concept.

Hold your shares of Gerber Products (around $62, NYSE) because the company holds a 70 percent market share in an industry which it invented, said John McMillin, analyst with Prudential Securities.

Gerber has scaled back its non-baby food enterprises to concentrate more on its specialty. For example, it recently announced the closing of its Weather Tamer division, which mae children's snowsuits and outerwear.

"Once Gerber management is done with the restructing, we'll see a leaner, less-diversified operation whose stock should be well worth holding," concluded McMillin.

Q. I would like to buy some shares of General Electric Co. At current prices, I think it's affordable, but I'd appreciate another opinion.

A. At Buy shares of General Electric (around $76, NYSE), the biggest manufacturer of electrical and mining equipment and producer of consumer, industrial and defense products, advised Mark Altman, analyst with PaineWebber Inc. Its strong earnings potential and its likelihood of outperforming the overall market are the primary reasons, he said.

"I'm confident that GE will return to double-digit growth in 1992 and its stock price will reflect this," said Altman. "The valuation of all the company's assets is also attractive, making this a premier investment that you can't go wrong with."

Q. I am getting married in December and have been a college If a child has met all the criteria to be claimed as a dependent, as we assume you have, his parent can claim him as a dependent even if he's married, said Robert Greisman, tax partner with Grant Thornton.

"That is, provided that you don't file a joint return with your spouse," added Greisman. :In subsequent years, your father wouldn't claim you if you don't meet the criteria of dependent support that he was providing prior to your marriage."

Q. I lost track of my 1,000 shares of Chase MedicChase Medical Group, purchased several years ago. Can you help me locate some informatiion?

A. Chase Medical Group Inc. was incorporated in Delaware and its last address was 7950 North West 53rd St., Miami. Fla. 33166, according to the New York-based R.M. Smythe & Co. stock-search firm.

While its stock is still traded on the over-the counter market, it is being offered at 9 cents a share with no current bids.

Q. I have held 600 shares of Wang Labs for about two years. Should I continue to hold, buy an equal amount at the current low price and hold, sell?

A. The recent announcement that International Business Machines Corp. is making a significant investment in Wang bodes well for the future of the company, but there still are some roadblocks in the immediate future, says Richard Wholey of Wayne Hummer & Co in Chicago.

Wang Labs Class "B" (around $4, American Stock Exchange), was hurt badly by recession and the trend toward low-cost desktop workstations, and it will almost certainly post its third consecutive annual loss in 1991, he said.

"A small profit is projected for 1992, and, as a leader in imaging technology, Wang stands to benefit from the rapid growth of this segment," said Wholey, cautioning that computer competition is intense and Wang remains one of the weaker players. I wouldn't buy any more shares, but I'd hold what you have and monitor the company's progress each quarter."

If all does go well the next few years, Wang shares have the potential to generate big returns, he believes.

Q. I would like your investment advice on Venture Stores, for I'm thinking of investing.

A. Venture Stores (around $25, NYSE), operating 80 quality discount stores in eight Midwest states, is a stock worth buying if its price slips into the lower $20s, said Sharon Conway, of A.G. Edwards & Sons Inc. on Chicago

Earnings in its past fiscal year doubled due to higher sales and the absence of costs associated with its spinoff from May Department Stores. Its earnings and share price have done remarkably well this year.

"Venture is proving itself a worthy addition to the retail world, acting well in a depressed economy and trading at a fair multiple to others in the industry," concluded Conway. "Id holding existing shares now, but hold off on any new purchases."

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

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