No longer a nickel-and-dime investment, Woolworth a good buy

Answering the mail

August 21, 1991|By Andrew Leckey

Q. Do you think this is the right time to buy retailing stocks? I'd appreciate your opinion of F.W. Woolworth.

A.Woolworth Corp. (around $28 a share, New York Stock Exchange) is no longer a nickel-and-dime investment.

Besides the stores bearing its famous name, this company operates discount stores under 35 different names that include Woolco, Kinney, Foot Locker, Athletic X-Press and Richman.

It's a good time to buy the company's shares, since they're attractively priced, advised Donald Trott, analyst with Dean Witter Reynolds.

"I really like the prospects for the stock of Woolworth's and believe it will benefit from an economic recovery," explained Trott. "In addition, discount stores weren't as heavily hit by recession as the upper-ticket or large-ticket retailers."

Q. My family recently came back from Walt Disney World. Having been there shortly after it originally opened, we were amazed at how it has grown. What's your opinion of the stock of Walt Disney Co.?

A. Buy shares of Walt Disney Co. (around $120, NYSE), a greatly expanded company that owns and operates amusement parks and is also a major presence in film and television production, said Ray Katz, analyst with Shearson Lehman Brothers.

Under top man Michael Eisner and his management team, Disney is making money by opening more attractions at its theme parks, expanding the licensing of Disney characters and opening its own stores in malls to promote its product line.

Its film business through its Disney and Touchstone divisions is significant, and its EuroDisney theme park should also pay big dividends, Katz believes.

"Disney stock will outperform the market, as more travelers and families return to the theme parks, which provide more than 50 percent of company revenues," predicted Katz, who says he admires this aggressive company because it isn't content to rest on its laurels. "I expect a total return of 10 to 25 percent in the next couple of years."

Q. I bought 65 shares of Mead Corp. early this year and they've done well. Do you think I should buy another 100 shares?

A. It'll be tough to match the first half of the year.

Hold, but don't buy more shares of Mead Corp. (around $34, NYSE), the manufacturer of paper, lumber and wood products, said Gary Palmero, analyst with Oppenheimer & Co.

Most paper companies did well in the first half of the year because of the anticipated economic recovery and improvement in earnings and sales. After the price run-up, shares of companies such as Mead appear to be fairly valued, Palmero believes.

"If you were to buy more shares now, you'd have to look out to 1993 to 1994 to get a good return on those shares," said Palmero. "Frankly, everything is too uncertain at this point to say what 1993 or 1994 will bring for the paper industry."

Q. A few years ago, I bought 200 shares of Hospital Newspaper Group Inc. Is this stock worth anything today?

A. This company wound up in sick bay.

Hospital Newspaper Group went out of business, according to Robert Fisher of the New York-based R.M. Smythe & Co. stock-search firm.

Its transfer agent stopped transferring the stock just last year. The firm's last known mailing address was P.O. Box 31, East Greenbrush, N.Y. 12061.

Q. I bought 200 shares of an over-the-counter stock for $1,500 some years ago and they have steadily declined in price. I just received formal notice that the company went bankrupt. Can I claim this on my taxes, or is it too late?

A. You can claim a capital loss in the year the stock was deemed worthless for the full amount of $1,500, according to Robert Greisman, tax partner with Grant Thornton.

"This loss can be taken on your 1991 return, since you have proof of notification and are covered in case the Internal Revenue Service argues that you actually had a loss earlier due to the steadily declining price," explained Greisman.

Capital losses are deductible only to the extent of capital gains. If you don't have any capital gains, you can offset other income with capital losses only up to $3,000, Greisman noted.

Q. I own 2,000 shares of GenRad stock. It has had its ups and downs. Do you think I should sell what I have, or buy more and wait?

A. Hold, but don't buy more shares of GenRad Inc. (around $4, NYSE), a leader in products for the testing of electronic components and printed circuit boards, advised Richard Wholey of Chicago-based Wayne Hummer & Co.

The recession has triggered GenRad losses in recent years, and this year isn't shaping up much better. The company has been bTC developing a new generation of automatic test equipment and is counting on it to boost sales and earnings.

"As its low share price indicates, GenRad is a very speculative stock and buying now doesn't seem like a good idea," said Wholey. "However, since the share price is so low and the company is an industry leader, it might be wise to hold what you have in hopes of a recovery."

Q. I have 150 shares of Borden Chemicals and Plastics. The dividend is good, but is the stock worth holding?

A. Hold, but don't buy more shares of Borden Chemicals and Plastics (around $12, NYSE), the limited partnership that operates the basic chemicals and polyvinyl chloride resins business formerly owned by Borden Inc., said Sharon Conway, based in Chicago with A.G. Edwards & Sons.

Earnings per share, following a decline last year, improved in the first quarter of this year and then slipped a bit in the second. Nearly a quarter of the firm's sales are to Borden Inc.

"An improvement in the construction and homebuilding industries would be positive, since they're major purchasers of Borden's resins," added Conway.

"But, while the share price has recovered nicely this year, I'd wait another quarter before buying more shares."

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

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