Amoco Corp. offers little risk, better-than-average performance

Answering the mail

November 27, 1991|By Andrew Leckey

Q. I am currently holding 45 shares of Amoco Corp. and want to keep them. What are your thoughts on the stock? Should I buy more?

A.If you're confident about investing in Big Oil, this company is among the best.

Buy more shares of Amoco Corp. (around $51 a share, New York Stock Exchange), a giant firm in resins and domestic integrated oil, because they should outperform the overall stock market and offer little risk, said Robin Shoemaker, analyst with Shearson Lehman Brothers.

It's true that oil companies are facing reduced long-run consumption and must emphasize fuel efficiency. However, Amoco already has a strong market share and a proven strong interest in cleaner gasoline. Lackluster performances of its natural gas and chemicals businesses are concerns, though these could perform better in the future if pricing conditions improve.

"I like Amoco's cost-cutting and consolidation efforts in the midst of recession and stiff competition," concluded Shoemaker, pointing out that the company's earnings potential is strong. "Though it is viewed as a domestic concern, Amoco does have Caspian Sea drilling rights in the Soviet Union, which might prove to be highly profitable sometime in the future."

Q. I am thinking of investing in Alberto-Culver Co. My friends think it has a lot of potential. What do you think?

A. Prospects are looking beautiful.

Buy shares of Alberto-Culver (around $27, NYSE), the hair care, health and beauty aids firm, based on its heavy investment in efficiency and product development, said Deepak Raj, analyst with Merrill Lynch.

More than half of Alberto-Culver's revenues come from its Sally Beauty Co., a beauty supply firm with 945 stores. It features strong growth and considerable potential. Internationally, the company is attractive due to its name recognition and an aggressive game plan for further growth. Brand names such as VO5, Alberto Mousse, Bold Hold, FDS and Consort provide the company's underlying strength. Its food products include Mrs. Dash, Papa Dash, Sugar Twin and Molly McButter.

"I see Alberto-Culver sales momentum improving next year, especially in the United States, where sales weren't as solid last year," said Raj. "Earnings will reflect this solid momentum."

Q. I would like to continue my investment in Martin Marietta. What's your opinion?

A. This firm may fare better than some of its competitors.

Buy shares of Martin Marietta Corp. (around $55, NYSE), the big defense and aerospace contractor, based on its steady earnings history and its relatively inexpensive stock price, advised Wolfgang Demish, analyst with UBS Securities.

"Many people are concerned about this industry," said Demish. "However, Martin Marietta should do quite well because President Bush intends to continue investing in conventional arms, rather than emphasizing new and riskier nuclear programs."

The company is best known for its missiles, especially its "Midgetman" missile, which is a joint project with Rockwell, TRW and others. Bush has emphasized that he wants that project to continue.

Q. I recently found a stock certificate for 100 shares of Pathe Industries Inc., an investment I'd forgotten. Do you think it has any value at this time? The certificate is dated 1969.

Pathetic is a good way to describe the performance of that company.

Pathe Industries Inc., incorporated in Delaware in 1963, is still legally in existence but has "inactive" status on the over-the-counter market, according to Robert Fisher, vice president with the New York-based R.M. Smythe & Co. stock-search firm. Its last known address was in care of Samuel Shapiro, its president, at 52 Planting Field Road, Roselle Heights, N.Y. 11577.

Pathe Industries has not been active in business since 1967 because it is insolvent. Your shares, unfortunately, have no value because there is no market for them, concluded Fisher.

Q. I am a senior citizen on a fixed income. I recently won $10,000 in a church raffle. I've already received half of the money and will receive the other half early next year. Will this affect my taxes?

A. Yes, it definitely will affect your taxes, according to James Schlesser, tax partner with Deloitte & Touche. Prize winnings such as yours are taxable just as any other type of unearned income would be.

"The church should issue you an information report or an IRS Form 1099 stating your winnings and the dollar value," explained Schlesser. "Include this form with your tax return."

Q. I recently entered the stock market with 200 shares of Advest. Can you give me your opinion on this stock?

A. This company is engaged in a balancing act between the strength of its securities business and the weakness of its banking business.

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