Liz Claiborne will keep turning investors' heads

Answering the mail

December 04, 1991|By Andrew Leckey

Q. I own 150 shares of Liz Claiborne that have done well for me. I understand that the company will be aggressively advertising for the first time. Does this signal trouble? Should I buy more shares, as I had been planning to do?

A.Don't worry. This stock will stay in fashion a long time. Performance of the stock of Liz Claiborne (around $36 a share, New York Stock Exchange), designer of women's apparel, should be average short-term and above average longer-term, said Brenda Gall, analyst with Merrill Lynch & Co.

While the company name is well known, Liz Claiborne hasn't advertised on its own in magazines or newspapers in the past, opting instead to simply be a part of retailer advertisements, Gall pointed out. The shift toward placing its own ads might be termed aggressive by some, but this company is cautious enough not to build up large inventories of apparel until it feels sales figures merit it, she said.

"Liz Claiborne isn't resting on its laurels, but has been diversifying into its higher-priced Dana Buchman line, menswear and athletic shoes," said Gall, noting that the company's earnings rose 18 percent in the first half of 1991 and 14 percent in the third quarter. "It's a good solid company that keeps on top of consumer desires."

Q. My investment newsletter keeps telling me that consumer goods stocks are a good bet at this time. I'd like to buy some shares of Quaker Oats, but would like to double-check with you.

A. Such an investment would give you some solid earnings to chew on.

Quaker Oats (around $69, NYSE), the packaged food products giant, is a good investment choice because it has been performing well even in difficult economic times, advised Roger Spencer, analyst with PaineWebber Inc. Following a difficult prior fiscal year, a 13 percent earnings increase is expected for the current year, said Spencer.

"Quaker Oats has built up momentum with growth products such as Gatorade and Golden Grain, and its international grocery business is expected to remain strong," said Spencer.

Q. What are your thoughts on Motorola? Has the company completely lost its edge? I've been considering investing in its stock.

A. Better late than never. Buy shares of Motorola Inc. (around $60, NYSE), the electronic equipment and systems firm, because it is "coming around" and attempting to improve itself, said Stuart Johnson, analyst with Wertheim Schroder.

The company is the best broad-line producer of semiconductors, consistently outperforming the competition in terms of market share gains, he said. Furthermore, it puts a healthy emphasis on return on equity. It has restructured to make major improvements in its non-cellular business which is likely to enhance that return even more.

"Motorola has learned from its mistakes and looks extremely positive long-term," said Johnson. "There's a lot of potential."

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