Local favorites of the brokers

Donald Saltz

December 27, 1991|By Donald Saltz

Stock analysts have a field day this time of year. It is their opportunity to give us a batch of corporate names on which their reputations are riding, names they want to remember with fondness 12 months from now.

The recent strong stock market has been beneficial for a substantial majority of stocks, but a very select number are favored by the brokerage firms, stocks their analysts consider the better bets for 1992.

One of the favorites of the firms of Legg Mason and Ferris Baker Watts is a young Rockville-headquartered company -- Mid-Atlantic Medical Services -- an aggressive and growing health maintenance organization with well over one-third of a million subscribers. The HMO, founded in 1987, has experienced rapid growth in its sales and profits. It sells now for between 10 and 11 a share, "very undervalued," according to analyst Michael Meek of Ferris Baker Watts. The stock sells currently for more than 20 times last year's earnings, but for only 10 times those anticipated for '92. Mid-Atlantic's share price approached 19 earlier this year.

MicroProse Inc. of Hunt Valley is a new-age type of stock whose performance has the approval of Ferris Baker Watts, which recommends it as one of its top choices. MicroProse, which has 6.5 million shares outstanding, develops entertainment software. The stock went public this year at 9 1/2 , but rose above 14. MicroProse is only a point or so under that high now after a good Christmas season.

Banks are out of favor and few of them stir much analytical interest, but there is an exception. Loyola Capital Corp. of Baltimore, the holding company for Loyola Federal Savings & Loan, is another recommendation of Ferris Baker Watts. The stock sells now for about 13 but its book value, says analyst Meek, is above 31. He projects earnings of $2.30 a share this year and $2.58 in '92.

Alex. Brown & Sons likes the shares of McCormick & Co., the spice business based in Sparks that has built a phenomenal record of dividend increases and stock splits. The firm's prediction would have gotten off to a fabulous start if the New Year had started about three weeks early. McCormick gained 9 points in just 11 trading days to reach 50.

Washington Real Estate Investment Trust, also at its all-time high, is another on Alex. Brown's list. Known as Writ, it has been the most successful real estate investment trust in the United States over a period of years. The Bethesda firm has seen its earnings accelerate during a period of much difficulty for a lot of real estate firms.

One of those that hasn't done so well -- Federal Realty Investment Trust of Bethesda -- is also on the Alex. Brown list of favored stocks. The Marriott Corp. of Bethesda is an additional Brown recommendation. Both Federal Realty and Marriott need a bit of bounce just to recover their steep share price declines this year.

At Legg Mason, Research Director Robert Quasman likes the shares of Bell Atlantic, this area's regional Bell company, but he also casts a favorable eye on a Bell competitor, MCI, a national phone company based in Washington.

McCormick & Co. is one of the choices of Wheat First Securities. Merry-Go-Round Enterprises, a large fashion retailer based in Joppa, is a Dean Witter Reynolds selection. Fashion stores are a Dean Witter favorite; Gap and Limited also are choices.

Federal National Mortgage Association, a firm dealing in home mortgages and headquartered in Washington, is on the Smith Barney Harris Upham selection list.

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