Apple shares are ripe for picking AT&T stock won't bear fruit soon

Answering the Mail

March 04, 1992|By Andrew Leckey | Andrew Leckey,Tribune Media Services

Q. I am interested in investing in Apple Computer. I like the computers it makes and I think the company has a great future. However, I don't know if the time is right to buy. What do you think?

4 A. It's the apple of many a stock analyst's eye.

Buy shares of Apple Computer (around $65, over the counter) because this famous personal computer company controls a key element to success -- its software, said Bruce Lupatkin, analyst with Hambrecht & Quist.

That puts the company in a great position to define its destiny, he said. Another plus is Apple's decision to enter the microprocessor-based consumer electronics business, in which it should prosper because of its brand name, Mr. Lupatkin said.

"In the second half of the year we should see stronger sales growth of 15 percent to 25 percent, with some quarters better than others along the way," he said. "The fourth quarter, which begins in September, should be the time when we see earnings benefit from improved sales."

Q. My sister and I are holding 200 shares of American Telephone & Telegraph and haven't been following the company much. What should we do with these shares?

A. Don't expect to dial up significant profits for a while.

Hold your shares of AT&T (around $38, NYSE), the giant provider of national and international communication services, and wait for an economic turnaround to improve its outlook, said Ed Eyring, an analyst with Argus Research Corp.

The long-distance business, which constitutes the bulk of AT&T operations, isn't doing very well. Competitors MCI Communications and U.S. Sprint are in the same boat, because the recession and low consumer confidence have meant fewer long-distance calls.

"AT&T is a lagging indicator," Mr. Eyring explained. "It will take three to six months after the economy is on solid ground for the company and its stock to pick up."

Q. I recently located an old stock certificate among some papers that are more than 50 years old. It is for 10 shares of Flint Motor Co. Is there any value in this investment?

A. Come on now, think about it: Have you driven a Flint lately?

The Flint Motor Co., a car manufacturer incorporated in Michigan in 1922, went out of business on Aug. 31, 1932.

Your stock, unfortunately, has no value, according to Robert Fisher, vice president of the New York-based R.M. Smythe & Co. stock-search business.

Q. We like to buy cyclical stocks and have been wondering when it will be the right time to buy Ford Motor stock. We'd appreciate your opinion.

A. Hold your shares of Ford Motor Co. (around $38, NYSE), keeping in mind that even though the automotive cycle is poised to move upward, that doesn't necessarily mean Ford will do blockbuster business, said Douglas Laughlin, analyst with Bear, Stearns.

Major sales competition at home from many new models offered by competitors, coupled with disappointing international results resulting from weakness in Britain, are worrisome.

"That's why I'm neutral on Ford stock, even though we're starting to see signs of the cyclical movement that would normally favor Ford and the other carmakers," he said.

Q. My broker and everyone else is telling us about Home Depot and what a great investment it would make. Do you agree?

A. Buy shares of Home Depot (around $62, NYSE), a building materials and home improvement center company, because it's in a great position for outstanding growth in the next five years, said David Lee, an analyst with Robinson-Humphrey Inc.

While other retailers are hurting, Home Depot seems to have found its niche, as Americans enhance the value of their homes through improvements.

"Home Depot is more competitive than ever before and has only tapped a fraction of potential market share," Mr. Lee said, noting that there has been no sales slippage during the recession.

"The company services only about 4 percent of the do-it-yourself business and has just 175 stores, so there's a lot of room to grow."

Q. I recently bought shares in an over-the-counter stock, Calgene, a biotech company. What do you think of its prospects?

A. Hold your shares of Calgene Inc. (around $13, OTC), a leader in the application of DNA technology in developing plant products, because the stock has considerable speculative potential, said Richard Wholey of Chicago-based Wayne Hummer & Co.

For example, Calgene recently announced it has genetically engineered canola plants to produce a new source of raw material for the soap and detergent industry.

"Like most biotech companies, Calgene is long on promise but short on immediate profits," Mr. Wholey said. "However, it may be moving closer to harvesting the benefits of its research efforts."

Q. I own stock in a company called Guest Supply Inc. What's the outlook for this stock?

A. Guest Supply Inc. (around $8, OTC), which manufactures and markets items for the lodging industry, is worth holding by aggressive long-term investors, said Sharon Conway, based in Chicago with A.G. Edwards & Sons Inc.

Products include personal-care products, room accessories, paper products and housekeeping supplies. It also makes items for consumer-products companies, which then resell them to retail outlets.

Doing business with 18 of the top 25 lodging chains, Guest Supply rebounded with a profit last year following several years of losses.

"Management has been striving to upgrade sales and distribution," Ms. Conway said. "It expects earnings to surpass 1991, thanks to a less recessionary environment."

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