Now's not the time to gum up portfolio with Wrigley stock

Answering the Mail

March 25, 1992|By Andrew Leckey | Andrew Leckey,Tribune Media Services

Q. My family and I like buying stock in brand name products that we enjoy. We're considering buying shares of Wm. Wrigley Jr. Co., the chewing gum company. What are your thoughts?

A. It remains a quality investment that sticks with you no matter what the economic conditions.

However, don't buy shares of Wm. Wrigley Jr. Co. (around $71 a share, New York Stock Exchange) right now, even though current shareholders should hold on, advised Dick Elam, analyst with Blunt Ellis & Loewi Inc.

The steady stocks in the packaged-food group, such as Wrigley, are most favored during recession. Wrigley's impressive stable of chewing gum products includes Doublemint, Spearmint, Juicy Fruit, Big Red, Extra, Orbit and Freedent. Its Amurol Products subsidiary makes novelty gums such as Bubble Tape and Big League Chew and markets Hubba Bubba bubble gum.

The problem is that a stock such as Wrigley can't match the performance of rebounding cyclical stocks when the economy improves. In addition, no smash-hit product appears to be on the horizon, such as its Extra gum, introduced in 1984 and now the nation's best-selling sugar-free gum.

"Wrigley is an 'old reliable,' a stock you can count on to have a 10 percent growth rate regardless of the economic situation," explained Elam. "But this is not Wrigley's time, since there are a lot of other stocks that will be offering a higher return."

Q. I own 100 shares of Johnson & Johnson and really like this investment. I would like to buy more shares. I'd hold on to them for a while. What do you think? Should I be liking this stock as much as I do?

A. What's not to like?

Buy shares of Johnson & Johnson (around $96, NYSE) because it excels not only in its brand-name health care consumer products, but cardiovascular and general surgical products as well, said Kurt Kruger, analyst with Hambrecht & Quist.

Famous products such as Band-Aid, Tylenol, Stayfree, Modess and Reach constitute a good portion of the company's revenues and will continue to in the future. With sales equally divided among domestic and foreign markets and among its three main divisions, Johnson & Johnson managed solid growth despite the weak economy. Furthermore, its research efforts have developed products such as Hismanal antihistamine and Floxin anti-bacterial.

"Johnson & Johnson is definitely a stock for you if you are an investor who takes a long-term perspective," explained Kruger. "The company is a solid performer with very conservative management that rarely has strayed from its core business."

Q. I am in possession of a stock certificate for 1,000 shares of Gamma Medical Products Inc. I have lost track of this investment purchased several years ago and wonder if the company is still in existence.

A. You're in luck, but your reward definitely won't be enough to retire on.

Gamma Medical Products Inc., a manufacturer of cardiovascular devices and diagnostic kits incorporated in Delaware in 1980, is still in business. You can contact the company for financial information at 175 Rock Road, Glenrock, N.J. 07452. President is John Ciarlo.

Gamma Medical Products stock, traded over the counter, was recently offered at 25 cents a share, according to Robert Fisher, vice president with the New York-based R.M. Smythe & Co. stock-search firm.

Q. I recently started a new job as a salesman for a nationally known company. I am incurring a lot of expenses such as dry-cleaning and meals on the road that aren't reimbursed. Other expenses are reimbursed. What expenses can I itemize for deductions? I'm not clear on this.

A. The unreimbursed expenses incurred in the course of business as an employee are deductible so long as they are legitimate business expenses, said Robert Greisman, tax partner with Grant Thornton.

"In the case of dry-cleaning, it is deductible if you were out of town for a period of time and had to have it done specifically because you were out of town," explained Greisman. "If you just stayed overnight and had to have your suit pressed, the Internal Revenue Service won't permit this expense."

Meanwhile, meals on the road that aren't with clients are not deductible, since the IRS believes you'd have to eat even if you were at the office or home.

Q. We are senior citizens who recently inherited 2,700 shares of Nash Finch Co. Should we hold or cash in?

A. Nash Finch Co. (around $18, over the counter), one of the nation's largest food wholesalers, for some time has provided steady sales, earnings and dividend growth, said Richard Wholey of Chicago-based Wayne Hummer & Co.

It supplies 1,200 supermarkets and 4,500 other retail outlets, and also owns and operates 87 supermarkets of its own.

"Whether you hold or sell your inheritance depends on whether you already have a diversified portfolio and whether the 3.7 percent dividend is adequate for your needs," said Wholey.

"Even though Nash Finch is known for its stable growth, you must sit down with a trusted financial adviser to discuss all those considerations before you decide whether to hold this stock."

Q. What's your opinion of the stock of Pep Boys?

A. The stock of Pep Boys (around $20, NYSE), retailer of car parts, accessories and service at 330 stores in 18 states, should be a steady performer, said Sharon Conway, based in Chicago with A.G. Edwards & Sons.

Business is rebounding and an ongoing expansion program should translate into profits down the line. Its computerized cataloging system should be in about half of its stores by year-end.

"Pep Boys management is also increasing its focus on reducing debt and improving profitability," Conway concluded. "So, while its stock won't be a world beater, you should be confident about it nonetheless."

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