Hospital StaffingInefficient Market Hypothesis, Madison...

STOCK WATCH

May 06, 1992|By Opinions on stocks offered by investment experts. Compiled by Steve Halpern for Knight Ridder.

Hospital Staffing

Inefficient Market Hypothesis, Madison, Wis., recommends buying Hospital Staffing Services (OTC, HSSI, $10.875), a health care temporary employment agency, up to $11 a share.

"The firm is showing strong growth in an ever-expanding industry. Earnings have risen from 4 cents a share in 1985 to 57 cents a share last year. Earnings in the latest quarter rose 50 percent, despite a 40 percent increase in the number of shares outstanding. This stock is very volatile; it is meant for investors who like a lot of excitement. Given its strong earnings growth, the price drop from $16 a share appears overdone. Our target is a rebound to the 17 1/2 level."

Sensormatic Electronics

"Sensormatic (NYSE, SRM, $29.50) has remained on its record earnings track. November marked the 18th consecutive quarter of revenue growth exceeding 20 percent," notes Jim Stack, InvesTech, Whitefish, Mont.

"The company is the world's leading provider of electronic article surveillance technology for use in retail theft prevention. Sensormatic has seen demand for its products rise as retailers seek to protect themselves from increased shoplifting and employee theft. The company is now working to develop new markets in 'source-tagging,' in which items are marked with tags for theft detection at the time that they are manufactured."

Spec's Music

Will van Allen, Individual Investor, New York, likes Spec's Music (OTC, SPEK, $6.25), with 58 stores the largest audio and video retailer in Florida. The chain has opened its first store in Puerto Rico.

"The firm's distribution system is so well refined that new stores don't need storage space. Aggressive growth became apparent in 1990, when the firm opened 12 stores; eight of them were superstores with more than 7,000 square feet. The upside of this expansion is now starting to show up in results. While most retailers were singing the blues during Christmas, Spec's saw net income grow 20 percent in that quarter. For the six months ended January, net posted a 40 percent gain."

Claire's

"Claire's (NYSE, CLE, $7.875) is a specialty women's retailer. The stock is quite out of favor; the company will likely earn 30 cents per share this year," notes the Zurich Financial of Switzerland.

"However, the firm is a dominant player in the fashion accessory industry. A large number of stores have been opened over the past two years; as these are worked into the corporate structure, margins should widen from 2.4 percent last year to 6.6 percent. Meanwhile, 1991's dismal conditions have resulted in pared costs and created a lean inventory situation. The firm should earn 80 cents per share in 1992 and $1.10 a share in 1993. We recommend purchase."

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