Investors seek stocks to buy for long haul

October 23, 1992|By Andrew Leckey | Andrew Leckey,Tribune Media Services

Put the presidential debates behind you. In this period of market volatility, another debate is raging.

American investors are deciding which stocks they think they can depend on for the long haul. Reliable choices for five years or more are in great demand these days. They're the sort of stocks that let you sleep at night, no matter what the future political or economic circumstances.

To invest long term, stick with stocks of companies that do one thing well in an industry you can understand and follow. Such niche companies are easy to live with, their basic staying power being the key. Of course, you benefit most if you capture one of these beauties when it's out of favor and its price is down.

"People don't do enough homework when buying a stock using a long-term horizon, simply taking a tip from a friend, relative or stock broker," says John W. Rogers Jr., president of Ariel Capital Management of Chicago, with $1.9 billion in assets under management and which runs Calvert-Ariel Growth Fund and Calvert-Ariel Appreciation Fund.

Stay the course, say the experts. "Don't be short-sighted and emotional, selling on price dips, for price dips are the times when professional investors such as myself like to buy," says Louis Navellier, editor of MPT Review investment letter, P.O. Box 5695, Incline Village, Nev. 89450. ($275 annual subscription.)

Don't get jumpy about near-term trends. "If you're investing for -- five to 10 years out, don't get carried away by an unfavorable earnings outlook for the current or coming year," advises Arnold Kaufman, editor of The Outlook investment letter of Standard & Poor's Corp., 25 Broadway, New York, N.Y. 10004. ($280 annual subscription.)

The following are recommended by Rogers:

* Oshkosh B' Gosh, Class "A," the pre-eminent children's clothing manufacturer in the United States, which will benefit from demographics that indicate a great many more youngsters will be born to baby boomers this decade.

* Hasbro Inc., the world's largest toy company, which is broadly diversified with names including Milton Bradley, Parker Brothers and Playskool. It made a smart acquisition of Tonka Corp. a year ago.

* Valassis Communications, which holds more than 50 percent of the coupon insert business for Sunday newspapers. Benefiting from difficult economic times and struggling consumer brands, the coupon business is setting records this year.

* Enquirer/Star Group, Class "A," a strong franchise in controversial "personality" journalism, which particularly benefits from the readership of Americans approaching their retirement years.

Navellier suggests the following:

* PolyGram N.V., the producer and marketer of recorded music with U2 and Janet Jackson on its label, which gets a royalty on every compact disk produced.

* Fruit of the Loom "A," the largest producer of underwear, which has abnormally high profit margins and is significantly reducing its debt.

* American Power Conversion, manufacturer of constant-power-supply products such as surge protectors for computers, which fits a proper niche and has "fat" profit

margins.

* International Game Technology, maker of the majority of slot machines used throughout the world and owner of lucrative slot machine networks, which hopes to land a big contract in Japan.

Kaufman likes these examples:

* H&R Block, the tax, computer and personal service company, whose services will be in greater demand if changes occur in tax laws.

* Procter & Gamble, the slick-marketing household, personal care and food products company, which recently announced it will be selling its Citrus Hill orange juice brand to emphasize more profitable lines.

* ConAgra Inc., the prepared-foods and agricultural-products giant, which may be the strongest and most diversified of food companies, thanks to popular brands such as Healthy Choice.

* Merck & Co., respected maker of ethical drugs and specialty chemicals, whose stock price is down despite its excellent reputation for developing and marketing drugs.

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