Legg Mason offers annual Thanksgiving picks Brokerage selects stocks with prospects

November 21, 1995|By Bill Atkinson | Bill Atkinson,SUN STAFF

Legg Mason Inc. again has picked a dozen lean stocks it hopes will fatten up into big money-makers by next Thanksgiving.

The Baltimore-based brokerage and investment banking firm yesterday unveiled its 18th annual Thanksgiving list of stocks it will recommend to clients. But these aren't companies worth raving about, because they've been picked from the bargain shelf.

"These are stocks that are down significantly from their highs," said Richard E. Cripps, Legg Mason's director of equity marketing. "We feel they have a good long-term outlook, and a year from now, people will be paying for that long-term outlook at a higher price."

The Thanksgiving picks include Baltimore-based insurer USF&G

Corp., toy and game maker Hasbro Inc., and Advanced Micro Devices, a microprocessor maker that competes with Intel Corp.

Mr. Cripps said Advanced Micro is working on a new processing chip that could take away as much as 5 percent of Intel's stranglehold on the market.

"That holds huge profit possibilities," he said.

Advanced Micro's stock has slipped to the low $20 range, but in June it traded as high as $39.

USF&G has similar potential, because it has cleaned up several number of its problems and has begun churning out steady profits.

"USF&G could be a big winner," Mr. Cripps said. "That is one of the big sleepers."

Legg Mason is buying bargain basement stocks because it keeps the stocks in its own portfolio and doesn't sell them, as it has done in recent years.

The strategy can be difficult for portfolio managers to stomach, especially when there are obvious signs that a company's stock is going to fall.

For example, the 1995 Thanksgiving list had several stocks that Legg managers would have sold in a snap, including Advanta Corp., a financial company that climbed to the $50-a-share range.

Legg Mason's analyst later downgraded Advanta and the stock dropped into the $30s, but the portfolio couldn't sell the stock under the rules for its Thanksgiving portfolio.

Despite the rules, Legg Mason's Thanksgiving list performed well over the last 12 months, rising 20.3 percent, but it still trailed the S&P 500's blistering 31.6-percent performance over the same period.

Legg Mason's Thanksgiving list has beaten the S&P 500 index in 13 of the last 17 years. It has an average annual return of 26.7 percent, compared with the S&P 500's 16.9 percent.

Legg Mason's Thanksgiving list for '96

C9.. .. . .. .. .. .. .. .. .. .. .. .. .. .. ... 52-week

Company .. .. .. .. .. .. .. .. .. .. Ticker .. range

Advanced Micro Devices .. .. .. .. .. AMD .. .. $39-21

Circus Circus Enterprises .. .. .. .. CIR .. ... 36-20

Comcast Corp. .. .. .. .. .. .. .. .. CMCSK . .. 22-14

Commercial Intertech Corp. . .. .. .. TEC .. ... 23-16

Cracker Barrel Old Country Store . .. CBRL . ... 25-16

DSC Communications ... .. .. .. .. .. DIGI . ... 64-27

Fisher Scientific International .. .. FSH .. ... 34-23

General Instruments Corp. .. .. .. .. GIC .. ... 42-18

Hasbro Inc. . .. .. .. .. .. .. .. .. HAS .. ... 35-28

Hillenbrand Industries Inc. ... .. .. HB ... ... 33-27

Tecumseh Products Co. ... .. .. .. .. TECUA . .. 53-40

USF&G Corp. . .. .. .. .. .. .. .. .. FG ... ... 20-13

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