Thanksgiving stock menu traditionally light on turkeys

Investing

December 01, 1997|By Bill Atkinson

LEGG MASON Inc.'s research department has demonstrated once again that it has plenty of sharp stock pickers.

Last year, the department selected a dozen stocks for Legg's 19th annual Thanksgiving list, stocks that it would recommend to clients. As a group, those stocks have appreciated a hefty 64 percent in the last year as of Friday's close, excluding dividends. That was despite the performances of a couple of losers.

Last year's leaders included Regal-Beloit Corp., up 45 percent; Integrated Health Services, up 33 percent; and HealthCare Compare Corp., up 21 percent.

Don't look for anything flashy in the new picks. There are no Intels, Coca-Colas or Microsofts in Legg's 20th annual Thanksgiving list. The list includes companies that members of Legg Mason's research team think will reward investors with good performance. It's an eclectic group of companies, ranging from a firm that operates casinos to one that supplies braking systems to automotive companies.

Stewart & Stevenson Services Inc. is making an initial appearance on the list this year. The Houston-based company makes diesel-powered vehicles and compressor systems for the petroleum and airline industries, and distributes diesel and natural gas engines. The company's "tactical vehicle systems" division is humming. It recently delivered 865 trucks and has another 1,092 ready to go in the fourth quarter.

Stewart's stock trades at about $21. Legg's researchers think it could reach $30 a share.

"We expect shares of Stewart & Stevenson to sharply outperform the market over the next year," said a recent Legg report.

Another pick is Las Vegas-based Circus Circus Enterprises, which operates casinos and owns property in Nevada. It is trading for about $20 a share. Legg Mason's stock pickers think it could hit $32 a share.

Engaged in a less-glitzy business is Philadelphia-based CDI Corp., a management recruiter that also supplies clients with temporary staffs. Its specialty is providing technical staffing for telecommunications, engineering and information technology firms.

"Despite being in a rapid-growth industry, CDI's shares are selling at very attractive valuations," a Legg Mason report says.

Several companies that were on last year's list remain. They include Integrated Health Services Inc. of Owings Mills, one of the nation's largest home health-care providers; Downers Grove, Ill.-based HealthCare Compare Corp., which operates one of the country's largest preferred-provider organizations for the group health and workers' compensation needs of large, self-insured companies; and Finova Group Inc., a Phoenix-based commercial finance company.

Over the years since Legg's Thanksgiving list began, the list has been up an average of 26.2 percent a year, while the Standard & Poor's 500 stock index has risen 18.1 percent.

That is not to say every pick turns out to be a winner, of course.

Last year, the list included Columbia/HCA Healthcare Corp., the big hospital chain whose stock has plunged after revelations of Medicare fraud, the indictments of three midlevel managers and the ouster of its chief executive. The stock has slipped nearly 23 percent, to the $29 range, since Legg recommended it a year ago.

Other poor performers include those of book publisher Houghton Mifflin Co., down 28 percent to the $37-a-share-range; and Finova Group Inc., which is down about 28 percent to the $47 range.

Legg's Thanksgiving list operates under "buy and hold" rules. Once a stock is selected, it can't be removed from that year's list no matter what happens to it.

Highest-ranking among the stock pickers are Robert Frank, director of research; Richard Cripps, chief market strategist; and Judith M. DeHoff, supervisory analyst.

Legg Mason's 1998 picks

G=Company .. .. .. .. .. .. .. .. Symbol .. Price .. .. Target

American Mgmt. Systems .. .. .. AMSY . .. $20.13 . .. $32

Berkley (W. R.) Corp. * . .. .. BKLY . .. $40.63 . .. $45

BJ's Wholesale Club .. .. .. .. BJ ... .. $29.06 . .. $34

CDI Corp. .. .. .. ... .. .. .. CDI .. .. $41.63 . .. $50

Circus Circus Enterprises .. .. CIR .. .. $21.63 . .. $32

FINOVA Group Inc. . .. .. .. .. FNV .. .. $44.94 . .. $57

HealthCare Compare ... .. .. .. HCCC . .. $54.88 . .. $75

Independent Bank Corp. * ... .. INDB . .. $16.75 . .. $19

Integ Health Services ... .. .. IHS .. .. $32.00 . .. $42

LCI International . .. .. .. .. LCI .. .. $25.33 . .. $32

Lucas Variety PLC . .. .. .. .. LVA .. .. $32.50 . .. $49

Stewart & Stevenson Services .. SSSS . .. $22.62 . .. $30

Prices are as of Nov. 19 except American Mgmt., which is Nov. 20.

* Legg Mason makes a market in this security.

Pub Date: 12/01/97

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