Beware of buying into hype around `hot' IPOs

The Ticker

June 02, 2000|By JULIUS WESTHEIMER

Do initial public offerings tempt you? Be careful. Working Woman, June, says, "Hype aside, `hot' new issues aren't always what they seem. Ninety percent of hot deals go to big institutions, and the remaining IPOs offered to individuals are the riskiest of all. Rule of thumb: You probably don't want any IPO you can get shares of."

After being bounced around in this wild market, many investors are looking for conservative growth stocks. The American Association of Individual Investors Journal lists these choices: Sara Lee Corp., J. C. Penney Inc., Texas Utilities Co., Allstate Corp., Host Marriott Corp., Office Depot Inc. and Sears, Roebuck & Co.

"Investors can buy shares of clothing manufacturers at steep discounts," says Forbes. Under "Out of Fashion," the article lists Jones Apparel Group Inc., Liz Claiborne Inc., Nautica Enterprises Inc., Polo Ralph Lauren Corp. and Tommy Hilfiger Corp.

WEDDING BELLS: "Talk over your finances with your future spouse," says Financial Perspectives. "Financial conflicts - not low income - are the major cause of divorce. Be honest about your debts, spending habits and how household money will be managed."

WALL ST. WATCH: "The high-flying tech stars may lead the next rally, but the investor who buys solid core growth stocks at reasonable prices will receive the best `total return' over the next five years." (Michael Sivy in Money, June)

"The threat to Cisco is very real. Cisco's market share for high-end routers sold to telecom carriers dropped from 86 percent to 79 percent over the past five years." (Raj Mehta, analyst, RHK Telecom)

"Cisco Systems Inc. and Oracle Corp. both trade at over 100 times earnings, four times the P/E ratio of the average S&P 500 stock." (CNBC-TV)

"Companies with a steady record of raising dividends generally provide superior price appreciation." (Charles Babin, investment adviser)

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