A digest of investment opinion from the world's leading financial advisers.
In its brief two-year history, Sy Harding Investor Forecasts has produced some very impressive profits for its subscribers. Its Mutual Fund portfolio rose 48.7 percent. Its Short-term Trading portfolio jumped 59.3 percent. And its Options Trading portfolio cranked out a mouth-watering 189 percent gain on its original stake.And in its first ranking by Hulbert Financial Digest, the unofficial scorekeeper of advisory performance, SHIF placed sixth out of 114 advisories tracked, with an average portfolio gain of 5.8 percent for the first two months of 1990.
How does SHIF feel about the stock market now?
"We definitely see a trading market. When all is said and done, interest rates and earnings, or rather investors' expectations of same, drive the markets. We don't expect the Fed to raise rates dramatically because we're too close to a recession. But with rising international rates, our need to finance the deficit and those stubborn CPI numbers, it's unlikely we'll see any easing soon, either."
Harding believes there's a lot of risk in stocks now, but even more potential reward. That's because he feels any rally to all-time highs would force the substantial levels of sideline cash into the market, turning sentiment euphorically bullish.
Each month, SHIF screens and researches hundreds of stocks, selecting the few that meet its stringent criteria for the conditions of the moment. In each issue it spotlights the most promising, which it calls "Potential Overperformers." Here are the "Potential Overperformers" featured in its most recent issues.
MARK IV INDUSTRIES, a widely diversified manufacturer of technical products with a 40 percent plus annual growth rate and solid experience in foreign markets, is selling at only seven times earnings, notes SHIF, "despite its proven ability to use leverage as the wealth-building tool it's supposed to be, buying companies, keeping the cream, and selling off excess operations to multiply net worth many times over."
INTERACTIVE MEDIA TECHNOLOGIES is a "high-risk, development-stage company," SHIF admits. "But it also has great potential. It's developed the first-ever desktop video system, hoping to become to the video industry what Aldus became to the desktop publishing industry."
UNION CORP. is the nation's best-positioned bill collector, says SHIF. "As can be imagined, business is booming. Earnings are expected to double this year and grow 15 percent to 20 percent for the next several years. Long-term debt is virtually non-existent. Yet the stock sells at only 12 times earnings."
NATIONAL PRESTO has sold enough prosaic household items like can openers and pressure cookers to produce record sales, earnings and dividends in each of the past three years, notes SHIF. "Yet when you subtract the mountain of cash they're sitting on, you can buy their excellent business at a p/e of 6-to-1."
CONNER PERIPHERALS makes compact hard disk drives for laptop and notebook PCs. "New products, an expanding customer base and the rapidly growing laptop market should keep Conner on the fast track," SHIF predicts.
(Sy Harding Investor Forecasts, P.O. Box 352016, Palm Coast, FL 32135. Published every three weeks; $175 annually.)
Investor's Notebook reflects the opinions of professionals. It does not endorse specific investments, and no endorsement is implied or should be inferred. For more information, contact the individual firms cited. (C) 1990 Universal Press Syndicate 4900 Main St., Kansas City, MO 64112.