Slower earnings growth is a negative for the stock market, says Lehman Brothers' Global Economics (3 World Trade Center, New York, N.Y. 10285). "But the current slower growth isn't being accompanied by two other traditional bearish factors: higher interest rates and signs of a recession. These two factors normally appear before a bear market, but aren't expected for a long, long time."
- T. Rowe Price New Horizons Fund (800-638-5660) maintains a constant balance between risk and return. It looks for growth stocks, but not excessively priced ones. It concentrates on sectors, but diversifies widely by issue. And it draws heavily on the expertise of other Price fund managers. This evenhandedness has produced exceptional 26 percent average annual returns over the past five years, with risk scores equal to the average small-stock fund's. Recent favorite stocks: Paychex, Sungard Data Systems, Adobe Systems, Paging Network, Catalina Marketing, Sanifill.- Finding reasonably-priced stocks is increasingly difficult in this frothy market. But one sector that is definitely on the bargain counter is retailing. Here are eight retailing stocks that, according to the Institutional Brokers Estimate System, recently sold for less than eight times this year's estimated earnings, vs. 14 times for the Standard & Poor 500: Cole National, Old America Stores, Rhodes, Roberds, Sun Television & Appliances, Ultimate Electronics, Waban, Wolohan Lumber.
- How can investors get relatively high dividends, with safety, in this pricey stock market? The Franklin Rising Dividends Fund (800-342-5236) concentrates on stocks with payout ratios under 65 percent of net income, all of which have raised dividends at least eight times in the past decade. Seven stocks in its portfolio recently met these criteria and had above-market yields: Philip Morris, Wilmington Trust, Superior Surgical, Kimball International, Safeco, Genuine Parts, Selective Insurance.
- Bond investors will have a hard time achieving double-digit returns this year, notes Barron's (800-544-0422) Andrew Bary. "The benchmark 10-year Treasury would have to fall to under 5 percent to produce total returns over 10 percent. That has happened only once in the past 20 years. It would have to fall to 4.5 percent in 1997 to produce another 10 percent total return."