Question--What's your opinion of the stock of Albertson's? It's been taking a beating the last year.--J.R., Chicago
Answer--Bigger hasn't been better for Albertson's sharholders.
Despite some recent improvement, the giant grocery company saw its stock price decline 34 percent over the past 12 months, understandably raising the ire of shareholders such as yourself.
Yet it continues to be an aggressive company in a a rapidly consolidating industry. Its 1999 merger with American Stores added Jewel/Osco, Acme Markets, Sav-on and Osco Drug Stores to make it the nation's second-largest food and drug retailer behind Kroger.
While merger costs have been significant, Albertson's contends the synergies provided through the merging of the two businesses resulted in a cost savings of $60 million in the fiscal quarter ended Feb. 3, 2000. Quarterly sales for the combined company rose 5.7 percent over the previous year's results for the two entities, with especially encouraging results in California.
Albertson's, based in Boise, Idaho, now operates nearly 2,500 retail stores in 37 states. It has more than 220,000 employees.
The consensus recommendation on Albertson's stock is between a "buy" and "hold," which is below average, according to the Boston-based First Call research firm. That currently consists of three "strong buys," two "buys" and nine "holds."
Earnings are espected to grow 18 percent this fiscal year, compared to 20 percent for the food industry. Earnings are projected to increase 16 percent next fiscal year, with its five-year annualized growth pegged at 14 percent.
The company recently voted to increase its regular cash dividend from 18 cents to 19 cents a share, marking its 29th consecutive year of increases.
In other developments, Albertson's and 10 of the world's leading food, drug and discount chains recently unveiled a Web-based exchange to share information and cut costs. In addition, Albertson's purchased three Tennessee stores from Jitney Jungle Stores of America Inc. Large holders of Albertson's sock include Washington Mutual Investors, Investment Company of America and Legg Mason Vallue Fund.
Question--I'm carrying credit card debt and want to pay the lowest interest possible. I don't want to keep looking for new "teaser" rates every few months. What's the lowest rate on a card? How hard is it to get these cards?--D.K., via the Internet.
Answer--Not only are credit card rates on the rise, but more and more card issuers are moving to variable rather than fixted rates. Worse yet, it's getting tougher to obtain the lowest-rate cards.
"In order to get a rate of less than 12 percent, you'll likely have to have impeccable credit with absolutely no late payments and not owe more than 20 percent of your gross income on credit cards," said Robert McKinley, chief executive officer of CardWeb.com Inc., which tracks card rates. "Some of the lowest-rate cards reject 95 percent of applicants."
The best rates on no-fee standard credit cards, according to McKinley, were recently Wachovia Bank (800-241-7990), with a variable rate of 10.9 percent; AFBA Industrial Bank (800-776-2265), with a variable rate of 11.9 percent; and USAA FSB (800-992-9092), with a variable rate of 12.9 percent.
The best deals on standard cards with annual fees were Wachovia, with a variable rate of 9 percent and annual fee of $88; Chase Manhattan (800-400-2414) with a variable rate of 9 percent and $49 annual fee; and Huntington National Bank (800-480-2265), with a vairable rate of 9.75 percent and annual fee of $35.
All six of those cards have a 25-day grace period for payment.
Question--I bought Berger Growth Fund for my retirement last year. What's your opinion of this mutual fund?--M.G., via the Internet
Answer--It's a fund that emphasizes volatile technolgy, which we have learned this year sometimes has its downside.
The $2.1 billion Berger Growth Fund (formerly known as Berger 100 Fund) gained 52 percent over the past 12 months to place it in the upper one-fifth of all large growth funds. However, its three-year annualized return of 30 percent ranks below the midpoint of its peers.
There's management intrigue: Previous manager Pat Adams was dismissed a year ago after periods of weak performance due to small-cap and financial stock miscues, with managers Tino Sellitto and John Jares taking over. Sellitto, who also runs Berger Growth & Income Fund, has reportedly been unhappy with the leadership of the Berger Funds, and his future career intentions are uncertain.
"You must have some reservations about Berger Growth, since good stock-picking over the past year is too short of a period to make a determination," said Ernesto Chavez, mutual fund analyst with the Morningstar Mutual Funds investment advisory. "The fund is more mainstream than it used to be because it holds large-cap stocks, though a lot of them didn't become large-caps until fairly recently."
More than half the fund's assets are in technolgy, followed by services and health care. Its biggest stock holdings were recently Microsoft, Genentech, Cisco Systems, America Online, Nokia, Yahoo!, Clear Channel Communciations, Motorola, Qualcomm and VeriSign. This "no-load" (no sales charge) fund requries a $2,000 minimum initial investment.