Q-What are your thoughts on Deere & Co.? As a lifelong farmer, I have always been impressed with the quality of its machinery. Should I invest in this company?
A-Many experts consider this manufacturer of farm and construction machinery to be a smart investment play on the revitalization of Eastern Europe.
Because its current high price reflects that logic, short-term investors should only buy stock of Deere & Co. (around $63 a share, New York Stock Exchange) on price weakness, advised Robert Bernstein, analyst with Edward D. Jones & Co. However, longer-term prospects for the stock are extremely positive, he believes.
”My recommendation on Deere is strongly based on potential benefits the company will derive from the emerging Eastern European markets, where new construction and more advanced agricultural machinery is needed,” said Bernstein. ”Deere`s reputation for quality is worldwide, and, following a difficult period for the farm industry, its recent strong farm equipment sales prove that.”
Q-I have held on to my shares of BankAmerica Corp. in hopes that problems would be solved. Should I hold, sell or buy more?
A-Despite well-publicized problems of the past, you should now be able to bank on this stock.
Stock of California-based BankAmerica Corp. (around $27, NYSE) is worth holding or buying because the bank is a survivor that seems to have put behind it the possibility of bankruptcy, said James Rosenberg, analyst with Shearson Lehman Hutton Inc.
”BankAmerica turned its situation around with a healthier loan portfolio and increased emphasis on consumer loans, mortgage lending and credit cards,” Rosenberg added. ”Furthermore, even though the housing market is soft in California, this is unlikely to affect the stock adversely.”
Q-My broker has been strongly recommending purchase of a stock called Marsh & McLennan and says it is a very large insurance company. I have not heard anything about this company and would like to know what you think of it as an investment.
A-Despite a runup in price, this stock offers a policy for success.
Marsh & McLennan Cos. Inc. (around $77, NYSE), one of the world`s largest insurance and reinsurance brokers, provides benefits and compensation consulting and investment managing services as well.
Its stock is worth buying because the company is well-positioned, with about one-third of its business in the profitable reinsurance field, said Herbert Goodfriend, analyst with Prudential-Bache Securities Inc.
”Although Marsh & McLennan`s stock has gone up based upon expectations for strong 1990 earnings, it`s still a good buy,” Goodfriend said. ”Any positive surprises in other segments of the insurance business will only enhance its stock price.”
Q-My wife inherited 100 shares of Bishop Industries Inc. Is this corporation still in existence and, if so, do the shares have any value?
A-This manufacturer of cosmetics and toiletries had a distinct scent of failure.
Bishop Inc., which was incorporated in New York and recorded its last office location as Union, N.J., hasn`t been in business for years, according to Robert D. Fisher, vice president with the New York-based R.M. Smythe & Co. stock-search firm.
”The company was declared bankrupt in 1974,” Fisher said. ”Your stock, which hasn`t been traded since that year, is worthless.”
Q-What are your thoughts on Old Spaghetti Warehouse stock as an investment?
A-Old Spaghetti Warehouse Inc. (around $15, over the counter), which develops, owns and operates casual family-style restaurants serving moderate- priced Italian food, is a stock with some promise, said Sharon Conway, based in Chicago with A.G. Edwards & Sons Inc.
With 13 restaurants from New York to Texas, the firm`s earnings per share are up based on new restaurant openings, wider profit margins, price increases and a computerized labor management system.
”A franchising program is in the offing but on hold until a settlement is reached on litigation involving its name and logo,” said Conway, noting that yet another company-owned restaurant is scheduled to open soon. ”There is always risk in a business that deals with the public, but Old Spaghetti Warehouse seems to be doing a creditable job, and its future looks good.”
Q-I am 65 years old and will be receiving a full distribution from my company`s pension plan next May. The pension plan is 50 percent government securities and 50 percent stock. Since I do not need the money at this time, I would like to roll it over into my own portfolio so I can invest directly. Will there be any adverse tax consequence because of this rollover?
A-So long as you roll over your lump sum distribution into a qualified account 60 days after you receive it, it won`t be taxed, said James Schlesser, tax partner with Deloitte & Touche.
”The IRS defines lump sum distribution as all of your pension plan and no percentage less, and defines a qualified account as an individual retirement account,” Schlesser explained. ”You won`t be taxed on the money until you begin to take it out of the IRA.”
Q-I have been holding shares of CoreStates Financial since 1985. Is this a well-run company, and does it have a good future?
A-CoreStates Financial Corp. (around $42, over the counter), a multibank holding company whose main subsidiary is Philadelphia National Bank, is a high-grade stock with fine growth prospects, said Richard Wholey of Chicago-based Wayne Hummer & Co.
This company has an excellent record of growth in earnings, dividends and share price, with an extremely low percentage of problem loans as well.
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Andrew Leckey, whose column appears Sunday, Monday and Thursday, answers questions only through the column. Address inquiries to Andrew Leckey, Chicago Tribune, 435 N. Michigan Ave., Chicago, Ill. 60611.
