Q-I own 200 shares of Ameritech. Should I hold, sell or buy more?
A-You’ve got a line on a good investment.
Buy more shares of Chicago-based Ameritech Corp. (around $41 a share, New York Stock Exchange), holding company for Bell companies in Illinois, Indiana, Michigan, Ohio and Wisconsin, because it’s one of the best-managed telephone carriers, advised Guy Woodlief, analyst with Dean Witter Reynolds Inc.
It’s placing the Ameritech corporate name on all subsidiaries to create stronger brand image. As the telecommunications industry continues to evolve, it will be helpful to have solid product and service identification.
“Ameritech is efficient at managing its network and keeping down operating expenses,” said Woodlief. “As regulatory and technological barriers fall, there will be many providers of telephone, cable television and multimedia services, but the ultimate winner will be the one with the lowest cost structure.”
Q-I’ve been hearing about a company called Boston Scientific. I like to take a risk once in a while. Any thoughts?
A-Buy shares of Boston Scientific (around $15, NYSE), a worldwide medical devices company that several decades ago anticipated the shift toward medical procedures that employ catheters, said Kurt Kruger, analyst with Hambrecht & Quist.
“Just like Madonna, Boston Scientific doesn’t watch trends, it sets trends,” said Kruger, noting that its cutting devices, balloon-tipped catheters and stents to prop open blood vessels and arteries are exceptional products. “Its growth rate slowed in 1993 in part because the Food and Drug Administration slowed down approval of such products.”
The worst is over, and there’s been an uptick in sales. An 18 to 20 percent growth rate is quite possible for the foreseeable future, Kruger said.
Q-I am retired and depend on income generation to cover living expenses. Should I liquidate or add to my holdings in T. Rowe Price Capital Appreciation Fund?
A-Stick with this conservative investment.
The $534 million T. Rowe Price Capital Appreciation Fund, based on current price and dividend yield, is an attractive bargain, said Eileen Sanders, analyst with the Morningstar Mutual Funds investment advisory. The fund’s one-year total return was 15.66 percent, its five-year average annual return 13.02 percent.
“Because it holds conservative, high-yield stocks, performance isn’t as affected by the market as the average growth fund would be,” said Sanders, noting that conservatism is also why returns haven’t been as dynamic as some others in the capital appreciation group.
T. Rowe Price Capital Appreciation Fund recently had 24 percent of portfolio in cash, 16 percent in convertible securities, 6 percent in bonds, 0.5 percent in preferred stock and the rest in common stock. Larger holdings include Monsanto, Polaroid, Overseas Shipholding Group and Loews Corp. This Baltimore-based “no-load” (no initial sales charge) fund requires a $2,500 minimum initial investment.
Q-I own 10 shares of Lawson Aircraft Co. Is it still in existence?
A-It was grounded in 1933.
This New York firm forfeited its charter at that time and your stock, unfortunately, is worthless, according to Robert Fisher, senior vice president with the New York-based R.M. Smythe & Co. stock-search firm.
Q-Would you advise me to hold or sell my shares in Gulf Canada Resources?
A-Gulf Canada Resources (around $3.50, American Stock Exchange), a Canadian oil and gas exploration and production company, should be held only by patient investors who realize better days may be three years away, counseled Sharon Conway, based in Chicago with A.G. Edwards & Sons Inc.
The company suffered losses on lower revenues, higher depreciation and low oil prices. A large block of stock is in the hands of a group of banks and will probably be sold, putting pressure on share price.
“Management made some assets sales and just issued a debt offering to prop up the balance sheet,” said Conway. “Higher natural gas prices and a 10 percent jump in 1994 production should help.”
Q-Please give me your recommendation on U.S. Bioscience.
A-Shares of U.S. Bioscience (around $9, AMEX), which specializes in development and commercialization of drugs to treat cancer and other diseases, are speculative, said Richard Wholey of Chicago-based Wayne Hummer & Co.
The company recently presented favorable data from a trial of its drug Ethyol, which protects tissue during cancer therapy, and began shipping NeuTrexen, a recently approved drug to treat infection in AIDS patients.
“Despite its unproven record and tough competition, this investment could prove rewarding long-term,” concluded Wholey.
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Andrew Leckey, whose column appears Sunday in Business, and Monday and Thursday in Your Money, answers questions only through the column. Address inquiries to Andrew Leckey, Chicago Tribune, 435 N. Michigan Ave., Chicago, Ill. 60611.
