Q-My wife and I own shares of Johnson Controls Inc. We’re considering purchasing additional stock, but I understand Johnson lost one of its major battery accounts. What’s your prognosis?
A-It didn’t lose just any battery account. Effective Oct. 1, it is without the Sears DieHard battery account for the first time in half a century.
Johnson Controls Inc. (around $53 a share, New York Stock Exchange), maker of batteries, control systems, automotive seats and plastic beverage containers, will suffer a $185 million financial jolt in fiscal 1995 from the DieHard loss. Exide Corp. will now be providing batteries to Sears.
As a result, Johnson’s battery business will likely be restructured and downsized, predicted Eli Lustgarten, managing director with PaineWebber.
“I’m neutral on Johnson Controls stock because, although it has good, sound businesses in automotive seats, controls and packaging, the way the battery business has turned out is disappointing,” said Lustgarten, who expects 15 percent growth next year, followed by 10 percent for several years.
Q-I have a large investment in Phoenix Balanced Fund Series. It is my only investment and I was wondering if I should take some out and invest elsewhere.
A-Recent performance of this conservative fund has been only so-so. But no matter what the returns, it always makes sense to diversify your holdings.
The $3 billion Phoenix Balanced Fund Series, down a little more than one-half of a percent over the past 12 months, had a three-year average annual return of 6.64 percent. It recently held approximately one-third of its portfolio in stocks, with a like amount in money-market instruments and bonds. Some large stock holdings have been Texaco Inc., General Electric, PepsiCo and McDonald’s Corp.
“You think that, given the large amount of cash it has, this defensive fund would have weathered the storm a little better than it has,” observed Catherine Voss Sanders, analyst with the Morningstar Inc. investment advisory, noting that the fund ranked in the bottom quarter of balanced funds over the past 12 months.
“Since Phoenix Balanced has lagged in market rallies due to its cautious nature, you’d have really expected it to do better in the down market.”
The fund requires a 4.75 percent “load” (initial sales charge) and $500 minimum.
Q-Should I hold shares of Smucker’s? It pays a decent dividend and seems to be a stable company.
A-Things are getting sticky for this famous company.
J.M. Smucker Co., Class “A” (around $23, NYSE), leading manufacturer of jams, jellies, preserves and marmalades in this country, acquired the Mrs. Smith’s frozen pie operations of Kellogg Co. this year.
Unfortunately, the jam and jelly categories have been declining for some time and the frozen pie business has flattened due to the rapid growth of in-house grocery store bakeries.
“Long-term positives are Smucker’s dominance of its category, its ability to gain market share against private labels and the fact that it historically hasn’t had to rely on price increases,” said David Rabinowitz, analyst with Kidder, Peabody. “But, given the lack of growth in its industry, I can’t recommend much more than a neutral rating on the stock.”
Q-I have a certificate for five shares of the Carlisle Tire Corp. Do they have value?
A-Unfortunately, prospects went flat.
Carlisle Tire Corp., incorporated in Delaware in 1919 with a manufacturing plant in your own hometown of Stamford, Conn., claimed to have a miracle process for manufacturing tires that was much more economical than conventional methods.
The process, whose formula has long since been forgotten, didn’t work. Carlisle went bankrupt in 1923, and its charter was revoked in 1926.
Your shares have no value, according to Robert Fisher, senior vice president with the New York-based R.M. Smythe & Co. stock-search firm.
Q-I’m considering stock in U.S. Robotics. Is this company a solid investment for the future?
A-U.S. Robotics (around $34, over the counter), despite a significant increase in revenues, suffered a drop in stock price due to a rise in its receivables and inventories. The stock has since recovered on expectations of continued excellent earnings.
The firm is a technology leader in the modem and network access equipment markets and expected to overcome its temporary problems.
“U.S. Robotics’ technology is constantly being updated and management holds a large position in the stock, both of which indicate a solid investment,” said Sharon Conway, based in Chicago with A.G. Edwards & Sons. “It indeed looks to be a stock for the future.”
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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.
