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Show STOCK POINTS INVESTMENT PLUS Out of necessity investors in common com-mon stock must include many factors in the selection process. Some important impor-tant criteria include an analysis of the specific firm and its securities, as well as the market(s) served. Moreover, it's critical to have a perspective on the economic climate and the relative prospects for financialmonetary markets. Accordingly, these considerations, taken together, should be melded into the appraisal process and consequently consequent-ly suited to the objectives of a portfolio. port-folio. Other determinations should involve in-volve earnings and dividend growth rates, financial strength, and any other amenities indigenous to a company. com-pany. This type of analysis is quite proper. However, the substantial bull market dating back to mid-August 1982 provides another potential profit factor as rising stock prices favor a spree of stock splits in 1983. Stocks have frequently advanced in anticipation anticipa-tion of a split, or even at the time when a split is announced. Longer term, though, it's most advantageous to pay careful heed to the fundamentals. ADDED FEATURE The principal benefits of a stock split flow to the issuing company, but the process of splitting a stock oftentimes can yield other intangible results. First and foremost, the reason why a company com-pany splits its stock is the desire to keep the issue actively traded. Price levels are a consideration, and naturally moderately priced issues are more accessible to a large number of smaller investors. Indeed, at lower price levels, it's much more likely for buyers to purchase pur-chase round lots, i.e., in lots of 100 shares, which is preferable to odd-lot buying. Admittedly, there are differing differ-ing points of view, but some investors believe stocks which split are good buys. Also, issues trading on high price plateaus may be a limiting factor in many decision processes. Hence, the wider accessibility of common stock at advantageous price levels achieved through splits can be an attractive added feature. NO SET PARAMETERS While price can play an interesting role in the decision to purchase, in the final analysis price is not the absolute determinant in the marketability of an issue. Keeping in mind the advantages of accessibility previously mentioned, there are no set parameters for when a stock is split. In the past, issues have been split below the $50 mark as well as up in the $100-and-above territory. Generally speaking, though, issues in the latter price range have split while they are moving up in price and projections favored continuing price gains. Also worthy of note, the split ratio does not have to be 2-for-l, but could be any multiple thereof. Another consideration, con-sideration, a split is often accompanied accom-panied by an expansion in the dividend, divi-dend, which is a bullish influence. Lastly, a split can signify that a firm is growing and, as a consequence, its shares have risen in price to a point where a split is justified. SOME CANDIDATES The Dow Jones Industrial Average is limited to a modest number of companies com-panies even though it is frequently representative of a much broader spectrum. In 1982, none of the Dow's 30 industrial component stocks split. However, given the market's lengthy rise since mid-August 1982, a few of the industrials have split this year no doubt reflecting the substantial boost in trading prices. The Research Department of Bab-son's Bab-son's Reports looks for more splits to occur in the last half of 1983. In fact, issues which appear to be in a position to split include Anheuser-Busch, Borg-Warner, Borg-Warner, IBM, Lockheed, Merck & Co., NCR, Standard Motor Products, Tandy, Tan-dy, Teledyne, and West Point-Pepperell. Point-Pepperell. Many have been recommended recom-mended for purchase by Babson's in the past at lower levels. |