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Show Analysts Are Closely Eyeing the January Barometer By Chet Currier Associated Press Writer NEW YORK As investment analysts try to assess the prevailing climate on Wall Street for 1984, many of them are keeping a close eye on the "January barometer." gait fal? tribune Their theory, as propounded by investment adviser Yale Hirsch, holds that "as January goes, so goes the year in the stock market. Business Monday Morning January 9, 1984 Section D Page 1 By Hirschs calculations, the direction that Standard & Poors composite index of 500 stocks has taken in January has foreshadowed its performance for the balance of the year 85 percent of the time since 1950. Dan Dorfman For example, the markets worst year in the past three decades, 1974, began with a 1 percent drop in January that extended to nearly 30 percent by the following December. The strong recovery of 1975, in which the market rose 31 5 percent, started out with a booming 12.3 percent January advance. Furthermore, Hirsch maintains that the first five trading sessions of a year also provide a good indication of how the roarket is likely to behave in the months that follow. These five days serve as an excellent early warning system with a batting average almost equal to the January barometers 85 percent," he says in his annual Stock Traders Almanac." This year, the initial five-daperiod concludes with Mondays session. The doctrine has gained a lot of followers over the years. As William LeFevre, analyst at Purcell, Graham & Co. observes, "With results like these, its no wonder that so many investors watch the first five days of Januarys market closely, and then the whole months results, for some clue as to the market's full year performance. There remains, however, a lot of disagreement over the usefulness of this indicator. Investment Horizons, a Chicago-basenewsletter, contends that "the January barometer appears to be more stock market folklore than fact. Over the last 58 years, it asserts, y d an investor who bought stocks every Feb. 1 and sold 11 months later would have enjoyed better results than one who pursued the same strategy only in those years in which prices rose in January. The indicators reputation certainly wasn't enhanced in 1982, when the market indexes fell in both the first week of January and the month as a whole. Seven months later, in t, the market began a historic rally that put it solidly in the black for the year. The record was much better last year, however, with a 3.3 percent January rise ushering in a 17.3 percent yearly gain. In any case, Hirsch maintains that the nation's political calendar pro- - vides some logical support for the particularly January barometer since the 1930s, when the Constitution was amended to set presidential inaugurations and the convening of new sessions of Congress in the first month of the year. As a result," he says, several vital events which greatly affect our economy and the future course of the stock market have been squeezed into January. It seems quite likely that if these most important events were switched to another month or at different times each year, the January barometer would sure-- , Hirsch ly lose its effectiveness, says. tv Bruce llainmond Duffy Seagram Tests Wine With No Alcohol Study Predicts Good Year For Smokestack America By Jonathan Greer Knight-Ridde- If youre one of the nations 42.5 million stock market players, chances are youve had your fill of stories focusing on the best stock ideas for 84. The reason: Youre confused. Who knows which Study Reveals European Investors Hold $100 Billion Equity in U.S. Companies The worst: Global Marine, which is expected to lose $1.28 a share this year, vs. an expected $1.39-- a share be-- ! lieve in profit namely power which companies are going to turn in the years most sizzling earnings a meaningful clue to 1984s gains stocks may be a from gleaned study conducted exclusively for this column. In brief, the study zeroes in on the companies (and industries) that are likely to be this and worst profit years best gainers. Granted, just about everybody expects Corporate America to turn in a strong profit performance this year. Still, given the uncertainties on the direction of interest rates and their ultimate impact on the the chances of earnings economy shockers (namely less than expected profits) are a clear possibility. Earnings Predictability Accordingly, it figures the institutional biggies will focus heavily on especially earnings predictability those companies that are likely to have the best profit gains. In this context, the top three profit stars of '84 signaling a big earnings rebound for Smokestack Amer- ica (the basic are an aluminum industries) bread-and-butt- er com- pany (Alcan Aluminium), a container producer (Stone Container) and a construction machinery firm (Clark Equipment). These names emerge from an analysis of the profit expectations of as gleaned from 2,900 companies 1,300 analysts at 84 leading brokerage firms. The study was undertaken by the folks at the Institutional Brokers Estimates System, a closely-watche- d g earnings-trackinservice of the Big Board brokerage firm of Lynch, Jones & Ryan. The IBES ground rules: A company must be the subject of at least three estimates; also, that estimate (for the year) has to be at least 50 cents a share. Profit Star Leader In terms of our three profit stars, Alcan Aluminium with a projected 334 percent 84 profit gain is the leader. The consensus of the Street estimates is a profit showing this year, vs. an estimated 81.03 a share in 83. Stone, the runner-u- p with an estimated 329 percent profit increase, is expected to earn $3.10 a share this year, vs. an expected 72 cents a share last year. Clark with a 286 percent prois expected to earn jected gain $3.29 this year, compared with an estimated 86 cents in 83. Rounding out the top 15 the projected 84 profit gain is in parentheses are Foxboro (245 percent), Signal Cos. (215 percent), Arrow Electronics (200 percent), Mead Corp. (192 percent), Research-Cot-tre- ll (182 percent), S.P.S. Technologies and Hyster (both 177 percent), General Datacomm and B.F. Goodrich (each 170 percent), Moore-Mc- $4.45-a-sha- re profit for 83. The runner-u- p on the dog list: Offshore Logistics, which is expected to turn in a 26 cents-- a share loss in fiscal 84, against a reported $1.50-- a share profit in fiscal '83. All told, the IBES study found 14 companies that are expected to turn in losses this year. In addition to Global Marine and Offshore Logistics, they are Varco International, Air Florida, Republic Air, Texas Air, Crutcher Resources, American Hoist & Derrick, Parker Drilling, Eastern Air Lines, American Quasar Petroleum, International Harand Digicon. vester, Dickey-Joh- n Rounding out the list of profit bummers their projected 84 declines are in parentheses are Atwood Oceanics (76 percent), Rowan Cos. (52 percent), Zapata (50 percent), Comdisco (33 percent), & Payne (26 percent), Apple Electronics Computer and (both 24 percent) and Reading & Bates (21 percent). Standard & Poors Companies As an adjunct to its analysis, IBES took a look at how Wall Streets analytical fraternity viewed the profit prospects of the companies that Stanmake up the closely-tracke- d k dard & Poors index. Over 100 industry groups are covered and IBES boss Stan Levine tells 84 is exme: No doubt about it pected to be a boom year. Based on the analysts estimates, the 500 S&P companies are expected to turn in a snappy 28 percent profit growth this year, vs. an expected 17 percent earnings gain last year. No industry is expected to lose offshore money and only one is seen turning in lower drilling profits (a 44 percent drop). Leading the way with the biggest Hel-meri- - NEW YORK (UPI) The Swiss own more equity in U.S. companies than any other European nation, but the British are more active traders. The French are hampered by currency controls and the Germans prefer bonds to stocks. Those are some of the conclusions of a study on European ownership of U.S. equity prepared by Ranier Ess-lea consultant to public relations firm. At the end of 1982, the study found, European investors probably held $100 billion to $130 billion in U.S. equity. It was not unusual for Europeans to invest up to 50 percent of their entire portfolio in companies outside their borders, the study said. 5 The Swiss held about per n, Burson-Mar-stell- 43-4- Alka-Seltz- er Hitachi said it would introduce its chip, technically called a 1 megabit dynamic random access memory large-scal- e integrated circuit, at the International Solid State Circuits Conference to be held in the Goes After NEW YORK (UPI) Americas favorite hangover remedy is out to change its image and become a status symbol for ambitious executives. A new advertising campaign stresses its role as a remedy for the pressures that come with overachievement. Tablets dissolve in a water cooler as an unseen announcer intones: For the junior executive who vowed to be vice president by the end of the fiscal year ... In advertising parlance, Miles Laboratories is hoping to reposition its headache and remedy. Its out with I cant believe I ate the whole thing, and in with the stress of success. No more bleary-eyeburping sybarites is a gulping fizzy water on the sly. In the new era, Alka-Seltzbadge of honor, right up there with an ulcer as proof that the bearer is a certified workaholic. More than a third of all American households have Alka Seltzer in the medicine cabinet, but most dont use it that often. The product, according to McCann-Erickso- n advertising agency, is a victim of the countrys new obsession with clean living. had a unique niche. It was associated primarily with overindulgence, said Paula Drillman, the agencys drector of research services. The problem was people werent doing that as much any more. In interviews with 600 antacid users last year, Ms. Drillman discovered an emerging hangover shortage people just didnt use it as often. The minority who consumed a lot of Alka-Seltzwere using it for other things for relief of outside pressure and stress, she said. of 1984 will be sold as the thing to take for the The woes associated with upward mobility: For those symptoms of stress that come with success. A second commercial depicts a corporate boardroom, where top executives quaff while listening to their boss outline his heady goals for the new fiscal year. Bruce Nelson, McCann-Erickso- n vice president, said he and Ira Madris, the companys two creative directors, were aficionados long before their agency got the account. At 3 p.m. when things started coming down hot and heavy, wed have an cocktail in front of us. "Its as refreshing as Perrier, added Madris. Their enthusiasm prompted a Miles Laboratories executive to interject that the product was not being promoted as an exotic soft drink. Were medicine. There should be a need for it, said Edward Gustafson, president of Miles Consumer Healthcare Division. Giving customers a new reason to use an old product standby is a traditional, but difficult task for marketing experts working in mature areas where growth cant be supported by a naturally expanding market. When steak consumption fell, A- Sauce was recycled into a hamburger topping. When people stopped baking with baking soda, Arm & Hammer began touting its product as a refrigerator deodorizer. Alka-Seltz- er upset-stoma- d, er expected industry earnings increases are aluminum (over 2,500 percent), truck parts manufacturing (499 percent) and airlines (376 percent). Expected Profit Increase Rounding out the top industry gainers with an expected 84 profit increase of over 100 percent are copper (312 percent), air freight (273 percent), paper containers (167 percent), semiconductors (142 percent), forest products (128 percent) and building materials (102 percent). folThe lowest industry growth lowing the expected loss of the offare electric utilishore drillers ties, up just 4 percent, the new telephone companies, as well as GTE Corp., up 5 percent, the New York City banks, up 10 percent, and life insurance, soap companies and brewers, up 11 percent. One concluding cautionary note from Levine: Analysts estimates are constantly subject to change, and no doubt a lot of the 84 earnings news both good and bad may already be reflected in the stock prices. The Chicago Tribune United States Feb. Random access memory means the chips data can be erased or otherwise altered at will, and dynamic-RAindicates the need to constantly recharge the memory with tiny electric impulses to keep the stored data from vanishing. A Hitachi official also said its new chip has not yet reached a commercially viable level, and Hitachi will initially introduce it only at the academic level. However, commenting on a local industrial newspapers report that Hitachi is likely to start commercial production of the chip around 1987, the official said, It is a possibility. cent of the European investments in U.S. stocks, Esslen estimated. But the British overtook Switzerland in total trading volume, accounting for $18.8 billion or 40.1 percent, compared to the Swiss $14.2 billion or 30.3 percent. The British jumped from 26 percent ($6.9 billion) in 1979, and Esse-le- n credits the surge to the Thatcher governments decision to end currency controls that had restricted investments in foreign securities since World War II. Currency controls are now restricting the French, who can use only profits from sales of foreign stock to make foreign investments. The total pool is pretty limited, Esslen said. They can buy only with An Executive Image 500-stoc- Alka-Seltz- er Alka-Seltz- er Alka-Seltz- Newspapers - er investment currency, which sells at a premium. The last time I heard it was more than 30 percent over the normal exchange rate. The restrictions dont stop the French from trading, he said. The trading volume has not fallen off. What has fallen off is the net purchases. The United Kingdom and Switzerland together count for well over 70 percent of the foreign trading in Europe, much of it on behalf of clients in other countries. The Swiss of course are managing substantial sums for other people, Esslen said. The Swiss are estimated to manage $400 billion worth of portfolio assets all told. $320 Billion Invested Since the total market value of Swiss stocks and bonds is only $80 billion, approximately $320 billion is being invested by the Swiss in foreign stocks and bonds. Esslen estimated about $128 billion of that is in equity, and about half in U.S. stocks. The British are investing for nonnationals too. One of the reasons for . the jump in the volume of British trading, Esslen said, is the growth of Londons role as an international investment broker. Esslen believes portfolio turnover rates are much higher in Britain than Switzerland, with the British more aggressive than the conservative Swiss. German investments are more closely guided by currency considerations than in most other countries, Esslen said. German institutions, he wrote in his report, have been known to clean out their portfolio entirely of holdings in a certain currency, including U.S. dollars, if the they expected a decline Deutschmark. Germans Prefer Bonds German holdings generally emphasize bonds rather than stocks, Esslen said. Belgian investors prefer high-yiel- d bonds, preferably Eurobonds that do not require withholding tax on interest. Esslen, who has served as a senior consultant to in Europe since his retirement from the firm, says the study may be updated in the spring, when 1983 figures are available. The study was based on an analysis of Treasury Department statistics, estimated portfolio turnover rates, information available in European countries and a 1980 Treasury report on foreign holdings of U.S. securities. largest distiller and second largest wine producer, has found a different niche to explore: wine. St. Regis Vineyards of Seagrams San Francisco is test marketing "St. Regis Blanc in several California cities and major cities in Arizona. Its the first time an American winemaker has tested the waters in this field, though Italian and Australian producers have already introduced similar products. wine actually contains a little alcohol, but its alcoholic content is less than .5 percent of total volume. Thats a far cry from the percent to 14 percent found in conventional wines. Not Grape Juice Dealcoholized wine isnt grape crushed, juice. Its regular wine fermented and aged that has had the alcohol removed. For two years, Seagram has been working on the process so the drink resembles table wine in color, aroma and taste. St. Regis is making the wine in Madera from French colombard and chenin blanc grapes and bottling the product at Paul Massons plant in Saratoga, Calif., about 50 miles south of San Francisco. Paul Masson is also owned by Seagram.. . St. Regis is using the same controlled heat process that Masson uses to make Masson Light, a wine with 7 percent alcohol. Ed Reiner, marketing director for St. Regis, wouldnt say how much wine the company has sold since the test started in ber. And, he refused to speculate on when the product would be released nationally. But he said Seagrams commitment to St. Regis Blanc is strong. Beverage Revolution Were seeing a whole revolution in beverages in the United States," he said. With the rapid growth of drinks, such as mineral water and wine vis-a-v- is Burson-Marstell- er -- ol ol coolers, Reiner predicted that youre going to see an expansion of the alternative beverage market in the next 10 years. Wine industry consultant Louis R. Gomberg called the a great development wine, Before the 1950s, the most popular wine was sweet dessert wine, containing 18 percent to 21 percent alcohol. During the 1950s, table wines, containing 10 percent to 14 percent alcohol, began replacing dessert wines as the most popular wine. In the late 1960s, pop wines made their first appearance, with alcoholic content between 8 percent and 10 percent. The Lambrusco style followed from Italy, with an alcohol content between 7 percent and 9 percent. Then, in recent years, California wine coolers a mixture of fruit juice and wine with an akohol content between 4 percent and 6 percent were introduced and favorably received. wine, Gomberg said, i? the logical extension of this trend. ol Alka-Seltz- Hitachi Ltd. Gives the World The First 1 -- Megabit Chip first TOKYO (AP) Hitachi Ltd. says it has developed the world's computer memory chip capable of storing more than 1 million characters, or 1 megabit. The most popular memory chip currently used is the 64K, which stores about 64,000 characters, although semiconductor makers are now commercially introducing a 256K chip that stores some 256,000 characters enough to fill about 6W pages of a newspaper. In semiconductor jargon, IK actually represents 1,024 characters, which could be a letter of the alphabet, a comma or a number. r SAN FRANCISCO Joseph E Seagram & Sons Inc., the nations dogs. expert is right? Well, if you Cormack (169 percent), PACCAR and Alcoa (both 166 percent). If you own a stock in the offshore bad news. This indrilling field dustry is expected to turn in the worst 84 profit showing of them all. And this is dramatically illustrated in a rundown of the projected profit -l 22-2- Last September, International Business Machines Corp. announced an experimental memory chip capable of storing about 512,000 u THE STATE OF UTAH INVITES YOUR BID ON THE FOLLOWING IMPROVEMENTS TO BE REMOVED OR DEMOLISHED Location: 6741 So. Highland Dr. all Bock dwelling with attached frame office and attached plastic add-obuilt on cement slabs: a frame shed located at rear of lot. All buildings and debns on lot shall be removed and backfilled according to Standard Road and Bndge Specifications. Cement slabs may remain In place. Fences at ' sides and rear of lot snail remain in place. Minimum Acceptable Bid: $0.00 Bond: $1,000 Negative Bids Considered Reference No. 897223 n, J Improvements to be removed by February 24, 1984. The Utah Department of Transportation will assume that each bidder will have made an inspection of the improvements and must accept same in the existing condition at the time the award is made. Bid For information and bid forms, cell Properly Management forms also available and will be received in Ftoom 2112, State Office Building, until 10 30 a m. January 24, 1984. CATHRYN COU.IS Director, Division of Purchasing CALL 965-424- 3. $ NOW mw!Imirji5Si w?? 968-900- 0 i |