"We simply can't envision even the remotest possibility that the serious economic conditions already irrevocably in place in this nation can lead to still higher stock prices," says The Richland Report (P.O. Box 222, La Jolla, CA 92038). "There's the S&L, bank, insurance company and real estate crises. Plus the recession, rising taxes, Persian Gulf and foreign aid costs. All of it can be summed up in one word - debt - none of which will be worked off very soon."
- The biggest mutual funds have turned in lackluster performances in recent years. But not Twentieth Century Select. T.C.S., the nation's eighth-largest stock fund, with $2.9 billion under management, has outperformed the general market eight of the past 10 years, rising an average 16.1 percent annually in the process. Select has managed this feat by sticking to well-known, large-cap stocks with above-average earnings momentum, such as Atlantic Richfield, Gillette, Johnson & Johnson, Eli Lilly, Philip Morris, PepsiCo, Schlumberger and Wal-Mart.- Most investors buy utility stocks for their current dividends. But few take into account an even more important factor, rapid dividend growth, says Utility Analyst (P.O. Box 15381, Chevy Chase, MD 20825). U.A. recently identified 37 utilities that have increased their dividends by 100 percent or more over the past 10 years. Six had current payout ratios below 50 percent, suggesting a strong potential for maintaining rapid dividend growth: Chillicothe Telephone, Great Falls Gas, Hickory Tech, Louisiana General Services, National Gas & Oil, Rhinelander Telephone.
- The safest stocks to own during a deepening recession, says John Tauer, research director of Piper Jaffray & Hopwood in Minneapolis, "are those of financially strong companies which make things people can't seem to do without." Tauer's favorite such defensive plays now: ConAgra (food), PepsiCo (food), Philip Morris (tobacco), St. Jude Medical (heart valves), SciMed Life Systems (catheters), Walgreen (drugs).
- No-Load Fund X (235 Montgomery St., Suite 662, San Francisco, CA 94104) is one of the best mutual fund timing letters around. According to The Hulbert Financial Digest, it has averaged profits of more than 14 percent annually since 1980 on its fund switch recommendations. Here are its five favorite funds, in five different categories, now: Financial Strategic Health (sector), Mathers (growth), T. Rowe Price International Bond (international bond), Scudder Income (income) and Vanguard U.S. World (international stock).
- The new "prime-rate" funds, which promise yields somewhere near those of the current prime rate, seem like a "bad new idea" to Donoghue's Moneyletter (P.O. Box 6640, Holliston, MA 01746). "Since they all come with sales charges, their break-even point is two years or more to earn a yield advantage over conventional money market funds. In addition, they're liquid only one day each quarter, and then only at the whim of the fund's directors."
- If you don't usually buy new stock offerings and your broker contacts you about one, be wary, cautions New Issues Newsletter (3471 N. Federal Highway, Fort Lauderdale, FL 33306). "It could well be a dud. Usually there's so much demand for promising new issues that brokers don't have to try to push them. Sometimes when you buy an unpopular new issue, however, it can help you get in on the next hot deal when it comes along."
Investor's Notebook reflects the opinions of professionals. It does not endorse specific investments, and no endorsement is implied or should be inferred. For more information, contact the individual firms cited.