Attracting The Right Suitor

How cable equipment maker Amphenol coupled up just right

If you thought Amphenol (NYSE: APH) sounded like a stock on the rise when it appeared in our stock-pile column last year, you weren’t alone. Kohlberg Kravis Roberts & Co. (KKR), the infamous New York takeover firm, apparently got the same idea in January, announcing a plan to buy out all but 10% of Amphenol’s outstanding shares. That news, coupled with noteworthy earnings gains, has been enough to propel the share price from $22 as of Amphenol’s appearance last March to $54.75 a share. All in all, shareholders have enjoyed a 149% increase over the year, a windfall that would have turned a $1,000 investment in the Wallingford, Connecticut, maker of fiber optic connectors and coaxial cable equipment, into $2,490 (if you kept all your shares at the time of the buyout).

To find out if there’s more of that kind of appreciation to come, we turned to Barbara Bowles, portfolio manager of the Kenwood Growth & Income Fund (888-536-3863), who recommended the stock. Thanks to stocks like Amphenol, Bowles’ fund was up 30.2% for the year as of the beginning of December 1997. At the time, Bowles said Amphenol made sense since heated competition in the telecommunications industry was forcing telephone and cable companies to improve their networks on the fly. Bowles says Amphenol’s tremendous run has left the stock a bit pricey. “I’d say the shares look fully valued at these levels,” says Bowles, who advises readers to take profits and sell the shares. And if you’re looking for somewhere to put the profits you reaped from that recommendation, Bowles says she likes Calloway Golf (NYSE: ELY, $27.44), a maker of golfing equipment that’s selling at a price-to-earnings ratio of 13, and should grow earnings at a 12%-15% average annual rate for the next few years. “More and more people are taking up the game, and Calloway makes many of the No. 1 products in the sport,” she says.

Amphenol .

AMPHENOL (NYSE: APH)
Current price: $54.75*
Price at recommendation: $22.00
Share price appreciation: 149%
52-week high/low: $56.63/$21.50
Earnings per share: $1.75
Estimated 5-year EPS growth: 19.5%**
* As of 1/7/98; **Source: Zacks Investment Research Inc.

ACROSS THE WEB