Bargain Hunter

Green of Loomis Sayles is always looking for good deals

next pick, Carmike Cinemas (NYSE: CKE), the “WalMart of the movie theater business.” Not only does Carmike own 2,700 screens in 35 states; in 60% of its markets, it’s the only cinema in town. Even with that kind of leverage, the stock is cheap, currently selling at 15 times estimated 1998 earnings. Green says earnings should jump 22% this year and after that continue on an 18%-20% annual clip over the next five years.

Another favorite, Green says, is Compaq Computer (NYSE: CPQ), a steal at its current P/E of 16 times 1998 earnings. Recently, the PC and networking hardware maker has been trading at low levels because of worries over its Asia exposure and also because a new software package like Windows ’95 hasn’t come along to propel sales. Still, Green thinks the company is good for a 25% increase in earnings this year and around 20% for the next five years.

Pharmaceutical maker American Home Products (NYSE: AHP) was left at the altar when British drug manufacturer Glaxo backed out of their planned merger earlier this year. Green saw that move as a “go” signal, especially since AHP is trading at 25 times projected 1998 earnings, compared to 30 for its industry peers. Green says AHP has some great products coming up and should grow earnings at a 13% rate over the next five years. Besides that, the company still remains a takeover candidate, he says.

To round off his list, Green’s including a familiar name, Sears (NYSE: S). After trading as high as $65 last July, the Chicago retailer’s stock came tumbling down as worries rose over its rising credit card default rate. Green says the problem just wasn’t great enough to derail a company he thinks is well managed. Sears has since set its credit card business back on track, and with the stock selling at 16 times 1998 projected earnings, it’s cheap. Green sees Sears notching earnings growth of 12% this year, and 14%-15% over the next five years.

Attention Bargain Shoppers

(Exchange: Symbol)

Current
Stock
Price*

Est. 5-Year
Annual
EPS Growth

P/E

Hasbro (NYSE: HAS)

$34.94

13%

18

Carmike Cinemas (NYSE: CKE)

32.5

19

15

Compaq Computers (NYSE: CPQ)

26.25

20

16

American Home Products (NYSE: AHP)

91.75

13

25

Sears (NYSE: S)

56

15

16

* As of 3/30/98
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