Safety first

Seligman's Rodney Collins outlines an approach for a sound portfolio

settlement on the state or federal levels so Wall Street can quantify how the tobacco controversy will affect the company.” Beyond that, Collins likes its booming international sales.

Add Travelers Group (NYSE: TRV), the insurance giant that recently announced merger plans with Citicorp (NYSE: CCI), to Collins’ list. Even while plans are being readied to unveil a new financial behemoth called Citigroup after the union, Collins says Travelers offers a dividend yield of 0.8% (a little below his standards), and sells at a P/E of 16, compared to 19 or 20 for most financial institutions. “Together, these companies should see strong revenue growth once Travelers’ insurance products are sold through Citibank’s vast distribution network,” he says.

Low oil prices during much of the year mean integrated oil companies like Mobil (NYSE: MOB) look like a bargain right now. Add a yield of 3.2% and a P/E of 18, compared to 25 for the S&P 500, and you’ve got a winner in Collins’ eyes.

Finally, Collins says Washington Mutual (Nasdaq: WAMU), a West Coast financial company that operates savings and loans, looks particularly attractive. “The company has seized opportunities to expand by snatching up savings and loans in California,” he notes. Besides that, Washington Mutual offers a yield of 3.1% and sells at a low P/E multiple of 10. Collins says the company has worked to consolidate operations by eliminating branches that overlap with those of companies it has acquired. It has also come up with a number of savvy promotions, including free checking, to attract customers.

BANKING ON THE SAFE AND SOUND

Company Exchange: Symbol Current

Price*

Est. 5-Yr.

Annual

Growth

P/E Yield
Baxter International

NYSE: BAX

$57.19

17%

20

2.0%

Philip Morris

NYSE: MO

43.13

14

12

4.1

Travelers Group

NYSE: TRV

59.56

15

16

0.8

Mobil Corp.

NYSE: MOB

72.38

10

18

3.2

Washington Mutual

Nasdaq: WAMU

37.06

15

10

3.1

* As of 8/18/98
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