News-Press from Fort Myers, Florida on May 12, 1991 · Page 75
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News-Press from Fort Myers, Florida · Page 75

Fort Myers, Florida
Issue Date:
Sunday, May 12, 1991
Page 75
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1 Mutual funds 3E NYSE ZZZZZ.4E Amex ZZ..5E Money market funds ""!!!Z5E NY bond market 7E NASDAQ and OTC 6-7E NEWS-PRESS BUSINESS EDITOR: HARRIET SIMPSON 335-0393, Mon.-Fri. 10-7 SUNDAY, MAY 12, 1991 DAM DORFMAN GANNETT NEWS SERVICE Market expert sees the Dow hitting 3600 hot hand thinks the market will get even hotter. In brief: The recent runup A in the Dow Industrials above 3000 was merely a practice run. We're in for a 3200 Dow by July and 3600 by year-end. That's the beat-the-drums outlook of investment advisor Al Frank, 61, head of Al Frank Asset Management and publisher of The Prudent Speculator investment newsletter out of Santa Monica, Calif. Frank, who manages roughly $13 million in assets, has clearly warmed up for the anticipated market marathon with a hot streak. His newsletter portfolio, he says, is up about 74 percent this year by being fully margined (buying on credit). That's roughly five-fold the rise in the Standard & Poor's 500-stock index. But even a bull who sees the Dow up 20 percent by year-end from its current level of about 2940 says you can't pick just any stock. So what do you do? "The big market play is still in smaller stocks," says Frank. He sees many up 20 to 30 percent within 12 months, on top of about a 30 percent rise this year in the NASDAQ composite home of most small fries. What's more, he sees these 7'2-year laggards-turned-loved ones beating the Dow 2 to 1 over the next two to three years. "They still have lots of catching up to do," Frank says. Big plus: He sees many showing earnings growth of 15 percent to 30 percent a year over the next three to five years, 1 2 to 2 times his outlook for the S&P 500 stocks as a whole. But Frank guessed wrong about the economy last year, and his passion for peewees saddled him with a 50 percent decline in 1990. "We didn't see a war or think the Federal Reserve would wait so long to ease," he says. Still, for the 92 years ended December 1989, his portfolio was a top performer up 423 percent, versus a 361 percent rise in the S&P 500. Here's why he's excited about the general market. Peppier than expected economic recovery, sparked by pent-up consumer buying. He expects stepped-up 4 percent to 5 percent growth in the gross national product in the fourth quarter, spilling over into early 1992. Most pros see less than 3 percent growth over this period. Falling interest rates. Frank sees them dropping even more, with 30-year Treasury bond yields dropping to 7.5 percent by year's end from roughly 8.2 percent now. Rising free reserves the money banks have on hand above reserve requirements. Industrywide, they're running at about $700 million, up roughly 45 percent from $478 million a year ago. This is a sign of growing liquidity, Frank says. Big pre-election potential. Dating back to 1936, the S&P 500 rose an average 24 percent in each 15-month period that began the second October after each presidential election. That's more than twice the S&P 500's compounded annual return in the past 55 years. Frank, of course, doesn't see the Dow reaching 3600 without a hitch. But at most, he sees periodic pullbacks of 4 percent to 7 percent. Here are his top picks, three- to five-year price targets and his earnings estimates for the next four quarters. He's a long term player so he doesn't look at potential prices in 6 to 12 months. Swift Energy (9 !8), an oil and gas player, is pegged as his biggest price gainer. It's trading at about 4.7 times its cash flow, about half the average price-to-cash flow ratio for the stocks that make up the S&P 500. It's also trading around 6.8 times earnings for the previous 12 months, versus an average of about 17.5 times earnings for the S&P 500. His earnings estimate: $1.50 a share. Three- to five-year target price: 22i2. He also likes aluminum producer MAXXAM (4412). which could be a big beneficiary of a rebounding economy. Big plus: Return on equity is 33 percent, double the S&P 500 average. It's trading at about 2.8 times earnings. Earnings estimate: $10 a share. Target price: $104. Here are other Frank favorites, plus their current prices and his three- to five-year targets in parentheses: American Reliance, 14 (32'2); SafeCard Services, 8 (18'2); Magma Copper, 5 (13); Varity, 2 (6), and Quantum Corp., 13 (32'2). His bottom line: The Dow may have wowed you but you ain't seen nothing yet. Dan Dorfman is a syndicated columnist. Union calls Green Giant 'ogre' for Mexico move By TONY KENNEDY Associated Press MINNEAPOLIS In the market for frozen vegetables, Green Giant is king these days. But some union officials accuse the Pillsbury subsidiary of being more like "a vicious mean ogre" because of a recent decision to move part of its operations to Mexico. Green Giant has been in the No. 1 spot in frozen vegetables for the past several months following 28 years in the shadow of industry pioneer Birdseye. The company today controls about 13.5 percent of the $2 billion frozen market, compared to Birdseye's 12 percent, according to data provided by Nielsen Co., which tracks consumer product movement. "They've made it to No. 1," conceded Birdseye spokeswoman Linda Eatherton. "I don't know if it's been a meteoric rise. But they are there." "It's something we feel pretty good about it," said Green Giant President Gary Klingl. But while management is singing the praises of the leaf-clad giant, plant workers in Watsonville, Calif., are facing the permanent loss of 380 jobs from their 490-member workforce. The plant's broccoli and cauliflower growing and cutting work earlier this year was moved to labor-cheap Irapuato, Mexico, a town of about 300,000 people which dumps raw sewage into its waterways. Labor leaders claim the expansion south of the border will undermine product quality and sully the wholesome image of the Giant and his elves. "We are trying to educate the consumer as to what the new Green Giant is," said Joe Fahey, president of Teamsters Union Local 9 1 2 at the Green Giant plant in Watsonville. "He's turned into a vicious mean ogre." Green Giant curtailed its Watsonville operations at a time when the community was reeling from a 13 percent unemployment rate brought on by earthquake damage. The move increased the Mexican work force to about 800. There are about 7,000 Green Giant workers in the United States, including sales, operations, management and plant workers. Labor groups angered by the exodus of production jobs have protested in Tokyo, a key market in Green Giant's overseas sales expansion; Minneapolis, where Pillsbury is based; and England, home of Pillsbury parent Grand Metropolitan PLC. Displaced Watsonville workers also announced a boycot in April against Green Giant, Pillsbury, Haagen Dazs and Burger King, which are owned by Grand Metropolitan. Labor's complaints are included in a video called "Dirty Business," which claims that Irapuato's polluted water is dumped on crops. The video also depicts laborers who toil at "Gigante Verde" for about $4 a day at ages as young as 11. Fahey said starting wages for the same jobs in Watsonville were $7.56 an hour, or $60.48 a day. Klingl, the Green Giant president, said production standards in Irapuato, with the help of chlorinated well water, are no different than at any other Green Giant plant. And no one as young as 11 works at the plant, he said. Green Giant pays above the approximately $3.50-a-day minimum wage in Irapuato and has plans to build a sewage treatment plant if the city does not build its own, Klingl said. Mexican farmers work under the same guidelines the company imposes on U.S. growers even though there are fewer farm chemical restrictions in Mexico, he added. Klingl admitted the cheap labor incentive of moving to Mexico is "obvious to everybody." But he said increased hand work and a better growing season will improve quality. "If we were trying to squeeze the last nickel and dime out of this thing, we wouldn't See GREEN GIANT, page 2E Am if mBM ) wf;fc (ft DEDE SMITHNews-Press Pete Scovill talks with general manager Chris Andrews on the set of one of WFTX's popular shows "Troubleshooter." n ton Some innovative TV programming moves WFTX up By CHRISTY BERG McCLURE here's a fox in the TV henhouse. WFTX-TV Channel 36, a station that didn't even exist six years ago, is showing the cunning nature of its parent network FOX with a locally produced show, Troubleshooter. The consumer affairs show recently beat out Oprah Winfrey, a national news program and a local news show in the February 1991 Arbitron ratings among viewers aged 25-54 in the 5:30 p.m. time slot. Troubleshooter's success coupled with the station's innovative programming and a lion's share of local commercial production has given the fledgling station in Cape Coral something to crow about in the local broadcast scene. In addition to Troubleshooter's success, the syndicated series of Golden Girls and the Arsenio Hall show also beat out most of their competitors among the 25-54 age group. Troubleshooter, which airs Monday-Friday, 5:30-6 p.m., rated 5.5 over WBBH's Oprah Winfrey (5.3); WEVU's ABC World News (4.6); and WINK'S Close-up News (4.5). Golden Girls, airing Monday-Friday, 7-7:30 p.m. got an 8.8 rating against WBBH's Jeopardy (7.6); WEVU's Entertainment Tonight (6.6) and WINK'S Inside Edition (6.4). Arsenio Hall, airing daily from 11 p.m.-midnight, tallied a 3.1 over WEVU's 11 p.m. News (2.1); WBBH's Tonight Show (2.1) and WINK's America Tonight (1.2). "Fox has been the emerging network for the past three years," said Chris Andrews, vice president and general manager of WFTX-TV. Andrews described the Southwest Station outlives dire prophecy By CHRISTY BERG MCCLURE Fox network was started in 1986 by Australian-born media mogul Rupert Murdock, who had previously acquired 20th Century Fox and a group of independent TV stations. Industry skeptics predicted failure for any fourth network pitted against the Big Three ABC, CBS and NBC. They labeled Fox as the 'coat hanger' network, referring to the homemade antennas used to bring in weak UHF stations. Fox's first attempts at broadcasting were troubled. Recall the 1986 Joan Rivers' late-night TV talk show that bombed in less than a year? Then, in spring 1987, Fox entered prime time with a single night of shows. Still, the network couldn't rise from the bottom of the broadcast-ratings pile. The network's chairman, Barry Diller, a former chief of Paramount Pictures, decided to make Fox a stage for the offbeat With the antics of the Tracey Ullman Show, Garry Shandling Show, and more recently, In Living Color and Married . . . with Children, Fox started to attract longed-for viewership. Fox got the teen-age audience with 21 Jump Street, and hooked Mr. and Mrs. USA with America's Most Wanted. Diller's experimentation and counterprogramming tactics paid off with higher ratings. Finally, The Simpsons, Matt Groening's animated family comedy (which began as inserts on the Tracey Ullman Show) debuted on Jan. 14, 1 990. Bart Simpson & Co., plus Fox's expanded programming made the fourth network a strong contender in the network-ratings game. According to a Time magazine report, Fox sold more than $550 million worth of advertising time this past season (1990-91 ), up from $300 million the prior season. By the end of last June,itannounceda$33 million profit. The Big Three networks continue to dominate the important arenas of news, sports and daytime TV. And, they still control the lion's share of the mass market with its billions of advertising dollars. However, the 5-year-old Fox has emerged as a healthy competitor in the million-dollar youth market, and appears to be gaining momentum in the overall ratings race. Florida broadcast community as one of "friendly competition." As reported by the National Association of Broadcasters, the competition is in pursuit of $35 million to $37 million in annual advertising revenues for the Fort MyersNaples market. How does WFTX intend to cut a larger portion of the TV ad-revenue pie? By going after the younger market. While many deem the Fort MyersNaples market as skewed to older adults, Andrews said WFTX has been successful "over the past two years catering to younger viewers." "A station has to define where it's going," she said. "By the very nature of television, there undoubtedly are viewers from 2 to 102 years old watching a station all day. That's the beauty of the medium. It has something for everyone." "However, a station must define in that broad range where to put its emphasis on programming," said Andrews. "We feel programming that appeals to the 25-54 viewer obviously will appeal to all." "Much of the national money that goes into this market is based on advertising See WFTX-TV, page2E founder back in the food business By IKEFLORES Associated Press LAKE MARY The man who introduced the world to "Chung King" Chinese food and "Jeno's" frozen pizza has cooked up another business venture. And he couldn't be more satisfied. After an unfulfilling run as a Florida developer, the 72-year-old Jeno Paulucci has returned to his roots in the food business with a new line of pasta-and-sauce dinners named after his late mother, Michelina. Paulucci says the product already has begun to show a profit. But it's too soon to tell whether he has PAULUCCI has another winning recipe on his hands. The short, stocky Paulucci, the son of an immigrant coal miner, has come a long way since starting out selling fruit from a stand in his childhood days in Duluth, Minn. His net worth today is estimated at $500 million. Paulucci founded Chun King Corp. in 1947 with a loan of $2,500, and sold it to R.J. Reynolds Tobacco Co. for $63 million in 1 966. . Jeno's was founded a year later and sold in 1985 to Pillsbury Co. for $147 million. Along the way, Paulucci founded other food-related companies. And in the mid-1980s became a real estate developer in central Florida. Paulucci created Heathrow, a luxury residential and business community near Orlando, and began wielding his considerable political and business clout to develop other enterprises. Among his successes was convincing the American Automobile Association to move its national headquarters from Falls Church, Va., into the Heathrow in 1989. But his first love has always been the business of food. At Heathrow, he started up a Pasta Lovers Trattoria and began franchising similar restaurants in big cities around the country. His Luigino's Inc. makes the sauces under Paulucci's direction so that "we can retain quality control." He was less successful with his Pizza Kwik and China Kwik ventures. They were attempts at setting up networks of independent restaurants to deliver hot Italian and Chinese food to people's homes. In effect, he tried to build two fast-food chains without building the restaurants. Paulucci found it tough competing against Domino's Pizza and later Pizza Hut delivery service. Smarting from those setbacks and restless in the softening real estate market in Florida, Paulucci returned to Duluth last year and set up a food production plant. In October, he began putting out a line of frozen food entrees based on Italian recipes. The single-serving sizes, plus a family size that serves six people, are in direct competition with low-calorie, low-cholesterol products put out by Stouffer's, Campbell's, H.J. Heinz, Budget Gourmet and others. Michelina's pasta and lasagna entrees began making money the first month, Paulucci said. They are now in more than 10,000 stores across the country, and Paulucci expects this to increase to 15,000 retail outlets by the end of the year. Starting with some old contacts at supermarkets in Florida such as Publix, Goodings and Winn-Dixie, he convinced executives to go along with "a new marketing style" that would guarantee low prices for the consumer and make the stores more money than they could get with highly advertised brands. "I said, 'We're going to give you the best product at the lowest possible prices. And I'm going to promote like hell through you. I want displays, I want sales signs. I'll give you hot demonstrations, pamphlet ads, but everything we do has got to be in your store.'" Some store managers were reluctant. "I said, 'Well, don't buy. That's the policy I have to follow."' Because of this policy, Paulucci says, he was able to price his 10 entrees from $1.39 to $1.49 for the 9-ounce to 10-ounce servings. During promotions, the products are sold at 99 cents each and return a 19 percent profit to the retailer. 3

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