WorldCom Among Lehman's Annual '10 Uncommon Values' (Update1)
Bloomberg News
July 1, 1998, 2:25 p.m. PT
WorldCom Among Lehman's Annual '10 Uncommon Values' (Update1)
(Adds comment from Lehman's Jeff Applegate in 4th paragraph;
adds background on previous members of list in 8th and 9th
paragraphs.)
New York, July 1 (Bloomberg) -- WorldCom Inc. and Office
Depot Inc. are among the 10 U.S. stocks that Lehman Brothers Inc.
is betting on to outperform the U.S. stock market in the next
year.
The nation's fourth-biggest securities company today
published its latest rendition of ''Ten Uncommon Values,'' an
annually revised portfolio of stocks that includes the most
attractive companies in Lehman's research universe. In the first
full 48 years since its inception, the list returned an average
of 16 percent annually, Lehman said -- topping the Standard &
Poor's 500 Index's 9 percent return.
Also making the list in this go-around were Danaher Corp.,
Comverse Technology Inc., Applied Materials Inc., Clear Channel
Communications Inc., Illinova Corp., Progressive Corp., Star Banc
Corp. and Tyco International Ltd.
''Worldcom's combination with MCI should give them a global
leadership position in long distance and Internet businesses
which are growing pretty rapidly,'' said Jeffrey Applegate, chief
investment strategist at Lehman. ''We think (WorldCom) ought to
be one of the surviving and very profitable global players.''
Jackson, Mississippi-based WorldCom's stock is up 64 percent
this year and now carries a price-to-earnings ratio of 56; that
is, its stock at today's close of 49 3/4 trades for 56 times the
88 cents a share in earnings analysts expect WorldCom to report
for 1998. The average P/E for companies in the S&P 500 is about
24.
''Valuation is the name of the game in the eyes of the
beholder,'' Applegate said. ''As long as they continue to grow
earnings, we think it will stay at a very rich valuation.''
This year's list of ''Ten Uncommon Values'' represents the
50th installment. In conjunction with the anniversary, Lehman
will introduce a unit investment trust that enables individuals
to invest in the portfolio.
Not on this year's list, after making two straight
appearances, are America Online Inc. and Boeing Co.
America Online, the largest consumer online services
company, saw its stock almost quadruple in the last year. Boeing,
meanwhile, dropped 12 percent.
--Hal Paul in the New York newsroom (212) 318-2301.ltk/wm |
