BETTING ON AVON, DOLE, AND SONAT
Avid market watcher Bill LeFevre, a perennial bull on the Dow Jones industrial average, has been one happy camper. His Dow picks--Philip Morris, Coca-Cola, and red-hot IBM--are among the big winners.
But with the Dow hovering around 6500 after a hefty 27% gain this year, has LeFevre turned cautious? Not quite. ''There's always a possibility of a 5% to 10% pullback along the way,'' he says, but he's forecasting a 7000-to-7200 Dow next year. As long as the economy continues at its slow pace, with inflation and interest rates low--and no debacle overseas--these goals are easy targets, he says.
Given the Dow's runup, LeFevre, who writes a newsletter, Monday Morning Market Memo, at Ehrenkrantz King Nussbaum in New York, has made a switch in his bets for 1997. He has gone out of the Dow 30 to hunt for winners.
This time, he's betting on three stocks he figures are way undervalued: Avon Products (AVP), maker and marketer of beauty products; Dole Food (DOL), the world's largest producer of fresh fruits and vegetables; and Sonat (SNT), an integrated oil and gas company that operates a natural-gas pipeline serving eight Southeastern states.
LeFevre thinks Avon will benefit from the emergence of China, Eastern Europe, and India. ''Avon's products are starting to invade these countries in a big way,'' he says. LeFevre thinks Avon, now 55, will hit 70 in 1997.
Dole should start to see its earnings rebound, now that it has left the real estate business by spinning off its holdings, including resort properties. LeFevre sees Dole, now at 37, climbing to more than 50 next year.
Sonat, he says, will keep upping production and adding to reserves. He thinks it's a bargain at 53. Sonat's focus on exploration will benefit from the Street's rediscovery of energy. ''It's in the right industry at the right time,'' he says. His target for the stock: 70.
BY GENE G. MARCIAL
Updated June 14, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.