BW Online | May 7, 2001 | A Jiffy Stock Story

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MAY 7, 2001

INSIDE WALL STREET

A Jiffy Stock Story

Gene G. Marcial

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Chart: Revving Up the Engines

INSIDE WALL STREET

A Jiffy Stock Story

Will Viacom Be a Blockbuster?

Hotjobs May Start Lookin' Way Cool

To technicians--the analysts who chart a stock's daily gyrations--Pennzoil-Quaker State (PZL ) is an enticing stock that's about to break out to new highs. And to the pros who track fundamentals, this global automotive consumer products company is a turnaround story with appeal to both value and growth investors.

Andy Addison, a technician who heads his own advisory firm, says the stock has "formed a base" at 10 a share at the start of 2001 and has been pushing up since. Now at 14, "it could well hit 18 by the end of the year," he says. Insiders, he notes, recently have been buying shares. At J.P. Morgan H&Q, analyst Jay Wilson sees "solid fundamentals and attractive valuation" in the company which, he says, represent a terrific opportunity for growth, income, and value investors. Wilson says profit growth should average 40% over the next two years. And, he adds, the stock sports a hefty 5.7% dividend yield.

The company was formed when Pennzoil and Quaker State merged in 1998. It has since sold assets, including oil refineries in Louisiana, which are expected to net $133 million. The company has evolved from an integrated oil concern to one specializing in automotive consumer products. It now sells 1,300 items, including the top-selling Pennzoil and Quaker State motor oils, in 50 countries and operates 2,000 fast-lubrication Jiffy Lube and Q-Lube service centers. The asset sales will crimp revenues by about a third, says Wilson, but will improve margins and the quality of earnings. The proceeds will help Pennzoil-Quaker State reduce its $1.3 billion debt by at least $200 million by yearend, figures Wilson. The stock is trading at 13 times his 2001 estimate of 95 cents per share, and 9 times his 2002 estimate of $1.35 per share.

By Gene G. Marcial

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