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Inside Wall Street
A MIDEAST PEACE PLAY
Guess where some big investors are looking to bag winners. Israel. Yes, in spite of the political trouble, the betting is high that Israel is the place for fund managers seeking "hot foreign stocks."
One that has enticed some global funds is Israel Land Development (ILD), which has rapidly grown into a conglomerate--with operations in publishing, insurance, communications, hotels, and real estate. Sales jumped from $51 million in 1992 to $220 million last year. Earnings rocketed, too--from 4 in 1992 to 90 in 1993.
"It's a play on Mideast peace and the prospect of prosperity in Israel," says one manager. When ILD was first mentioned here in 1992, its ADR was trading, on a split basis, at 10. It rose to 30 early this year but is now at 22.
It has become even "more undervalued at current levels," notes Victor Halpert at Israel Equity Research & Management in Chicago. He puts the combined asset value of ILD at $35 a share. Based on earnings growth alone, he says, the stock is worth that. He expects earnings of $2.50 a share next year on revenues of $330 million, up from 1994's estimated $1.75 on revenues of $270 million. In the past six months, ILD has taken public its units that weren't yet publicly traded. The result: "It's now easy to evaluate the intrinsic value of ILD's assets," he says.GENE G. MARCIAL