Inside Wall Street
WHERE CASINOS PLACE THEIR BETS
Albuquerque's Medallion Investment Management is sure to grow--no matter what the stock market does. The reason: It manages assets for Native Americans. More than half of Medallion's $150 million belongs to just one nearby tribe. Another tribe, which runs a gambling establishment, has agreed to let Medallion manage $10 million--for a start.
Where does Medallion invest? Says Laree Perez, president and CEO: "Growth stocks are the only way to win the long race, regardless of how fickle the market gets." Medallion's mainstays are familiar blue chips such as AT&T, Exxon, and General Electric. But of late, Perez has been buying shares of lesser-known growth companies: Cardinal Health (CAH), Franklin Electric (FELE), and SunAmerica (SAI).
Cardinal Health is a wholesaler of pharmaceuticals, hospital supplies, and health-and-beauty aids. Its stock has been rising, and John Ulrich, Medallion's managing director, sees Cardinal earning $2 a share this year and $2.45 in 1995, up sharply from last year's 86 cents. The company sells some 50,000 items to about 15,000 independent and chain drugstores. Ulrich expects the stock, now at 44, to hit at least 55 in a year.
Franklin Electric is the world's largest maker of submersible electric motors--used primarily for pumping water from wells but also for oil drilling, waste-water systems, and underground fuel tanks. It recently acquired a 50% stake in Oil Dynamics, a maker of deep-well pumps. Trading at 31, Franklin's stock may hit 45 in a year, says Perez. She figures earnings will be $2.90 a share this year and $3.50 in 1995, vs. 1993's $2.37.
SunAmerica is an insurance company specializing in tax-deferred annuities. "It's a convenient savings vehicle for aging baby boomers," says Perez. Given some people's aversion to stocks, "these tax-deferred products have become quite attractive," she explains. Perez thinks SunAmerica will continue its fast growth, earning $4.40 in the year ending Sept. 30, 1995, vs. 1994's $3.58. Perez sees the stock, now at 35, perking up and reaching 50 in 12 months. MEDALLION'S PICKS
52-WEEK 52-WEEK RECENT P-E
STOCK HIGH LOW PRICE RATIO
CARDINAL HEALTH 48 1/4 33 13/64 45 18
FRANKLIN ELECTRIC 37 24 1/2 31 10
SUNAMERICA 46 1/4 33 1/2 35 7.4
DATA: BLOOMBERG FINANCIAL MARKETS, MEDALLION
GENE G. MARCIAL