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Inside Wall Street
O COME YE TO BETHLEHEM
Everyone is looking for the ignored, undervalued stock. But it takes guts to
plunk down money on a stock that's down and out of favor. Investment pro
Larry Rice makes a fine living doing just that: With gusto, he goes after
unwanted stocks--those he thinks will be the next darlings of the mutual
funds. One such stock he likes: Bethlehem Steel (BS).
Rice is snapping up shares even though Wall Street types are nearly
unanimously bored with the steel industry. "Bethlehem doesn't make memory
chips or new drugs--there's no sex to the Bethlehem story," he says. But
Rice, chief investment officer and director of research at Josephthal Lyon &
Ross, is bullish nonetheless.
Why? He thinks the stock, which has been meandering around the mid-teens,
will hit the 20s in 6 or 12 months. It's trading at 14 a share--not far from
its 52-week low of 13 5/8. But, says Rice, Bethlehem "has downsized,
upgraded its mills, and become very competitive with steel producers here and
He expects the mutual funds will go after steel stocks when they realize
that the world economic outlook is brightening. Contrary to popular belief,
Rice adds, demand for steel will firm up along with prices. Zachs Investment
Research sees Bethlehem making $2.58 a share in 1996 and $1.77 this year, vs.
1994's 35 cents.BY GENE G. MARCIAL