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Indiana's 1989 all-star stocks; Hurco is the best-performing stock again.

Indiana's 1989 ALL-STAR STOCKS

Indiana stocks fared very well, thank you, in 1989's first nine months of trading. Following a pattern of strong gains in 1988 after the infamous October '87 crash, Indiana's public firms, in most cases, have added nicely to last year's gains. As was the case last year, small to medium-sized over-the-counter stocks showed the largest gains. Nine of this year's 10 top-performing Indiana stocks are from this group.

Two important points need be made about the top 10 companies. First, Hurco Companies, Inc., was the best-performing stock this year as it was in last year's post-crash analysis. That is an incredible story in itself and speaks most pointedly about Hurco's management team and its results for the past two years.

Second, four Indiana thrift stocks are included in the list of Indiana's top 10. That, in spite of all the negative national publicity about the problems in the thrift industry, presents a very positive picture of Indiana's thrift market-place.

The table tracks Indiana's 10 top-performing stocks from year-end 1988 through September 1989. Following are some thoughts on what happened in each company.

Hurco Companies, Inc.

Hurco again leads the list of Indiana companies, gaining more than 116 percent from the 1988 year-end price of 9 1/4 to trade at more than $20 a share. Consider that 1988's rise was even more spectacular (moving from 2 1/4 to 9 1/4) and you get the idea that somebody is doing something right at Hurco. Under the leadership of Brian D. McLaughlin and his management team, Hurco has done an about-face in two short years.

The company has dominant positions in several markets, has substantial order backlogs and, what is most important, has turned deficit earnings into very strong earnings gains. The stock trades in the OTC market under the symbol HURC and has attracted a huge institutional following.

The Wholesale Club, Inc.

The Wholesale Club operates a chain of cash-and-carry membership warehouses in the Midwest. From a humble beginning in 1983 with one warehouse, the company has grown to more than 20 locations. It has posted very profitable quarterly earnings in 1988 and 1989.

The company, under John F. Geisse, chairman and CEO, has been able to reverse the losses of its early years and still to expand its operations.

The Wholesale Club also appeared on last year's All-Star Stock list. The stock has moved up from a post-crash low of 3 1/4 in October 1987 and now trades around $16. It also trades in the OTC market under the symbol WHLS.

Conseco, Inc.

Carmel-based Conseco is a holding company that engages in the acquisition, ownership and operations of life insurance companies. The company believes that centralized management and economies of scale allow it to grow by acquiring large insurance firms rather than by producing new business. The company has utilized debt as its primary acquisition tool and finally seems to have made believers out of the investing public.

The stock, which trades on the New York Stock Exchange under the symbol CNC, now has moved up from $11 to trade above $18. Earnings have grown at such an incredible pace that some observers have questioned their validity. The market now seems comfortable with the stock and has finally given Conseco a vote of confidence.

Consolidated Products, Inc.

The company - better known to most by its primary division's name, Steak n Shake - appears as one of the state's top-performing stocks again in 1989, just as it did in 1988.

The company has more than 100 Steak n Shake units in operation and some 15 theme restaurants in the Midwest. Guided by a management team headed by E.W. Kelley, chairman, and James Williams, Jr., president and CEO, the company has posted two outstanding, back-to-back earnings years. Shareholders have been rewarded because the value of their shares has followed earnings increases and is up 60 percent in 1989 to the $12 level. Consolidated shares trade in the OTC market with a symbol of COPI. The company has a history of paying stock dividends to its shareholders.

Indiana Financial Investors, Inc.

Indiana Financial is the successor company to Indiana Mortgage & Realty Investors, a real-estate investment trust organized in 1972. The company now is an owner of various real-estate properties in Michigan, Ohio and Florida, totaling approximately $12 million. Indiana Financial is managed by its board of directors and has only two employees who conduct its day-to-day business. The officers and directors own more than 50 percent. The shares, which have moved up some 58 percent in 1989, trade at 8 1/2. The stock trades OTC under the symbol IFII.

McGill Manufacturing Co., Inc.

McGill is a Valparaiso-based manufacturer of bearings and electrical products. The company posted 1989 year-end earnings June 30 of $5.98 per share, up from 1988's $2.35 per share. In 1987 the company lost money. The company's stock, which trades in OTC markets under the symbol MGLL, enjoyed a 50 percent gain to $57 in 1989's first nine months.

In October, the company received a takeover bid from a Swedish concern, which it is fighting, of $72 per share. The company's shares have traded as high as $74 subsequent to the unwanted takeover bid.

The Thrift Stocks:

Valley Federal Savings Bank,

Terre Haute;

Shelby Federal Savings

Bank,

Indianapolis;

Home Federal Savings Bank,

Seymour; and

Railroadmen's Federal

Savings Bank,

Indianapolis.

No single group made a stronger showing in 1989 than did the thrifts. During the past six years, 13 different thrift institutions in Indiana converted from mutuals to publicly owned companies. During the past year, much attention nationally has focused on the substantial problems many thrifts have encountered. In Indiana, however, the industry bucked the national trend and prospered.

During the year, the much-discussed thrift "bailout bill" was passed. Many of the bill's provisions have proven very beneficial to local thrifts. The most important changes allowed thrifts to merge and banks to acquire them. All of these events prompted strong buying in local thrift stocks that at the time were very cheap in terms of book value and earnings power.

Thrifts such as Shelby Federal, Railroadmen's of Indianapolis and Home Federal of Seymour were bid up sharply as investors recognized the potential for these stocks in the new environment. One thrift, Valley Federal of Terre Haute, received a takeover bid of $11.50 from CNB Bancshares of Evansville. Valley had traded at $5 per share at year-end '88.

All in all, the Indiana thrifts were an excellent place to be positioned in 1989. The industry should provide additional opportunities in the years ahead.
 Table : COMPANY price price
 NAME year-end September percent
 CITY 1988 1989 increase
 1. Hurco Companies, Inc. 9 1/4 20 116


* Indianapolis

2. The Wholesale Club, 7 3/4 16 1/4 110

Inc. * Indianapolis

3. Valley Federal Savings 5 8 3/4 75

Bank * Terre Haute

4. Shelby Federal Savings 10 17 70

Bank * Indianapolis

5. Conseco, Inc. 11 1/8 18 62

* Carmel

6. Home Federal Savings 8 1/2 13 3/4 61

Bank * Seymour

7. Consolidated Products, 7 1/2 12 60

Inc. * Indianapolis

8. Indiana Financial 5 3/8 8 1/2 58

Investors, Inc. * Indianapolis

9. Railroadmen's Federal 11 1/8 18 56

Savings Bank * Indianapolis 10. McGill Manufacturing 38

57 50

Co., Inc. * Valparaiso

Bud Gremel is vice president of the trading department at City Securities Corporation in Indianapolis.
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Title Annotation:includes brief descriptions of Indiana corporations
Author:Gremel, Bud
Publication:Indiana Business Magazine
Article Type:directory
Date:Dec 1, 1989
Words:1237
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