PaineWebber predicts consumer economic comeback over the next decade; Chief Investment Strategist Ed Kerschner names 50 stocks that will benefit.NEW YORK--(BUSINESS WIRE)--Sept. 12, 1995--In a call that is contrary to popular opinion, PaineWebber's Investment Strategy group, led by renowned Wall Street strategist strat·e·gist n. One who is skilled in strategy. Noun 1. strategist - an expert in strategy (especially in warfare) strategian market strategist - someone skilled in planning marketing campaigns Ed Kerschner, predicts that the consumer sector will drive the economy in the coming decade -- an important trend which is outlined in the firm's new investment report "Consumer Comeback." "Despite what you may have seen reported recently about stagnant stagnant /stag·nant/ (stag´nant) 1. motionless; not flowing or moving. 2. inactive; not developing or progressing. wages and the 'death' of the consumer, our candidate for the major economic driver over the next decade is the consumer sector. In fact, it will lead both the government and corporate sectors as workers finally reap the benefits of the corporate restructuring of the 1980s and early 1990s," asserts Kerschner. "The role of 'economic driver' has rotated rotated turned around; pivoted. rotated tibia see rotated tibia. among these three sectors for the last half century, and neither the government nor the corporate sector stands to dominate over the next decade," Kerschner explains. "The trend in government is toward privatizing and downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing . And the corporate restructuring of the last decade has resulted in highly productive corporations that can't get much leaner, restricting the level of growth in this sector." "Corporations can afford to raise wages to get skilled workers, thanks to strong productivity growth, low unit labor cost increases and slower benefits inflation," Kerschner continues. "Added to this, the demand for labor will be healthy as the nation avoids a severe recession, and the supply of laborers will grow more slowly than in the past two decades, since women and 'baby boomers' have already entered the workforce. The combination of these factors will produce a 'consumer renaissance' -- as consumer incomes rise more rapidly and the savings rate Savings rate Personal savings as a percentage of disposable personal income. rises, interest rates will be pushed still lower. Consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. will also rise, albeit more slowly than incomes." New Trends Will Present Investment Opportunities Kerschner -- a 20-year veteran in the industry who is widely recognized as one of the leading strategists on Wall Street -- identifies six trends that will characterize the "Consumer Comeback," creating a new set of opportunities for certain industries and companies. "When the consumer leads the economy, consumer stocks outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. . However, an 'older and wiser' John Q. Public is not the 'ebullient youth' of the 60s, nor the 'conspicuous consumer' of the 80s," says Kerschner. "The interests and needs of the 'older and wiser' consumer will dictate which sectors and companies stand to benefit." For example: - As income inequality rises, companies that serve the extreme high or low ends of the market should do better than those that serve the middle. Some examples of high-end retailers that should benefit are St. John Knits and Starbucks, while Wal-Mart and Price/Costco are poised for growth on the low-end. A retailer that caters to the middle market and proves to be an exception to this rule is Federated Connected and treated as one. See federated database and federated directories. Department Stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. , an excellent consolidation play. As this rising income inequality becomes a hot topic in Washington, lawmakers will encourage individual home ownership for the middle class, increasing business opportunities for Fannie Mae Fannie Mae: see Federal National Mortgage Association. and MGIC MGIC Mortgage Guaranty Insurance Company MGIC Montana Geographic Information Council Investments. At the other end of the spectrum, more affluent families will trade up to larger, more expensive homes, a plus for home builder Toll Brothers. Automakers, such as Ford, Chrysler and General Motors, and companies that supply to automakers -- including Tower Automotive Tower Automotive Pink Sheets: TWRAQ is a manufacturer of automobile frames based in Novi, Michigan. The company is currently the world's largest manufacturer of vehicle frames. , Eaton and Masland -- all stand to benefit as a result of affluent consumers splurging when they buy new vehicles. Because they now view them as investments to be held for a long time, upscale suburbanites want their vehicles fully loaded. Finally, as the consumer sector improves, the newspaper industry should enjoy stronger growth in classified ads and display ads by retailers, a plus for A.H. Belo, Gannett and Central Newspapers. - As "baby boomers See generation X. " age and become more affluent, they will spend more money on jewelry jewelry, personal adornments worn for ornament or utility, to show rank or wealth, or to follow superstitious custom or fashion. The most universal forms of jewelry are the necklace, bracelet, ring, pin, and earring. , helping companies like Zale and Tiffany Tiffany, Tiffanie (UK) a semi-longhaired version of the Burmese cat. It has a fine, silky coat in many colors. ; on entertainment, a boon Boon A general term that refers to a benefit or improvement for investors. This can include such things as increased dividends, a stock market rally and stock buybacks. Notes: to Disney, Time Warner Time Warner Inc. (NYSE: TWX), formerly known as AOL Time Warner, is the world's largest media and entertainment conglomerate headquartered in New York City, with major operations in film, television, publishing, Internet service and telecommunications. and Viacom; and on books, which is positive for Barnes & Noble. They will also pursue a desire to travel, a plus for LodgeNet Entertainment Corp., and they will maintain a "health kick," benefiting General Nutrition Centers General Nutrition Centers or GNC is a Pittsburgh-based American commercial enterprise focusing on the retail sale of health and nutrition related products, over the counter drugs, and foods/food supplements world-wide through GNC branded stores. . A sensible source of career clothing which also should profit from baby boomer baby boomer also ba·by-boom·er n. A member of a baby-boom generation. Noun 1. baby boomer - a member of the baby boom generation in the 1950s; "they expanded the schools for a generation of baby boomers" boomer spending is The Men's Wearhouse Men's Wearhouse (NYSE: MW) is the largest men's dress apparel retailer in the United States. The company is based in Houston, Texas, and is publicly traded on the New York Stock Exchange. The company was founded by George Zimmer in 1973. . - As the over-75 segment of the population experiences rapid growth, several industries are poised for growth, including nursing homes, a plus for Integrated Health Services health services Managed care The benefits covered under a health contract ; the home health care market, bullish Bullish Word used to describe an investor's attitude. Bullish refers to an optimistic outlook, while bearish means a pessimistic outlook. bullish for Apria Healthcare Group; ambulance services, a plus for Rural/Metro and American Medical Response American Medical Response, Inc. (AMR) is the largest private ambulance provider in the United States. AMR and EmCare are wholly owned subsidiaries of EMSC L.P., an emergency management company held by the investment firm Onex. AMR is based out of Greenwood Village, Colorado. ; and funeral services funeral service n → misa de cuerpo presente funeral service n → service m funèbre funeral service funeral n , such as Service Corp. Also, as affluent baby boomers purchase retirement homes for their parents in adult communities in the Sunbelt states, Del Webb Delbert E. Webb (May 17 1899 - July 4 1974) was an American construction magnate, real estate developer and sports-team owner who is significant for founding and developing the retirement community of Sun City, Arizona. Corp. should profit. - As baby boomers spend more money to make their homes comfortable, housewares house·wares pl.n. Cooking utensils, dishes, and other small articles used in a household, especially in the kitchen. superstores This is a list of superstores by country. Multi-national
U-shaped stainless steel or vitallium units with sharp points used for surgical fixation. epiphyseal staples used to staple epiphysis to metaphysis; have metal bracing at the corners. and Officemax. Other companies positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. this trend are personal computer companies, such as Compaq, Hewlett-Packard, Intel and Microsoft; consumer companies that market their products via computer, such as CUC International CUC (Comp-U-Card) International Inc., a huge membership-based consumer services conglomerate with travel, shopping, auto, dining, home improvement and financial services offered to more than 60 million customers worldwide based out of Stamford, Connecticut and headed by Kirk ; and cellular phone companies, including Motorola and the Paging Network. - As the South continues to enjoy economic prosperity and an increase in political influence, country western culture will become more mainstream. This trend will be bullish for Thomas Nelson Thomas Nelson may refer to:
UST Underground Storage Tank UST University of St. Thomas (Minnesota, Texas) UST University of Santo Tomas (Manila, Philippines) Inc. and Circle K. - As incomes rise at a faster level than consumption, savings rates should also rise, a plus for firms that offer financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. to affluent consumers, including Fifth Third Bancorp and Republic New York Republic New York Corporation was the holding company for the Republic National Bank of New York and the Safra Republic Bank. The company was controlled by billionaire Edmond Safra, who was killed in a fire in his Monte Carlo penthouse apartment in 1999. Corp. PaineWebber Inc. is one of the nation's leading full-service securities firms, serving the investment and capital needs of a worldwide client base. Among the firm's key businesses are: private client services, research, investment banking, asset management, transaction services, and institutional equity and fixed income sales and trading. Headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , the firm employs more than 16,100 people in 325 offices worldwide. -0- -One Table Follows- Media Alert - For a copy of PaineWebber's new report, "Consumer Comeback," reporters should contact the firm's public relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most department at 201/902-6760. -0-
The Consumer Comeback 50
PW 8/29/95
Company Symbol Rating Price
American Medical Response(2) EMT buy $ 27 5/8
Comment: Ambulance services to benefit from rapid growth in
75+ population
Apria Healthcare(1) APRA buy 26 7/8
Comment: Home healthcare services to benefit from rapid growth
in 75+ population
Barnes & Noble(2) BKS attractive 39 5/8
Comment: Aging boomers are big buyers of books
Bed, Bath & Beyond(1) BBBY neutral 25 9/16
Comment: Heavy spending on household furnishings and equipment
by 45-54 age group
BellSouth Corp.(3) BLS attractive 67 7/8
Comment: Good telecom play on fast-growing South
Belo A.H. BLC buy 34 1/4
Comment: Strong growth in classified ads, help wanted, display
ads by retailers
Carmike Cinemas(2) CKE attractive 20 3/4
Comment: Entertainment company benefiting from prosperity of
country western consumer
Central Newspapers ECP attractive 28 3/8
Comment: Strong growth in classified ads, help wanted, display
ads by retailers
Chrysler Corp.(2,3) C attractive 52 7/8
Comment: Less frequent, but more costly and profitable auto
and truck purchases
Circle K(2) CRK buy 19 3/4
Comment: Convenience stores located across fast-growing South
Compaq Computer(3) CPQ buy 46 1/8
Comment: Continuing rapid growth of home PC sales
CUC International CU attractive 34 3/8
Comment: One of few consumer companies well-positioned to sell
products via computers
Del Webb Corp.(a) WBB not rated 19
Comment: Growing number of senior citizens moving to active
adult communities
Disney (Walt)(3) DIS neutral 56 3/8
Comment: Big spending increase on entertainment by aging
boomers
Eaton Corp. ETN attractive 52 3/8
Comment: Increased auto content of expensive components
Federal National Mortgage(2,3) FNM buy 96 3/4
Comment: Government trying to increase home ownership by
middle class
Federated Department Stores(3) FD buy 27 1/4
Comment: Best positioned player in constricted, consolidating
middle of retail market
Fifth Third Bancorp(1) FITB buy 56 1/8
Comment: Offers affluent customers financial services,
investment advice
Ford Motor(2,3) F attractive 30 1/8
Comment: Less frequent, but more costly and profitable auto
and truck purchases
Gannett(2,3) GCI attractive 53 3/8
Comment: Strong growth in classified ads, help wanted, display
ads by retailers
Gaylord Entertainment GET attractive 26 7/8
Comment: Entertainment company benefiting from prosperity of
country western consumer
General Motors(2,3) GM attractive 47 1/4
Comment: Less frequent, but more costly and profitable auto
and truck purchases
General Nutrition Centers(1,2) GNCI attractive 41
Comment: Aging boomers spend heavily on vitamins and health
foods
Hewlett-Packard(3) HWP attractive 77
Comment: Continuing rapid growth of home PC sales
Integrated Health Services IHS buy 29 1/4
Comment: Nursing homes to benefit from rapid growth in 75+
population
Intel Corp.(1) INTC buy 58 7/8
Comment: Continuing rapid growth of home PC sales
LodgeNet Entertainment(1) LNET buy 9 3/4
Comment: Aging boomers' increased consumption of
entertainment, propensity to travel
Masland(1) MSLD attractive 14 1/2
Comment: Increased auto content of expensive components
The Men's Wearhouse(1,2) SUIT attractive 30 3/8
Comment: Good place to buy "work-clothes" with minimum of fuss
and expense
MGIC Investment Corp. MTG buy 55 1/8
Comment: Government trying to increase middle class home
ownership
Microsoft Corp.(1) MSFT buy 91 7/8
Comment: Continuing rapid growth of home PC sales
Motorola(3) MOT buy 73
Comment: Cellular phones indispensable to home office workers
Officemax OMX attractive 24
Comment: Rapid growth in number of home office workers
Paging Network(1) PAGE buy 38 3/4
Comment: Many home office workers also use paging as well as
cellular phones
Price/Costco Inc.(1) PCCW attractive 16 7/8
Comment: Warehouse club format attracts impecunious consumer
Republic New York Corp.(2) RNB buy 53 3/4
Comment: Offers affluent customers financial services,
investment advice
Rural/Metro Corp.(1) RURL buy 24 1/4
Comment: Ambulance services to benefit from rapid growth in
75+ population
St. John Knits(2) SJK attractive 45 5/8
Comment: High-end designer, manufacturer, retailer of up-scale
women's apparel
Service Corp. International(3) SRV buy 34 1/2
Comment: Rise in number of older Americans will lead to
increase in death rate
Staples Inc.(1,2) SPLS attractive 25 3/4
Comment: Rapid growth in number of home office workers
Starbucks Corp.(1) SBUX attractive 38
Comment: With rising incomes, consumers willing to pay up for
gourmet coffee
Thomas Nelson(2) TNM attractive 24 3/4
Comment: Leading publisher of Christian books that appeal to
country western consumer
Tiffany & Co.(a) TIF not rated 42
Comment: Consumers in 45-54 age group biggest buyers of
jewelry
Time Warner(3) TWX buy 42 3/8
Comment: Big spending increase on entertainment by aging
boomers
Toll Brothers(2) TOL not rated 18
Comment: Affluent families to trade up to more expensive homes
Tower Automotive(1) TWER buy 12 13/16
Comment: Increase auto content of expensive components
UST Inc.(3) UST attractive 28 1/8
Comment: Smokeless tobacco particularly popular in South
Viacom(3) VIA buy 48 5/8
Comment: Big spending increases on entertainment by aging
boomers
Wal-Mart Stores(3) WMT attractive 25 1/8
Comment: Discount store business attracts impecunious consumer
Zale Corp.(1) ZALE attractive 14 1/8
Comment: Consumers in 45-54 age group biggest buyers of jewelry
(a) This company is not rated by PaineWebber but is followed by the analyst as part of his industry research. PaineWebber has limited its analysis to the specific topics addressed in the report and, as is the case with all unrated securities, recommends neither purchase nor sale. (1) PaineWebber Inc. makes a market in this security. (2) PaineWebber Inc. has acted in an investment banking capacity for this company. (3) A subsidiary of PaineWebber Inc. acts as a specialist that makes the market in this security. At any given time the specialist may have a position, either long or short in the security, and as a result of the associated specialist's function as a market maker, such a specialist may be on the opposite side of orders executed on the floor of a national securities exchange. CONTACT: PaineWebber Inc. Sarah Mullen Luke, 201/902-6760 or Kekst & Co. Jeffrey Z. Taufield, 212/593-2655 |
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