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Storming the market: Magee Co. of Pocahontas a division of hot stock Tandycrafts Inc.

EMPLOYEES OF THE MAGEE Co., a manufacturer of picture frames with facilities in Pocahontas and Piggott, have a keen eye on the New York Stock Exchange.

Stock market followers are watching Magee's parent company, Tandycrafts Inc., with equal excitement.

Tandycrafts is undergoing one of those exhilarating, Wal-Mart Stores Inc.-like market explosions: a big run, a split, another run, an announcement of another split.

All that action in less than a year. Heck, it could be better than Wal-Mart.

It's the kind of movement that makes the average investor grimace and ask, "Why didn't I know about this company sooner?"

About 90 percent of Tandycrafts' 2,800 employees -- about a quarter work at the Magee Co. -- hold 60 percent of the company's shares. The Fort Worth, Texas-based Tandycrafts, with its five divisions, is an Employee Stock Ownership Plan (ESOP) company.

Fortune tagged Tandycrafts as 1992's best buy on the NYSE. The Wall Street Journal, The New York Times, Barron's and Business Week are among the many publications that have noticed Tandycrafts' recent success.

The company had earnings of $130 million in fiscal 1991-92 and projects $155-160 million by the end of this fiscal year in June.

For the stock investor, Tandycrafts has become a phenomenon.

A $1,600 investment in 100 shares of Tandycrafts a year ago is now worth almost $11,000. In just six months, a $2,200 investment would have increased fivefold.

With news of a second split in just four months, Tandycrafts has zoomed to a high of $53.25 a share as of Feb. 3.

Frank Bigger, president of the Magee Co., is seeing this surge pay off for many of his employees.

"The last time I looked at the market value of the stock these employees owned, it was well over $30 million," says Bigger, who marks his 25th anniversary with the company Feb. 9. "You just don't know how good that makes me feel."

A Major Part

Besides the Magee Co. division, Tandycrafts is parent to Tandy Leather Co., the leading leather craft retail store in the country; Joshua Christian Stores, a chain of 29 religious bookstores; Sav-On, a small chain of discount office supply stores; and a cargo furniture division.

The Magee Co. had sales of $7 million 10 years ago. By last year, sales had jumped to $45 million. Bigger says projections indicate $50 million this year.

"A lot of people are interested in Tandycrafts stock and we'd like to think we're partly responsible for its run up," Bigger says.

Several factors apparently are causing the rush on Tandycrafts.

Bigger and Mike Walsh, Tandycrafts executive vice president and chief financial officer, both note:

* the splits have made more shares available.

* recent quarters show impressive earnings.

* other than the struggling cargo furniture division, Tandycrafts' other divisions have been very profitable.

* Tandycrafts has restructured the cargo furniture division, making it profitable.

* the company purchased five more companies and continues to look at other acquisitions with a sound business philosophy.

Magee produces wood and metal picture frames for mass merchandisers such as Wal-Mart, Venture Stores and Michael's. Magee twice has been a Wal-Mart vendor of the year.

"We're unique," Bigger says. "We do not manufacture offshore or buy from overseas companies like our competitors. We make it here in Arkansas, which makes us without a doubt the largest picture framer in the U.S."

Magee produces 26 million frames a year, Bigger says.

"It's a very solid company," Walsh says. "It has good management, good employees and is steadily growing. It's a strong company and a major contributor for our total earnings."

The upcoming split on Feb. 25 will bring the total outstanding shares to 3.6 million. That's still a relatively small float compared with the 2.3 billion Wal-Mart will have after its upcoming split.

Tandycrafts is thinly traded with an average volume of 19,000 shares per day.

"It's definitely the kind of stock that individuals play," says Bill Smith of Little Rock's Smith Capital Management Inc.

No stock firms are following Tandycrafts. But the numbers are catching analysts' attention.

It's price-earnings ratio is a risky 94.87. But with estimated earnings of 91 cents per share for this fiscal year, its price-earnings ratio drops to 53, Smith says.

The Magee Co. became part of Charles Tandy's Tandy Leather Co. in 1968. When Tandy used his leather revenues to buy Radio Shack, he created Tandy Corp. In the mid-'70s, Tandycrafts was spun off from Tandy Corp. as a separate company.

Rachel and John Magee started the frame maker in 1956 in Corning and moved to Pocahontas in the early '60s.
Tandycrafts Inc.'s Surge
Date Price per Share
Jan. 1, 1992 $16
Aug. 22, 1992 $22
Sept. 30, 1992 $34
Stock splits 2-for-1
Oct. 4, 1992 $17
Jan. 22, 1993 $34
2-for-1 split announced
Jan. 25, 1993 $42
Feb. 3, 1993 $53.25
Feb. 25, 1993 split date
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Title Annotation:stock price increase
Author:Harris, Jim
Publication:Arkansas Business
Date:Feb 8, 1993
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