Investing with B.E - how the stocks touted in Dec 1992 performed - B.E. Money Management Special Section

Black Enterprise, Oct, 1994 by Rhonda Reynolds

Despite the fact that the Beaverton, Ore., firm has experienced its sixth annual record year of sales, stock watchers are questioning Nike's position in a perceived "collapse of consumer brands" market. At the same time, critics are speculating why Nike announced that 1994 earnings will grow at a slower pace than its original 15% target.

However, keep in mind that Nike continues to grow with an expanding overseas market, and it remains the most profitable company in a $30-billion sporting goods industry. Nike delivered 75 cent cash dividends per share. Right now, share prices are hovering around $61, up from $55 when we told you to buy it in 1992. A $1,000 portfolio invested in Nike back then would have accumulated to $1,542 today.

PARAMOUNT VIACOM INTERNATIONAL INC.

Finally, it's a done deal. At a disclosed amount of $8.2 million, Viacom International merged with Paramount Communications--and stockholders are still waiting out the tide.

CreditWeek, a Standard & Poor's rating service, downgraded the newly formed company's rating to "stable," since the merger increased the financial risk of both firms.

But Viacom, the cable king, plans to cash in on Paramount, which owns Madison Square Garden, the New York Knicks basketball team and the Stanley Cup Champion Rangers.

PEPSICO INC.

While claiming to offer the choice drink of a new generation, PepsiCo Inc. has shown evidence of diversification in three consumer markets: soft drinks, snacks and fast food. The company, based in Purchase, N.Y., is expanding into small, fast-growing categories by creating alliances with Ocean Spray to produce fruit drinks and Thomas J. Lipton Co. to market iced tea.

PepsiCo is ranked No. 2 in the $48 billion soft-drink industry, selling $539 million worth of Pepsi each week. PepsiCo's Frito-Lay unit dominates the $9 billion U.S. salty snack food market, snatching up a 45% share. And the company's KFC, Pizza Hut and Taco Bell fast-food restaurants contribute about 37% sales.

When PepsiCo announced that second quarter earnings would be flat because of competing private label sodas, some panicky investors hastily sold out. Ultimately, the stock fell from $42 to $30. However, Chairman Wayne Calloway refers to the stampede as "a short-term blip" and anticipates 1994 earnings to be better than last year's $1.6 billion.

Calloway further adds that the firm is "taking the necessary steps to return to double-digit earnings per-share growth." Right now, PepsiCo is selling for around $30, slightly down from $34, when we first recommended it. Since this stock took a hit, a grand invested a year ago would have sunk to $750.

PepsiCo's next step is to challenge Gatorade by pumping out its slightly carbonated All Sport soft drink. The company also plans to reformulate Crystal Pepsi to a citrus blend in hopes of boosting its popularity and sales.

RUBBERMAID INC.

"It ain't pretty, but it works," is the way that some people may describe Rubbermaid Inc. For decades, the Wooster, Ohio-based company has quietly acquired other companies and then slipped its own products into their former competitors' slot.