Which way's up?

Business, North Carolina, Jan 01, 1999 by Frew, Alex

RF Micro Devices Inc.

RF Micro makes products for wireless applications such as cellular and cordless telephones, industrial radios, local-area-networks, and security and utility-meter-reading systems. All these areas are growing very rapidly. RF Micro has increased production capacity dramatically and will double it in 1999. It's still a small company but has outstanding upside potential.

Unifi Inc.

Billy Moore, Unifi's CFO, epitomizes good cash-flow management. Unifi's automated accounts-payable system saves time and money, and its investment in equipment has made it a textile world leader. Unifi's inventory turnover of 10.6 in a year is more than twice the 4.0 norm. The stock is not much above what it would take to replace the infrastructure. Unifi recently omitted its dividend, smart during a downturn. The textured-polyester-yarn joint venture with Burlington Industries looks like a winner.

Cone Mills Corp.

Cone Mills' export success has much to do with Levi Strauss & Co. Other customers such as The Gap Inc. and V.F. Corp. and a return to ring-spun denim bode well. Cone, which makes some 450 varieties of denim at nine plants in the Carolinas, has a vast advantage because of its long-standing heavy use of technology. Weak foreign currencies make this a contrarian play, but Cone's stellar record making products such as Levi's 501 jeans makes it a great one. Its home-furnishings division, which prints fabrics for some popular drape and upholstery makers, adds to the long-term appeal.

Lance Inc.

It looks like CEO Paul Stroup's cost cutting and downsizing will pay off. This is not a Microsoft but still one of the world's greatest defensive stocks. Does anybody make as good a cracker as Lance? Pricing pressures from larger competitors have crumbled earnings, but a generous dividend and a cheap stock price bode well. The balance sheet is debt-free, cash exceeds $60 million, the work force has been cut 15% and its property in Charlotte is worth a fortune. It seems like every year Lance goes to the mid-$20s, and if you buy in the teens, you'll make money.

Speedway Motorsports Inc.

Speedway owns racetracks in Charlotte; Atlanta; Fort Worth, Texas; Sonoma, Calif.; and Bristol, Tenn., controlling eight of 34 Winston Cup points races. Racing has an extremely loyal fan base willing to spend whatever it takes to attend their favorite race. NBC recently entered the competition for broadcast rights. Speedway is the next big player to negotiate TV contracts and just completed a Turner Sports pay-per-view event at the October race in Charlotte. Growth will continue through ticket sales, and Speedway is improving the Atlanta, Texas and California tracks.

Lowe's Cos.

Lowe's is the second-largest U.S. do-it-yourself retailer, with more than 450 stores in 26 states. It continues to be very aggressive in growth. It has entered main competitor Home Depot's back yard and been very successful at winning business. It will continue to expand in Texas and farther west. Earnings have been growing around 20% a year and could pick up with new markets. Lowe's also plans a line of private-label tools and accessories under the brand Cobalt, to be made by Snap-on Inc. Other private-label items will come later. This all provides good growth potential.