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Cruise industry looks good in '90s

Steve Halpern regularly reviews more than 400 stock market newsletters and services, choosing what he believes to be the most interesting or informed recommendations for inclusion in this column and his own newsletter, the Dick Davis Digest. For subscription information or further details call (800) 654-1514.

Carnival Cruise Lines "A'

Headquarters: Miami

NYSE (Symbol: CCL)

52-week range: $24-$39.37{

Friday's close: $33.62{

"Carnival shares have declined sharply due to disappointing first-quarter results and a poor short-term outlook. Revenues for the period fell from $328-million to $323-million, while earnings rose modestly from 33 cents to 36 cents per share.

"Based on the price drop, we recommend accumulation of this stock. The firm earned $2 a share in 1992; we look for profits of $2.30 for 1993. Beyond 1993, we see clearer sailing for the company. Given a stronger economy, we could see earnings leap to the $2.70 to $2.80 per share range.

"Meanwhile, Carnival recently announced it would sell the TSS Mardi Gras to a new company to be formed by Epirotiki, Dolphin and Carnival. Each company will have a one-third interest in the new firm. Carnival will add the Sensation and the Ryndam.

"We consider the stock a core investment position. The cruise industry is a good investment area for the 1990s, and a position in this well-managed leader should be very profitable. The shares could be in the low $40s at minimum and the mid-$50s topside over the next 18 to 24 months."

Peter McMullin

Southeast Research Partners

Raymond James Financial

Headquarters: St. Petersburg

NYSE (Symbol: RJF)

52-week range: $15-$28.37{

Friday's close: $21

"Raymond James Financial is engaged in retail and institutional brokerage, underwriting and asset management.

"Its stock is currently trading at a 23 percent discount to its 52- week high, due to charges of illegal trading activity. We believe this is unwarranted, since regulators have determined the allegations were unfounded.

"The company executes 9,000 trades each day, up 38 percent from two years ago; the number of its brokerage accounts has risen by 20 percent to 300,000 during the same period. Meanwhile, (the firm) managed or co-managed a record number of corporate and municipal offerings last year, causing investment banking revenues to rise 95 percent to $45-million.

"The company's investment advisory fees rose 23 percent during the first six months of 1993, primarily due to the growth of its asset management units. The firm is further diversifying .

.

. Raymond James entered the trust business last year and has attracted over $50-million in assets.

"More than 46 percent of Raymond James' stock is held by insiders, evoking excellent customer service and minimal client flight. The company repurchased some 200,000 of its shares in 1992 .

.

. Rapid revenue growth and margin expansion are causing earnings per share to soar _ up 51 percent last year to $2.83.

"Raymond James' 60 percent discount to the S&P 500, based upon 1993 earnings per share of $3.10, should narrow substantially. We recommend purchase, up to $26, for conservative accounts."

David Wanetick

Market Maneuvers

New York, N.Y.

TECO Energy

Headquarters: Tampa

NYSE (Symbol: TE)

52-week range: $38.87{-$47.62{

Friday's close: $46.25

"We wish to reiterate the benefits of owning shares of TECO.

"The firm's nonregulated businesses have contributed to above-average earnings growth of more than 5 percent over the past six years. These operations _ including ocean barge lines, coal mines and co-generation facilities _ accounted for about 21 percent of consolidated earnings in 1992.

"Our projection for annual dividend growth of 4.5 percent to 5 percent through 1995-1997 far exceeds the industry average of 2.6 percent to 2.8 percent.

"TECO's construction budget is very low compared with that of other electrics. In view of stable fuel expenses, a healthy Tampa economy, strong cash flow and what appears to be an absence of future pollution-control problems, TECO shares provide a chance for above-average dividend growth and capital gains."

Argus Weekly Staff Report

New York

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