1. Archive

Restaurant lender, S&L: good buys

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.

Transmedia Network

Headquarters: Miami

OTC (Symbol: TMNI)

52-week range: $7-$19.50

Friday's close: $19.50

"Miami-based Transmedia brings restaurants and customers together in a mutually rewarding way.

"Restaurants generally find it hard getting credit to cover operating expenses. Transmedia solves that by lending them money (and helping build a clientele). In turn, the restaurants issue dining credits to Transmedia for twice the amount of their loan. These are worked off as Transmedia card-club members dine at the restaurants for 25 percent off their bill; Transmedia nets another 25 percent.

"The firm began in New York and has since moved into Florida, New Jersey, Boston and Philadelphia. Franchises have been sold in California, Chicago, Washington, and North and South Carolina, and all locations are seeing very strong growth.

"The number of card members should jump 50 percent this year to 350,000, while the number of restaurants will grow 20 percent to 3,000. The New York Times has recognized the value of this approach; it's planning a major campaign to convert all its home subscribers to Transmedia membership.

"Meanwhile, Transmedia has licensed its operations in Europe, which will make its card more attractive to members when traveling abroad.

"We believe Transmedia has hit upon a very successful formula for growth and that it's on the threshold of becoming a nationally recognized card. We expect annual growth for the next few years to top 40 percent, both in sales and earnings. The stock is a buy."

Andrew Lanyi

The Lanyi Research Letter

New York

Glendale Federal Bank

Preferred E shares

Headquarters: Glendale, Calif.

NYSE (Symbol: GLN PrE)

52-week range: $22-$26.75

Friday's close: $23

"If high current income is what you want, look no further.

"Glendale, the nation's fourth-largest S&L, with 60 offices in Florida, recently issued $200-million of convertible preferred shares with a whopping 9.4 percent yield. They were issued as part of a major recapitalization that raised $450-million in new capital and helped Glendale avoid being seized by the government.

"Today, the bank's financial condition is much improved. Asset quality has increased dramatically, loan production is rising, core deposits have stabilized, and new products and business lines have been introduced.

"Despite all this, the California-based bank is still suffering from the West Coast's serious recession and falling real estate values. Yet we believe the worst has passed; California's economy should begin a strong recovery by next year.

"Glendale's preferred E shares are a major holding of Lindner Dividend Fund, one of the country's top-performing income funds _ a big vote of confidence. Glendale is a solid turnaround situation for those content to collect a huge dividend until earnings gains kick in."

Dan Bruce

Insightful Investor



Headquarters: Miami

ASE (Symbol: IVX)

52-week range: $21-$37.25

Friday's close: $36.25

"IVAX is one of the few generic drug firms with operations here and in Europe and with outstanding skills in new-drug development.

"The company's newest acquisition is McGaw, which has a dominant franchise in the growing markets for home infusion and hospital IV products. McGaw is a major positive because it offers growth opportunities and significantly broadens IVAX's product line.

"Meanwhile, IVAX has a huge pipeline of proprietary products, and sales of its principal generic drug, verapamil, are exceeding expectations.

"Reasonably priced relative to estimated future earnings, IVAX shares could hit 50 in the next two years."

David Saks

Gruntal & Co.