By Robert Luke
Cox News Service
ATLANTA _ Some stocks are consigned to the trash heap of
They're ignored by industry analysts, the media and most
But astute investors willing to do their homework can find
some hidden treasures among the lot. It's not easy and there are
no guarantees, so don't invest the mortgage money.
Still, solled "neglected stocks," which sometimes don't appear
in newspaper stock tables, can be a reasonable option for
investors willing to take some risk.
Also, some mutual funds have portions of their portfolios
invested in such stocks.
One of those funds is the Fidelity Lowiced Stock Fund _ ranked
No. 2 out of the 116 small company growth funds tracked by Lipper
Analytical Services. Its total return so far this year is 12.1
percent, compared with the minus 5.74 percent average for the 116
Joel Tillinghast, Fidelity Lowiced Stock Fund manager, has
made big bucks with neglected stocks.
Take Spartan Motors, for example. No industry analyst covered
the Charlotte, Mich., maker of custom vehicle chassis until its
earnings more than doubled in each of the past two years. When
analysts ignore a company, few people know about it, and trading
in the stock is limited. The trick is to find a neglected stock
before it takes off and loses its anonymity.
"At the start of 1991, Spartan Motors was trading at $2.62,"
Tillinghast recalled. He scooped up some shares at around $3. "At
its peak in February of this year, it was at $34.75."
But what goes up must come down. That's why every investor
needs to think about when enough is enough.
Shares of Spartan Motors took a dive last month after the
company announced that secondarter earnings wouldn't meet
analysts' expectations. The price tumbled by oneird in just one
Tillinghast was lucky enough to have sold some of his holdings
in the $20 range. But he's hanging on to the rest, now worth
about $14 a share.
"It's a very welln company and its products are very good," he
explained. "But I'd be a bit cautious here (of buying) because it
did attract a lot of Wall Street following so quickly. It's no
longer a neglected stock."
For every fallen angel, there is another potential rising
Out of the universe of some 20,000 publicly traded companies,
only about 7,000 are listed on one of the major exchanges. …