United Education, Drewry Photocolor Lead Stock Parade

Losers and gainers were almost split evenly among San Fernando Valley area stocks in the third quarter, reflecting the inconsistent behavior of stocks in general.

Of 68 Valley stocks tracked for the Times by MPACT Securities of Austin, Tex., 34 dropped in price in the three months ended Sept. 30, with 33 stocks up and one unchanged in price. The stocks include publicly held companies with headquarters from Burbank to Camarillo.

An index of Valley area stocks compiled by MPACT rose 3.3% in the quarter. The index weighs all local stocks equally to show how investors would do if they invested equal amounts of money in each of the local stocks.

The Dow Jones Industrial Average, the most widely followed index of stock prices, rose 7.4% in the third quarter to close at 2596.28. It had surged nearly as high as 2750 in August. The broader Standard and Poor’s 500 index rose 5.9% in the same period to 321.83.

The biggest winner among local stocks in the quarter was Drewry Photocolor, a Burbank film-processing company, which climbed 71% to $10.25 a share.

Drewry’s profit in the first quarter ended July 25 soared to $605,313 from $40,748 because of a shift in sales to its larger customers and benefits from previous cost-cutting that included reducing operations at its Hayward plant. In addition, the company restored its annual dividend of 20 cents a share.

Encino Chain a Gainer

By far the strongest local stock this year has been United Education & Software, an Encino chain of trade schools whose stock took off earlier this year after the company’s earnings were boosted by the acquisition of 10 trade schools for $11.5 million from Airco Educational Services.

United Education’s stock, which began the year at a little more than $5 a share, closed at $15.12 on Sept. 30, up 63% for the quarter and 195% for the first nine months of the year.

Other major companies whose stocks were among the biggest gainers were Sierracin, a Sylmar aerospace company, up 49% to $8.75; Martin Lawrence, a Van Nuys art-gallery chain, up 25% to $7.50; 20th Century Industries, a Woodland Hills insurance firm, up 19% to $27.87 and TransTechnology, a Sherman Oaks aerospace company, up 19% to $30.37.

All the companies have posted large earnings increases in their most recent quarters. TransTechnology has continued to do well with its acquisition of Lundy Electronics in Glen Head, N.Y., and Martin Lawrence has continued to open new art galleries, thus boosting its sales.

The biggest loser for the quarter was SFE Technologies, a San Fernando electronics concern that lost $971,000 in the quarter ended May 1. Its stock fell 50% in the third quarter to $2.62.

Olson Industries, a Sherman Oaks maker of plastic packages, which lost $861,000 in the quarter ended June 30 because of losses from discontinued operations, is the biggest loser so far this year. The company’s stock, which fell 34% in the quarter to $11.50, was down 58% in the first nine months.

Among the largest companies in the area, MCA climbed 24% in the quarter ended June 30 to close at $60. Higher television revenue helped the company post a 38% increase in profit to $38.8 million.

Walt Disney, one of the area’s hottest stocks, kept climbing, albeit at a slower rate than earlier this year. Walt Disney closed at $77.50, up 7% for the quarter and up 80% for the first nine months.

Lockheed, the Calabasas aerospace giant, climbed 4% to $53.25.

Stocks of some companies that had been top performers in the area fell in price last quarter, apparently because investors cashed in after big price gains.

Micropolis, a Chatsworth maker of disk-drive data-storage equipment for computers, fell 20% in the quarter to $28.25. The stock, which hit a high of $40 earlier this year, remains up 52% so far this year as a result of continued strong earnings.

Dundas I. Flaherty, the company’s vice president of finance, attributed the stock drop mostly to profit taking, although he noted that institutional investors have soured on disk-drive makers because some companies, such as Maxtor and Seagate Technologies, have posted or expect to show disappointing earnings.

Another top performer, Cherokee Group, the North Hollywood shoe and clothing maker, fell 14% for the quarter to $16.25.

Apparel Stocks Fall

Apparel stocks as a group have fallen recently, and earlier this year some Cherokee executives sold large amounts of their stock holdings. Still, Cherokee’s stock was up 41% in the first nine months, and the company continues to post strong earnings, rising 54% to $2.65 million in the quarter ended May 30.

Amgen, the Newbury Park biotechnology company, fell 14% in the quarter to $33. A rival biotech firm was awarded a patent earlier this year on a drug that Amgen has been developing, and that slowed investor’s enthusiasm for Amgen. But Amgen’s stock is still up 49% for the year.

Tandon, a Chatsworth personal-computer and disk-drive maker, fell 36% to $3.37 in the quarter, but remains up 50% for the year because it has moved into the black. In the nine months ended June 28, the company earned $11.7 million, contrasted with a loss of $17.5 million a year earlier, in part because of increased sales of its personal computers in Europe.

In August, the company disclosed that Dan H. Wilkie, a former top International Business Machines executive hired to help Tandon become a major personal computer maker, resigned as president and chief operating officer.

VALLEY-AREA STOCKS

3rd Quarter Winners

Closing Price % Stock Sept. 30,1987 Change Drewry Photocolor $10.25 71% United Education $15.12 63 Sierracin $8.75 49 Perceptronics $8.37 46 Martin Lawrence $9.25 25.3 MCA $60 24 Diodes $3.37 23 Compact Video $4.75 22.4 National Technical $4.75 22.4 TransWorld Bancorp $10.00 21.2 3rd Quarter Losers Closing Price % Stock June 30,1987 Change SFE Technologies $5.25 -50 Tandon $3.37 -36 Discovery Associates $2.50 -36 Olson Industries $11.50 -35 Delphi Information $5.12 -32 Bishop Graphics $2.12 -29 Digitext $5.50 -27 American Ecology $16.75 -26 Micropolis $28.25 -20 Dick Clark $4.00 -20 Productions

Note: Excludes stocks whose Sept. 30th closing price was below $2.

Source: MPACT Securities, Austin, Tex.