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Most Area Stocks Post 3rd-Quarter Gains

Times Staff Writer

Gainers outnumbered losers nearly 2 to 1 among San Fernando Valley-area stocks in the third quarter that ended Friday, although stocks for most of the area’s largest companies generally were flat or declined in value.

Of 57 stocks of major companies in the Valley area tracked for The Times by Communications Research Group of Austin, Tex., 37 stocks rose in price in the quarter and 20 fell. Stocks in the survey included companies with headquarters from Camarillo to Glendale and those whose shares traded at more than $3 a share at the end of the quarter on Friday.

The results for area stocks contrasted with the flat performance of the overall stock market in the quarter. The Dow Jones industrial average, a 30-company average that is the most widely followed index of market performance, slipped 1.3% in the quarter.

The leading gainer in the area was HOH Water in Newbury Park, a tiny developer of water purification systems that has yet to sell one of its products. Its stock climbed 169% to $4.38 for the quarter and has increased ninefold this year. Although HOH has yet to start mass production of its products, the company is obtaining financing and is working on plans for a Puerto Rico plant (See related story on this page).

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Largest Loss

The area’s biggest loser was United Education & Software, an Encino company that owns trade schools and services student loans, which saw its stock plunge 65% in the quarter to $3.63 a share. Last year UES’s stock was the area’s biggest winner when it climbed 142%.

The company’s stock collapsed this summer in the wake of disclosures that its student-loan processing business was being reviewed by government and private agencies. Just last April, the stock traded at an all-time high of $16.25 a share.

Takeover activity boosted some area stocks. Flamemaster’s stock rose 80% in the quarter to $6.50 a share, making it one of the leading gainers among the nation’s over-the-counter issues. The Sun Valley company, which makes flame-retardant coatings, disclosed that it is talking to potential suitors about being acquired.

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Cherokee Group’s stock jumped 15% in the quarter to $12.63 a share amid a bitter battle for control of the fast-growing Sunland shoe and clothing company. Founder James P. Argyropoulos has sued to block a takeover attempt by a group that includes Cherokee’s president, Robert Margolis. The group is offering $174 million, or $14 a share, in cash and securities.

Drewry Photocolor, a Burbank photo processing firm that is completing a liquidation, soared 76% to $14.50 a share in the quarter. Company shareholders are scheduled to receive $8.3 million, or $14 a share, next week and may receive more proceeds before the end of the year.

Republic American Corp.'s stock climbed 12% to $14.25 a share after Cincinnati investor Carl H. Lindner, who already controls the company, disclosed that Penn Central Corp., another of Lindner’s companies, wants to buy the rest of the Encino workers-compensation firm in a stock swap.

Among the area’s largest companies, Lockheed, a Calabasas aerospace giant that has been posting small profit increases due mainly to lower taxes, dropped 8% to $40.50 a share.

20th Century Industries fell nearly 10% to $17.62 a share. Some securities analysts have said the Woodland Hills auto insurance company’s stock has been hurt by uncertainity over the outcome of five insurance propositions on the November ballot in California, some of which could cut insurance premiums.

Zenith National dropped 20% to $15 a share. Earlier this year, investor Saul Steinberg, who owns about 30% of the company stock through his Reliance Holdings, said in a Securities and Exchange Commission filing that he is shopping around his stake in the Woodland Hills workers-compensation insurance firm.

Entertainment Stocks

Stocks of Valley-area entertainment companies increased modestly in the quarter. Walt Disney, the Burbank entertainment giant that released such film hits as “Who Framed Roger Rabbit?” and “Cocktail,” rose 3% in the quarter to $64.88 a share.

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MCA, the Universal City entertainment conglomerate, saw its stock climb 4% to $43.88 a share, even though the company’s second quarter profit fell by 80% because its investments in the toy business went sour.

Shares of Dick Clark Productions in Burbank rose 3% in the quarter to $4.50 a share, but the stock is down 25% for the year, which company officials attribute to the soft television market.

Hot Streak Chilled

Some once-hot stocks are now among the area’s worst performers.

Micropolis Corp., which last year was one of the area’s hottest stocks, plunged 54% in the quarter to $8.25 a share. Last month, the Chatsworth maker of disk-drive data storage equipment disclosed it would post its first loss in more than three years. The company, whose stock was once one of the leadings issues among computer-equipment makers, is suffering from high production costs for one of its products and increasing competition.

Verit Industries, the area’s biggest gainer in the second quarter after two investors bought major stakes in the company, fell 33% to $5 a share in the third quarter. The Sun Valley maker of loudspeakers lost $455,000 in its fourth quarter that ended June 30, raising its loss for the year to $781,000.

Among gainers in the quarter, Martin Lawrence Limited Editions, a Van Nuys chain of art galleries that has been posting strong earnings gains as it continues to expand the number of galleries, rose 21% to $9.25 a share. Lincoln Bancorp, the Encino parent company for Lincoln National Bank, one of the area’s fastest growing financial institutions, saw its stock climb 30% in the quarter to $12 a share.

Rise Continues

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Delphi Information Systems, a Westlake Village market of computer software systems for insurance agents, continued climbing. The stock ended the quarter up 32% to $9.25 a share, even though the company posted a $302,000 loss for its first quarter that ended June 30. The stock has climbed rapidly after it signed a five-year agreement with insurance giant CIGNA that could be worth $40 million in sales.

Superior Industries’ stock jumped 22% in the quarter to $20 a share and has nearly doubled for the year. The Van Nuys maker of wheels for cars has continued to enjoy strong profits because of continuing strength in orders from the auto industry.

Amgen’s stock rose 21% to $32.75 a share in the quarter. The Thousand Oaks biotechnology company’s stock rose after approval was granted in Switzerland for Amgen’s partner Johnson & Johnson to sell an anti-anemia drug that Amgen developed. The company also disclosed that it has signed a marketing agreement with F. Hoffmann-La Roche for a drug it is developing that would help build up the immune systems of cancer patients.

Judy’s, a struggling Van Nuys clothing chain whose stock has been an erratic performer this year, was up 50% in the third quarter to $3.75 a share.

10 BIGGEST VALLEY AREA STOCK WINNERS FOR 3RD QUARTER

Closing Price on Percent Stock 9-30-88 Change Line of Business HOH Water $4.38 169 Water systems Flamemaster 6.50 80 Coatings Drewry 14.50 76 Photo processing Judy’s 3.75 50 Clothing Delphi Information 9.25 32 Software Lincoln Bankcorp 12.00 30 Banking Superior Industries $20 22 Car wheels Martin Lawrence 9.25 21 Art galleries Amgen $32.75 21 Biotechnology Cherokee Group $12.63 15 Clothing

Note: Excludes stocks whose Sept. 30 closing price was below $3 a share Source: Communications Research Group, Austin, Tex.

10 BIGGEST VALLEY AREA STOCK LOSERS FOR 3RD QUARTER

Closing Price on Percent Stock 9-30-1988 Change Line of Business United Ed. & Software $3.63 -65 Schools Micropolis 8.25 -54 Disk drives ATI Medical 4.13 -35 Medical equipment Perceptronics 3.13 -34 Automation Verit Industries 5.00 -33 Speakers St. Ives 8.13 -24 Hair care Hotel Investors 11.75 -24 Real estate Semtech 3.88 -22 Electronics Olson Inds. 4.75 -21 Plastics Syncor 5.25 -21 Pharmacies

Note: Excludes stocks whose Sept. 30 closing price was below $3 a share


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