Inside Wall Street
A RICE TRADER MAY START TO STEAM
Investment pro Doug Campbell is obsessed with finding the next Telefonos de Mexico, which he caught several years ago--before it zoomed from 24 to 65. Now, he thinks he may have another winner--in a most mundane business: Erly Industries, a rice miller and trader based in Los Angeles.
At first glance, the stock is a turnoff: From July 2, 1993, to Aug. 15, 1994, it was delisted from the NASDAQ for capital insufficiency. Iraq is a big customer, and the U.S. embargo on shipments to that country caused Erly a major loss.
But Campbell, president of D.A. Campbell Co., a securities firm in Los Angeles, thinks Erly is back on track. In the year ended Mar. 31, 1994, it earned $17.6 million, or $4.53 a share (including nonrecurring items) on sales of $334 million--up 53% from the year before. Erly had posted heavy losses in the prior two years. In fiscal 1995's first quarter, Erly made 56 cents a share, on sales of $121 million.
Erly deals in rice through a subsidiary, American Rice, whose stock, also lately reinstated on the NASDAQ, is trading at 4. American Rice, notes Erly Chairman Gerald Murphy, has a production capacity of nearly 2 million tons a year and operates big milling facilities in all the rice-growing regions of the U.S., the Caribbean, and Southeast Asia. The biggest export market for Erly is the Mideast, especially Saudi Arabia.
Campbell predicts sales of $375 million to $400 million in fiscal 1995 and earnings of $1.50 to $2. Campbell thinks the rice business is very interesting but much ignored on Wall Street. He says the stock, now at 83/4, could hit 12 to 15 in a year.GENE G. MARCIAL