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Vacation Break Bets Set To Party

Inside Wall Street


Remember time-sharing? No, it hasn't gone away. In fact, it's staging a fast comeback, this time as vacation ownership interests (VOIs).

A few years back, "time-share interest was viewed with as much disdain as a leper at a garden party," says Dennis McAlpine of Josephthal Lyon & Ross. That changed when Walt Disney, Hilton Hotels, and Marriott made time-sharing a moneymaker.

But McAlpine says Vacation Break USA (VBRK), a direct marketer of VOIs, is the stock to bet on. This company is a pure play in "the fastest-growing segment of the travel industry," he says. It went public in December at 5 and is now at 7 1/2. He expects the stock to double in a year, as investors become more comfortable with the industry and the company.

He figures Vacation Break, whose revenues jumped to $117.5 million last year, up from 1994's $104 million, will make $1.15 to $1.20 a share this year, up from last year's 90 cents. The company says sales of VOIs in 1995 rose to $40.3 million, up from $27.6 million in 1994. The figures don't include deferred sales of VOIs in projects under development.

Initially a marketer of VOIs for other resort owners, Vacation Break acquired its first resort in 1993 and has since acquired three more. It now owns properties totaling more than 22,000 VOIs, and has over 15,000 VOIs for sale. Vacation Break also earns decent money in financing VOI sales.

At its current price-earnings ratio of about 5, based on 1996 profit estimates, "Vacation Break is the cheapest stock among its peers," argues McAlpine.BY GENE G. MARCIAL

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