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New Spring At Leggett & Platt

BusinessWeek Investor -- Inside Wall Street

New Spring at Leggett & Platt

Colin Ferenbach likes stocks with bounce. He runs the Haven Fund, an $80 million mutual fund that specializes in value investing. Such funds have had a renaissance this year, with Haven climbing 10.1% as of May 21--handily beating the Standard & Poor's 500-stock index. One stock that Ferenbach finds particularly bouncy is Leggett & Platt (LEG) in Carthage, Mo. And it's not just the company's record of profitability and solid management or even the recent resurgence in its share price. Among other things, Ferenbach notes, Leggett makes upholstery springs.

Leggett is a "metal basher"--a manufacturer of miscellaneous steel and aluminum products. Apart from its spring business, the company makes a range of bedding and furniture components, as well as store fixtures and displays, die castings, and other such things. There is, apparently, a hefty market for such doodads. Leggett has a market capitalization of $5 billion and 1998 revenues of more than $3 billion. And that, indeed, is the company's major strong point--a rock-solid record of increases in sales and earnings.

To be sure, Leggett has had minor stumbles now and then. Toward the end of last year, the company experienced small-scale troubles in its aluminum division. But since then, Leggett has been firing on all cylinders. And Ferenbach sees Leggett trading at 30 times estimated 1999 earnings of $1.43 a share over the next 12 months. If that comes to pass, Leggett shares, now trading at about $25, would be climbing to $40 or better.BY GARY WEISSReturn to top

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