Although named for one of literature's great idealists, Quixote is not tilting at windmills. The company, with estimated sales of $140 million for the June 30 fiscal year, has three promising but unrelated units. That's why the stock, at 16 7/8, sells for 12 times estimated fiscal 1993 earnings and 10 times 1994's. "Any one of its companies alone would have a higher p-e," says Alexander Paris at Barrington Research Associates.

Quixote's prized property, making up nearly half of sales, is Disc Manufacturing, the largest independent maker of compact disks. Customers include Sony and Time Warner. DMI also produces information-packed disks for personal computers. While it's only 10% of DMI's sales, CD-ROM is growing at a 50% annual rate vs. 20% for music CDs.

Quixote was originally Energy Absorption Systems, now the unit that makes highway crash cushions that adorn bridge abutments and toll booths. EAS has about 90% of the U.S. market, and Philip Rollhaus, Quixote's CEO and EAS's founder, says foreign sales are picking up.

The third unit, Stenograph, with 90% of the market for court stenographers' machines, modernizes its product with software that turns shorthand into text that can be displayed on a screen or printed for the record, cutting transcription costs.

Even as one company, the stock's outlook is bright. John Westergaard at Westergaard Research thinks it can move to the 24-to-32 range over the next 12 to 18 months. And if Quixote spins off parts of businesses, as Paris suggests, the stock could go higher. Rollhaus is noncommittal: "We're always looking at ways to enhance shareholder value."

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