Remember the stodgy conglomerates? Once highly visible, the corporate giants faded from the scene in the 1980s, when Wall Street was mesmerized by the breakups and acquisitions that junk bonds so ingeniously financed. So the shares of these multi-industry companies languished. But in recent months, the conglomerates have resurged.

The Donaldson, Lufkin & Jenrette conglomerates index outscored the stock market this year, and its strength may continue. "We believe the group will outperform the market during the next 6 to 12 months by 5% to 10%," says Donaldson analyst David Moore.

VALUE GAP. He says the substantial cost-cutting and restructuring that began in the late 1980s should help conglomerate profit margins at least through next year. Also, with their diverse businesses geared toward industrial manufacturing, conglomerate stocks have had a history of performing strongly in the first two years of a recovery. And, says Jack Solomon, chief market analyst at Bear Stearns, "since they are highly leveraged, the conglomerates have been major beneficiaries of the drop in interest rates."

Along with the improving scenario for conglomerates is the group's low valuation by the stock market. Despite recent advances, most shares sell well below the intrinsic value of the assets. Until the market acts on this disparity, conglomerates will tend to do more restructuring, selling assets. That would be a big plus for the stocks.

So some money pros have been loading up on conglomerate shares. Teledyne, whose products include aircraft engines and machine tools, "continues to be our strongest buy-rated stock," says Moore. He estimates company profits of $2.05 a share this year and $2.70 in 1994, vs. last year's 83 , which included unusual items and reserves for defense contracts. Also on Moore's buy list is Coltec Industries, whose products include landing gear, automotive products, and air compressors.

COOKING. Solomon likes Litton Industries, which recently bought microwave power-tube maker and aerospace company Raytheon. "Litton has one of the best earnings progressions over the past 10 years," he says. He expects that to continue, with a rise to $4.85 a share next year from an estimated $4.40 in 1993 and $4.22 in 1992.

Hillenbrand Industries is another Donaldson pick. Apart from supplying metal and wood caskets to some 16,500 funeral homes, Hillenbrand owns luggage maker American Tourister as well as Hill-Rom, a large producer of electric beds and other hospital equipment. It is expected to earn $1.95 this year and $2.35 in 1994, vs. $1.62 in 1992.

CONGLOMERATE
      COMEBACKS
      Company          Stock price   Price/earnings
                       May 10, 1993    ratio
      COLTEC INDUSTRIES      15         12
      HILLENBRAND            44         28
      INDUSTRIES 
      LITTON INDUSTRIES      60         14
      TELEDYNE               18         23
      DATA: BRIDGE INFORMATION SYSTEMS INC.
      
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