A Strike In Bowling?

There was a time back in the 1950s when bowling was the big rage in America. Now most investors tend to consign the sport to nostalgia. But don't tell that to shareholders of American Recreation Centers (ARC), the nation's largest publicly owned operator of bowling centers. They attest to bowling's comeback. The company, which operates 27 centers with 1,100 lanes, mostly in California, has been raking it in and has rewarded shareholders in the past 23 years with a modest but rising cash dividend.

With the stock having fallen to 7 3/4 a share after climbing to 9 1/4 in September, some smart-money pros are betting they will hit a strike with ARC. Their optimism is based on more than rising sales and earnings, which have doubled to $57 million and to 52~ a share, respectively, since 1988.

On Oct. 11, ARC spun off to the public 37% of its wholly owned subsidiary, Right Start, while keeping some 4 million shares. That company is a profitable mail-order outfit that specializes in safety and health products for infants and children up to age 4. Shares of Right Start now trade at 5 1/2. So American Recreation's stake is worth some $22.5 million, or about $4.50 for each of American Recreation's 5 million shares.

One New York money manager insists that ARC's move in taking Right Start public makes the bowling company "a very attractive target" for some of the major entertainment companies. He notes that bowling centers have become huge family entertainment complexes equipped with electronic games, billiard halls, snack bars, and even day-care centers. ARC President and CEO Bob Crist says his goal is to acquire more bowling centers and catalog companies. He declined to say whether some bigger companies have proposed a buyout deal.

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