Fingerhut May Have The Touch

Macy's Chapter 11 filing may be hogging the headlines, but that doesn't mean all retailers are hurting. Indeed, some of the catalog marketers that cater to low- and middle-income consumers are thriving--despite the recession and rising postal costs. One standout: Fingerhut, whose stock, now at 31, is near its high of 33. The nation's fourth-largest catalog retailer posted record 1991 earnings of $2.14 a share, vs. 1990's $1.96.

Money manager Carlene Murphy mf Strong/Corneliuson Capital Management thinks the company will earn $2.50 this year and about $2.90 next year. But she ventures that her estimates may prove to be low. Why? She expects benefits from Fingerhut's joint venture with Montgomery Ward to start kicking in as early as this year.

Formed in October, 1991, the equally owned entity sells some Ward products and uses its data base of 10 million credit-card customers. Given Fingerhut's merchandising expertise, Murphy figures the new venture will add 10c to 15c a share to earnings this year, jacking up profits to over $3 a share. The company sells brand-name and private-label merchandise, including electronics, housewares, and apparel, to a base of more than 13 million customers.

Fingerhut has a p-e of 14. Murphy thinks it should be at least 16, where other catalog houses trade. She sees the stock hitting 50 in a year.