Making Healthy Strides Overseas

Big rather than small is my preferred stock group," said money manager Lou Ehrenkrantz--until he discovered Del Electronics. The company, which has nothing to do with Dell Computer, makes basic low-cost and low-tech products designed for medical, industrial, and military uses. Products include mobile medical-imaging systems, transformers, and electronic noise-suppression filters.

"What attracted me to Del was the big market abroad for its basic products, as well as the company's consistent record of rising quarterly earnings," says Ehrenkrantz, president and chief investment officer of New York investment firm Ehrenkrantz, King & Nussbaum.

Del's strategy, he notes, is to sell cost-efficient products where they are badly needed, mainly in Asia, Latin America, and the Middle East. So Del has enlisted major international distributors, says Ehrenkrantz, to sell products such as neonatal X-ray and mammography equipment in Argentina, China, Hong Kong, Korea, and Saudi Arabia.

The company has done "very intelligent acquisitions," says Ehrenkrantz, citing its Dynarad unit purchased in 1992, which makes mobile-imaging systems used by hospitals and clinics.

Ehrenkrantz figures that the stock, now trading at 73 8, could just about double, based on a 20 to 25 multiple on his earnings estimate of 60 a share in the year ending July 31, 1995, and 50 in fiscal 1994. Del earned 43 in fiscal 1993.