A Cheap Way Onto The Golf Course

Yell "fore" on Wall Street, and the golf-club makers Callaway Golf and Cobra Golf come to mind. These stocks are down 15% to 20% from their highs, as competition rises and earnings growth slows. Michael Haines, who runs Founders Discovery Fund, suspects that's why the shares in Golf Enterprises (GLFE) are down. The over-the-counter stock went public at 131/2 in July and ran up to 15. It now sells at just 91/2.

But Golf Enterprises isn't in the equipment business. The Dallas company buys and leases golf courses--38 of them at last count. Its plan is to acquire properties that can be improved in the clubhouse and pro shop as well as on the fairway. Analyst David O'Neill of William Blair, Golf Enterprises' investment banker, says the company has shown it can double operating cash flow at each course in about two years.

Because of the slide, shares are selling for less than four times estimated 1995 cash flow of $2.50 per share. That multiple is less than Golf Enterprises pays for some of its properties. "It's cheap, and when it's discovered, the stock should double," says Haines, who, through the Founders Discovery Fund and private accounts, holds 3.8% of the shares outstanding.

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