O Come Ye To Bethlehem

Everyone is looking for the ignored, undervalued stock. But it takes guts to

plunk down money on a stock that's down and out of favor. Investment pro

Larry Rice makes a fine living doing just that: With gusto, he goes after

unwanted stocks--those he thinks will be the next darlings of the mutual

funds. One such stock he likes: Bethlehem Steel (BS).

Rice is snapping up shares even though Wall Street types are nearly

unanimously bored with the steel industry. "Bethlehem doesn't make memory

chips or new drugs--there's no sex to the Bethlehem story," he says. But

Rice, chief investment officer and director of research at Josephthal Lyon &

Ross, is bullish nonetheless.

Why? He thinks the stock, which has been meandering around the mid-teens,

will hit the 20s in 6 or 12 months. It's trading at 14 a share--not far from

its 52-week low of 13 5/8. But, says Rice, Bethlehem "has downsized,

upgraded its mills, and become very competitive with steel producers here and


He expects the mutual funds will go after steel stocks when they realize

that the world economic outlook is brightening. Contrary to popular belief,

Rice adds, demand for steel will firm up along with prices. Zachs Investment

Research sees Bethlehem making $2.58 a share in 1996 and $1.77 this year, vs.

1994's 35 cents.

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