Mid Caps To Stick A Feather In

Who's feeling acrophobic in this soaring market? Not Larry Keblusek, U.S. Chief Investment Officer at Citibank Global Asset Management. "In spite of the Dow's speedy climb above 8000, good stock values abound," says Keblusek, who oversees assets of $28 billion--mostly invested in equities, a big chunk in high-flying big-cap stocks. But Keblusek's new focus is on mid-caps.

Keblusek says the best values are in stocks with market capitalizations between $1 billion and $10 billion. "We look for companies with a record of solid growth--and are finding a lot of undervalued gems," he says.

Four picks:

-- Consolidated Stores (CNS), a retailer of closeout merchandise.

-- Leggett & Platt (LEG), a maker of prosaic but essential products such as furniture components and bed frames.

-- UCAR International (UCR), a producer of the graphite electrodes that minimills use in making steel.

-- Zions Bancorporation (ZION), which provides banking and insurance services in the Mountain States.

Consolidated Stores has been hot, zooming from 26 a share in January to 38 1/2 on July 22. The company buys excess merchandise--often discontinued lines--at a deep discount and unloads it at its 1,840 outlets--Odd Lots, Big Lots, and Kay-Bee Toy & Hobby Shops. With its vast warehouses, Consolidated can deal in huge volumes.

Leggett & Platt is also on a roll, going from 31 in January to 43 on July 22. Citibank's Rich Goldman says the Street expects Leggett to earn $2.14 a share this year and $2.49 in 1998. But he says: "We think it will earn more--$2.20 and $2.60, respectively."

UCAR's stock, now at 44, has been held back by a Justice Dept. probe into allegations of price-fixing among makers of graphite electrodes. But Keblusek believes there is no collusion. He views the current stall as a buying opportunity. He thinks UCAR will beat Street estimates of $3.45 a share for 1997 and $4.05 for 1998. His estimates: $3.60 and $4.20, respectively.

Shares of Zions have vaulted from 28 in late January to 35 on July 22. "Zions is an efficient, tightly disciplined, and highly profitable bank," notes Keblusek. It has a return on equity of 21.5%, vs. a 15.5% average for the top 100 banks. He expects Zions to earn $2 a share this year and $2.25 in 1998, vs. the Street's $1.90 and $2.