Recoton's Good Vibrations

Investment manager Douglas Raborn, who manages some $120 million for wealthy clients, has bagged some huge winners, such as Great Western Financial, which he bought last year at 26 and sold at 48 after six months, and Maytag, which ran from 22 to 49. Now he says he has found another: Recoton (RCOT), a major supplier to Circuit City Stores and Best Buy, retailers of electronic products.

Recoton, a leading developer and maker of consumer-electronics accessories, sports fundamentals that Raborn goes for: Strong earnings growth and a low price-earnings ratio. Recoton currently trades at 23, or at a p-e of only 10 based on Raborn's 1999 earnings estimate of $2.25 a share. This year, Raborn expects earnings of $1.85, vs. 1997's $1.18.

Raborn says that in spite of the shakeout now among retailers of electronic products and video games, Recoton will prevail as a major supplier to the industry's survivors. Meanwhile, the company is pursuing some new businesses with its big customers, such as Sears Roebuck, to market its line of loudspeakers--including Advent, AR/Acoustic Research, and Jensen products. This line alone, says analyst William Jelin of Pauli & Co., should add at least $15 million in sales volume per year. Recoton also has signed recent agreements with other big retailers, including Wal-Mart, Kmart, OfficeMax, and Musicland Group.

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