Growth stocks hit dry spell


NEW YORK -- In the 1992 stock market, it seems, growth won't get you very far.

Although some gauges of overall market trends forge ahead steadily to new highs, stock buyers have been spurning the traditional "growth" companies known for consistent increases in earnings over the years.

As a result, adherents of a large and long-successful school of investing are feeling more than a little let down and left out.

"Growth stocks small and large have underperformed for nearly four months," observe Kurt Feuerman and Martin Calihan, analysts at Morgan Stanley & Co. "It is difficult to find a non-cyclical growth stock that did well last year and is not down this year."

"The Dow Jones industrial average recently hit a new high," adds Richard Hoffman, chief investment strategist at Cowen & Co. in New York. "However, investors who are heavily weighted in foods, drugs, biotechnology, information processing, software and photography are not smiling."

Instead, the benefits of the market's rise have fallen lopsidedly to owners of stocks in manufacturing industries and other businesses whose fortunes are closely tied to the ups and downs of the economy.

These issues have come to be seen as the best way to play a sustained recovery from the recession.

"At some point later this year, investors will begin to look beyond 1993, and growth stocks should start to move again. Until then, investors with strong stomachs should take advantage of the carnage to buy growth stocks at much more reasonable valuation levels than before," Mr. Feuerman and Mr. Calihan say.

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