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Chemical BankingChemical Banking (NYSE, CHL, $36) is...


Chemical Banking

Chemical Banking (NYSE, CHL, $36) is a favorite turnaround candidate of United & Babson Investment Report.

"After dealing with heavy losses in the late 1980s, Chemical Banking now appears in a position to benefit from a pickup in the economy, led by its important consumer and business-loan franchises. The year-end merger with Manufacturers Hanover roughly doubled the size of the bank to $140 billion in assets and is expected to result in $750 million in expense savings over the next few years. . . . We are estimating an earnings rebound to $3.25 a share this year, with $4 possible in 1993. Buy for further recovery."

CPI Corp.

CPI (NYSE, CPY, $25.875) is another United & Babson turnaround pick.

"CPI may not be a familiar name to many readers, but most will recognize its products. The company operates nearly 1,000 photographic studios in Sears' stores, predominantly for children. In recent years, management also has aggressively expanded its secondary business -- one-hour photo-finishing stores. . . . Return on equity has averaged more than 20 percent since 1982. The shares slumped nearly 35 percent below their 1991 highs. . . . Now selling at only 11 times this projection, CPI should also benefit from multiple expansion. Buy."

Paramount Comm.

"Paramount (NYSE, PCI, $45.50) may be back on the growth track. The movie studio is on a roll, following up on box office successes 'Star Trek VI' and 'The Addams Family' with the low-budget cult phenomenon 'Wayne's World,' notes United & Babson.

"Other new releases scheduled for this year include the Eddie Murphy comedy, 'Boomerang,' and 'Patriot Games' (based on the Tom Clancy novel), starring Harrison Ford. And entertainment profits should also rise due to the completion of the Madison Square Garden renovation and strong seasons by both the Knicks and Rangers. . . . The stock is a long-term buy."

St. Joe Paper

Douglas Kass, director of research, First Albany, taps St. Joe Paper (NYSE, SJP, $38.625), which has five basic business segments, forest products, transportation, real estate development, sugar and communications.

"St. Joe is a vertically integrated producer of corrugated containers. St. Joe Paper also owns 54 percent of Florida East Coast Industries, parent of Florida East Coast Railroad. Importantly, the company is the largest private landowner in Florida. In fact . . . its 1.2 million acres equals nearly 4 percent of the land mass in the state of Florida. We believe that the underlying value of St. Joe Paper is approximately $100 per share."

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