Monsanto sinks but won't drown


Q. Help! I am the nervous owner of 66 shares of Monsanto Co. which seem to be sinking fast. Should I hold on or let go?

A. There's no need for a life raft.

Despite a decline in price on weak earnings estimates, your shares of chemical producer Monsanto Co. (around $55 a share, New York Stock Exchange) should be held, advised Harvey Stuber, analyst with Dean Witter Reynolds Inc.

Monsanto incurred enormous costs with its G. D. Searle division and in releasing its Maxaquin infection-fighting drug. It also had a one-time expense tied to repairs on a Texas facility. Because the worst most likely is over, Mr. Stuber now recommends buying Monsanto shares on the belief that the negatives already have been discounted.

"The investor must keep in mind that Monsanto is spending money on long-term investments, not costly acquisitions or debt, and this will pay off in the long run," Mr. Stuber said.

Q. My General Dynamics Corp. investment is going through the roof. I love it and might buy more. But is there a skeleton in the closet? A. A tripling of the stock price of General Dynamics Corp. (around $73, NYSE) during the past year has left many shareholders dizzy with happiness and they should continue to hold or buy more, said Wolfgang Demisch, analyst with UBS Securities.

This aerospace and defense company continues to progress despite defense cuts. It's focusing on operations which, though created for the military, have civilian applications.

General Dynamics stock is fueled by excess cash from a massive sale of assets, and even more is coming with the anticipated sale of its missile division. The company has also made huge cuts in expenses. As a result, the firm has boosted its dividend, plans to buy back stock and may provide the shareholder with a special dividend once more sales are completed.

"The investor should realize that profits are currently coming from the sale of assets and not increased earnings or diversification away from the defense business," Mr. Demisch cautioned. "By buying now, you can benefit from the cash rewards the company obtains in these sales."

Q. I am a retired policeman with several hundred shares of American Telephone & Telegraph. Is the company still doing well?

A. Nothing incredibly good or drastically bad is happening to American Telephone & Telegraph (around $44, NYSE) and you should probably hold your shares, recommended Edward Eyrling, analyst with Argus Research Corp. He says he's "gung-ho" about prospects because the economy will be improving.

Telecommunications stocks typically lag behind in a recovery, so you should hold on at least until they rebound six to nine months after the economy comes around, Mr. Eyrling said.

"What I like right now is AT&T;'s consumer division, which maintains a commanding presence in the cordless and corded telephone business and answering machines as well," said Mr. Eyrling, who is waiting to see how the Video-Phone 2500 will be received this year. "The company invests nicely in research and development and is being rewarded for it."

Q. I inherited 500 shares of American Leduc Petroleums Ltd. I can't find them on the New York Stock Exchange or over-the-counter market. What's up?

A. Right stock, wrong country. American Leduc Petroleums Ltd. (around 16 cents, Toronto Stock Exchange), incorporated in Alberta, Canada, in 1947, is very much in business.

The company has holdings in the producing and prospecting of oil and gas properties in Alberta and Texas, said Robert Fisher, vice president with the New York-based R.M. Smythe & Co. stock-search firm. For more information, contact the company at 910 Phipps-McKinnon Building, Edmonton, Alberta T553G2.

Q. I am a young man who lives full time on a boat. It's my permanent residence and I'm paying federal and state taxes based on the size of the vessel and docking fees. Can these real estate taxes and fees be deducted?

A. The tax on the boat would likely be deducted as a personal property tax if based on the value of the boat, said Barbara Pope, tax partner with Price Waterhouse. Make sure you keep the tax bill documents in your records or attach them to your tax return.

"The docking fees or other fees such as utilities aren't likely to be deducted, but show the bills to your tax accountant to be sure they're not another form of real estate tax," Ms. Pope said.

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, Chicago Tribune, 435 N. Michigan Ave., Chicago, Ill. 60611.

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