SELECTIVITY KEY FOR INVESTORS IN 1994

Many economic indicators are pointing to economic growth for 1994, creating a favorable environment for investors seeking opportunities in the stock and bond markets.

That's the opinion of representatives of two nationwide brokerage firms A.G. Edwards & Sons and Edward D. Jones & Co. headquartered in St. Louis.

"Selectivity will be the key for investors," said Marsha Limbaugh, branch manager of A.G. Edwards' Cape Girardeau office. "The growing economic recovery will continue to be fueled by consumer demand, low rates and the strengthening of the world economy."

"The stock market business was good for us in 1993," said Joe Domian of the Edward D. Jones office at 1749 Independence in Cape Girardeau. "The market as a whole went up and we had a lot of people who made money."

Domian added that local people received "decent dividends" from stocks like Union Electric and Southwestern Bell. "Southwestern Bell, which was at $38 today, reached a high of $47 last year," added Domian. "But, despite being down, investors collected good dividends."

Raymond A. Worseck, chief economist at A.G. Edwards, agrees that economic growth is gaining momentum in 1994. Worseck noted that recent economic reports suggest strong demand for automobiles, housing and retail goods. This demand has kept the recovery moving forward.

Corporate earnings continue to improve as a result of massive cost-cutting efforts the past few years, greater productivity gains, improving sales and lower interest rates -- creating lower borrowing costs, noted Worseck, who expects corporate earning growth to continue in 1994.

Worseck thinks the Federal Reserve will raise short-term interest rates from 3 to 3.5 percent some time this year. Despite the potential short-term rate increases, interest rates will remain historically low, according to Worseck.

"As the economy heats up, inflation fears should be held in check by excess productive capacity around the world and vigilant central bank policies in major industrial countries," Worseck said. He expects inflation to run at a rate of about 3 percent this year.

Many financial experts view the stock market as overvalued and are cautioning investors that a decline in stock prices is likely.

"Despite what some are saying to investors now, the stock market is currently not overvalued," said Worseck.

Given the current interest rate and inflation environment, A.G. Edwards remains bullish on the stock market, said Worseck. "A one-half percent increase in the short-term interest rate is already figured into stock market valuations, based on our research," he said. "Therefore, we believe the market is not fully valued at the present time."

Even though the possibility of a market correction exists, the market is fairly valued, maybe even undervalued, noted Worseck. "That should provide comfort to investors heading into this year."

Current market valuations indicate that investors may still participate in the upside potential of the market by buying selected stocks at depressed prices, said Limbaugh. "Investors maintaining a long-term outlook for their investments may benefit by riding out the day-to-day highs and lows of the market and concentrating on long-term rewards."

Limbaugh said investors should pick solid companies with strong management, strong potential earnings growth and an undervalued stock price.

Domian agrees:

"Investors should look for top-notch companies with proven track records," said Domian. "Coca-Cola, Gillette, McDonald's and P&G are all good solid companies, and each of them have overseas exposure."

Domian expects to see growth in international markets.

"We're currently telling our clients to focus on companies that fare better during an economic upturn," said Limbaugh. "We are especially drawn to selected industrial or basic goods and leisure products companies."

She also notes that some defensive stocks -- companies whose earnings usually remain steady during all stages of the economic cycle -- present good values as well. "These include those with major franchises, market share, brand-name recognition and pricing power," she said.

"One company I really like is Crown, Cork and Seal," said Domian. "That's not a real recognizable name, but its products are a necessity to some big-name companies."

Crown, Cork and Seal manufactures containers for Coca-Cola and Pepsi Cola. The company also produces plastic containers for other products. The company has about 55 percent of the container market," said Domian.

Another bargain, said Domian, is AT&T, at $53. "This is a high quality company, offers good dividends and is global."

A lot of companies have been "beat" up in the market place, noted Domian, "But some of them -- including Gillette and Sarah Lee -- have bounced back.

"The stock market changes on every little thing," added Domian. "But if investors are selective and stay with quality, they should be okay in 1994."

Prices in the bond market have retreated during the past several weeks as investors remain cautious in their opinion of the economy. Inflation, the bond investor's worst enemy, continued to be held in check.

Although 30-year Treasury bond yields may be headed higher next year, Limbaugh notes, there is a good possibility that these long-term rates will reach new lows for the bull market in bonds over the next two to three years.

"Investors shouldn't be fooled with the current rise in 30-year treasury bond interest rates," she said. "With long-term Treasury rates projected to dip over the next few years, bonds may still be attractive to income investors over the long haul."

Limbaugh noted that municipal bonds remain favored investments. The municipal bonds are exempt from federal taxation and provide investors an attractive way to reduce their tax burdens. Some municipal bonds are subject to state, local and alternative minimum tax.

Limbaugh noted that the municipal bond supply in the market may decrease this year as many state and local governments face tighter fiscal budgets and stronger opposition to raising taxes.

The fire-damaged structure, which housed Shakey's Pizza Parlor more than a decade ago, is being demolished to make way for a parking lot for Kerasotes Theaters.

Shakey's was a popular pizza spot before it was heavily damage by fire in 1981. The damaged building was never repaired.

The building was recently acquired by Kerasotes Theaters, which owns the movie house adjoining the structure. Nip Kelley Construction Co. is taking the building down for Kerasotes, which operates the Broadway Theater, 805 Broadway.

Crafts and store fixtures are still available for sale at Woolworth Store in Town Plaza Shopping Center.

"We still don't have a timetable for final closure," said a spokesman of the store which is conducting a "going out of business" sale.

The Cape Girardeau Woolworth store is one of more than 700 targeted for closure under cutbacks announced by the firm last year.

The local store occupies a 12,000-square-foot space. The first F.W. Woolworth here opened in June 1914 at 1 N. Main St. in downtown Cape Girardeau and was the 723rd store in a then-growing retail chain which had been founded by brothers Frank Winfield Woolworth and Charles S. Woolworth in 1912.

Missouri unemployment rates eased up to 5.5 percent in November, a small increase over the October rate of 5.3 percent.

Area counties also noted slight increases in unemployment.

Cape County moved to 4.2 percent from the October reading of 3.9; Perry County was up, from 4.6 in October, to 5.5 percent, and Bollinger went from 7 to 7.8 percent.

Other area counties and changes: Mississippi, from 7.5 to 9.0; New Madrid, from 6.7 to 7.7; Scott, from 7.0 to 7.1 and Stoddard, from 7.5 to 8.

Unemployment dropped in the four southernmost counties of Southern Illinois in November, as seven of 11 major employment sectors reported employment gains from October to November.

Retail trade, service and local government were the most consistent gainers.

Pulaski County experienced a 3.5 percent decrease in unemployment, dropping from 16.2 percent in October to 12.7 percent in November. The rate dropped 2.8 percent in Alexander County, from 15.8 to 13, and Union County dropped from 12.4 to 11.1 percent.

The lowest unemployment rate was in Massac County, at 7 percent, a drop of 1.3 from the 8.3 percent reading of October.

Statewide, the unemployment rate dropped from an October figure of 7 percent to 5.6 percent in November.