‘El Nino’ Effect Likely To Fill Investor Pockets

It’s the time of year that investors have come to enjoy.

Since the current bull market began to roar, investors have relished the very thought of sizing up their portfolios in December and seeing some dramatic gains. Not every year, mind you, but the vast majority.

At the same time, December stock market trading has become much more important to savvy investors who prepare their portfolios for what’s commonly called the “January Effect.”

Since 1950, the Standard & Poor’s 500 index’s best months on average have been December and January, says Gerald Kuschuk, director of equity strategies and services at Prudential Securities in New York.

Kuschuk calls the January Effect the El Nino of the stock market.

“It’s a phenomenon that we see every year. Many stocks get beaten down after Thanksgiving as individual investors sell their losers to offset gains in the market. At the same time, institutional managers are unloading stocks that they don’t want to show on their year-end statements.”

As a result, some stocks that are already depressed fall to bargain levels, he says.

To Kuschuk, this signals a buying opportunity. “We’ve gone through our universe of research and found stocks that we like both technically and fundamentally.

“Each is down 25 percent or more from their year’s high and we believe they’re even more attractive now,” he says.

Here are the six stocks and the reason Kuschuk believes each will begin to grow in January and reach full blossom in 1998:

Benton Oil and Gas. Benton’s specialty is to use new technology to get new oil from old wells in underdeveloped nations. This should add to its 110 million barrels of proven reserves, particularly with its new 50 percent interest with Shell in China, its rights acquisition in Jordan and its Russian venture.

Fore Systems. Its concentration on network switching should add growth as major telecommunications equipment makers begin a large-scale adoption of the new technology.

GTE, for example, will use Fore equipment as it upgrades communications at Microsoft’s headquarters.

IKON Office Solutions. IKON, the former Alco Standard, is transforming itself from a leading global copier distribution and service company into a complete office systems supplier with a full-fledged technically integrated dealer network. Growth of 20 percent or more is expected in light of IKON’s third- quarter earnings surprise.

Paging Network. With 9.5 million subscribers and 22 percent of the market, the company is the paging industry leader and lowest cost provider.

PhyCor. The nation’s No. 2 physician practice manager and owner of multi-specialty clinics is acquiring No. 1, MedPartners, and should see growth benefits from both cost savings and the spread of managed care.

Revlon. The beauty products giant has seen its financial position continue to improve as signaled by a positive third-quarter earnings surprise. New products are expected to drive growth.

Prudential is packaging the six stocks in what it calls its January Effect Autoport, a purchase order system that offers a multiple stock purchase in a single pre-specified total dollar amount.