A fair share.

• Author: McMillan, Alex Frew
• Position: Stock predictions

Last year, our panel of prognosticators picked almost as many losers as winners. Here are some Tar Heel stocks they predict will thrive in 1995.

Last year, Oak Value Capital Management Vice President Jim Green predicted Medic Computer Systems, which markets computer systems to medical practices, would benefit from national health-care reform. Well, health reform tanked, but that didn't keep the Raleigh-based company from booming. Between Oct. 21, 1993, and Oct. 21, 1994, its stock rose 85%.

Medic was the biggest mover among the stocks our panel of pickers went for last year, but it had some respectable competition. For instance, Raleigh-based GoodMark Foods, maker of meat snacks such as Slim Jims, posted its third year of 40%-plus earnings growth and saw its stock jump 64%. Overall, though, the choices for '94 proved a mixed batch. Eight performed better than the Dow Jones Industrial Average (compared with 11 the previous year), while seven declined in value. Medic's 85% gain would have merited only a sixth-place finish a year ago -- three stock picks for 1993 more than doubled in value.

Of course, picking winners for 1993 was easier. More stocks were on the rise. The Dow Jones increased 14%, compared with 7% in the year ended Oct. 21.

"We've had a rough year in 1994," Smith Barney Vice President Gerry Smith admits. "The biggest culprit there has been that interest rates have been moving up." But she also blames changes in "market leadership." As the country emerged from recession, consumer-goods companies replaced growth companies as the market's top performers. Now, Smith says, growth stocks are resurging.

One of Smith's picks last year, Charlotte-based Cato Corp., can only hope for a resurgence this year. It was the worst performer of the bunch, losing almost half its value. Its fall came after Wall Street's rediscovery and infatuation with the women's discount clothing chain in 1993 drove the stock up until its P/E ratio hit a high of 29.5, compared with the S&P 500's average of 18 over the last 12 months.

Buddy Howard, president of Equity Research Services in Raleigh, says he sticks with companies he trusts, such as Ruddick Corp. And when he sticks with a company, he sticks: Howard has selected the Charlotte-based conglomerate every year since 1988. This time it let him down, dropping 13%, but Howard sees the positive side of Ruddick's low price. When you pick the same stock every year, "whatever your ending point is for this year winds up being your beginning point for next year," he reasons. So Ruddick, Howard hopes, will boost his batting average for 1995. (Yes, he's picked it again.)

All eight panelists are back with new picks this year, and banks are a favorite. The prospect of rising interest rates squeezing margins apparently doesn't scare them, as it has many analysts. Some see weak stock prices as an opportunity for investors -- and larger, acquisition-minded banks.

(Editor's note: The panelists who picked Security Capital Bancorp as a possible prize proved prophetic: Plans for its merger with CCB Financial Corp. in 1995 were announced while this issue was on its way to the printer.)

Jitters about rising interest rates sent Culp Inc.'s stock tumbling in 1994, down more than 50% from its...