Picking winners.

• Author: Davis, Lisa
• Position: North Carolina-based companies with best-moving stocks on the market - On the market '94

We assembled a panel of prognosticators who have plucked Tar Heel stocks they predict will be prizes in 1994.

As far as picking stocks goes, Buddy Howard is no thrill seeker. "Companies with the best stories are the worst investments," he says. "The ones with fairly boring stories are usually the best investments."

Want some proof? Check out a yawner that Howard, an investment analyst with Equity Research Services in Raleigh, picked last year for BUSINESS NORTH CAROLINA: High Point-based Culp, a 21-year-old fabric manufacturer that sells mainly to furniture and bedding companies. From Oct. 21, 1992, to Oct. 21, 1993, Culp's stock price jumped 121%.

Howard wasn't the only member of BNC's annual panel to pick big movers. The price of five of the 21 stocks chosen last year increased by more than 80%. (The previous year's best showing was 61%). Eleven did better than the Dow Jones average, while only six picks declined in value.

The biggest gainer for our stock pickers was North Wilkesboro-based Lowe's, the do-it-yourself building-supply chain, which rose 141%. "Going to superstores has been very successful for Lowe's," says John Davis, managing director of Alex. Brown & Sons in Winston-Salem. "Consumer spending is up and home building is up because interest rates are trending down."

Culp was the second-best performer, benefiting from an improved balance sheet, investments in up-to-date equipment and strong cash flow, Howard says. Having traded in the $5-to-$10 range during most of the past five years, Culp stock broke into the $12-$13 range in 1993.

What might have been a good story -- the turnaround of Rose's Stores -- fell flat. Pounded by Wal-Mart, Kmart and other discounters, the Henderson-based chain continued to struggle as its stock dropped 74% to $1.13 a share after trading as high as $7 during the past year. CEO George Jones, who left Minnesota-based Target Stores to head Rose's in 1991, is overseeing a store-modernization effort and tinkering with the merchandise mix. With creditors tightening the noose as the Christmas shopping season approached, however, Rose's filed for Chapter 11 bankruptcy in September. Though some brokers think Rose's might make a strong comeback in '94, no one on our panel is betting on that.

The other big loser was Salisbury-based Food Lion, which dropped 40%, earning the sobriquet "Food Dog" among some disgruntled investors. The supermarket chain, whose net income for the first nine months of 1993 dropped by almost half from a year earlier, is working to regain customer confidence with an advertising campaign after allegations last year of unsanitary practices in its stores.

Last year, BNC decided to throw a few randomly selected picks in the pack to see how the panel's carefully chosen stocks would compare. We introduced our equivalent of The Wall Street Journal's dartboard: Mokey, an old blue-tick hound who made his picks from a bag of dog biscuits, each marked with a number corresponding to our ranking of the state's top 75 public companies. Mokey did pretty well. All three of his picks increased in value: Greensboro-based Guilford Mills by 4%, Raleigh-based Exide Electronics by 11% and Charlotte-based Cato by 48%.

This year's panel (whose members are all of the two-legged variety) chose for 1994 such perennial favorites as Charlotte-based Nucor and NationsBank...