Recap of Sat., December 15

Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:

David Asman: Bob, the Enron fallout.  How bad is it?

Bob Lenzner, national editor: The Enron (ENE) problem is a huge one.  I want to address the accounting problem.  There was not full disclosure.  To invest in a public company you have to know the numbers and they didn't do that.  The fallout is that the accounting profession cannot be trusted.  We have to change it and reform it. 

Elizabeth MacDonald, senior editor:  Hearings are going on about Enron in Washington. Until we change the regulations and the laws, we're not going to get anywhere. 

Bruce Upbin, senior editor:  You can't blame it all on the auditors. 

Jerry Flint, columnist:  Until they put accountants in jail, but of course they'll lie.

David Asman:  Okay we have to move on.  Bruce, what do you have for us?

Bruce Upbin:  Beer stocks.  They're pretty much flat.  Anheuser Busch (BUD) and Coors (RKY) have come up a little bit.  Goldman Sachs says beer sales are flat this year and they'll be flat next year. 

Elizabeth MacDonald:  I agree with Bruce.  I wouldn't go anywhere near these stocks.  Now there's this new diet beer but it has just as much carbohydrate content as these other light beers. 

Jerry Flint:  But you don't find bars going out of business.

David Asman:  Okay, Elizabeth.  What have you got for us?

Elizabeth MacDonald:  DuPont (DD) just won a big victory in the U.S. Supreme Court.  DuPont is big on genetically modified seeds to prevent drought and what have you.  But they're facing some problems right now.  Their quarterly income is down 75%.  It's at $40 near its 52-week high.  Bruce has some info on the stock too.

Bruce Upbin:  Dupont is breaking up into tiny little pieces trying anything to get the stock price up.

David Asman:  Jerry, give us some good news!

Jerry Flint:  General Motors I think is really turning around.  They've got some new products coming up like the Chevy Avalanche, the Chevy SSR, and the baby Hummer.  The key is Bob Lutz, the Vice Chairman is taking over all car operations at GM.  The guy's gonna be 70 next month.  I'm not saying buy the stock today but the company is coming back and a strong GM means a strong America.

Makers & Breakers

Chubb Corp. (CB)

Bob Olstein, president of Olstein Funds: Chubb Corp. (CB) is a property and casualty insurer.  We're coming out of a 10-year down cycle, the longest down cycle in the property and casualty industry.  9-11 has resulted in tremendous premium increases.  But in the long run this will be a positive.  Next year, we think they're gonna blow right through $6.

Jim Michaels, editorial vice president: BREAKER
I think this is a Breaker.  The lawyers are queuing up to go after these insurance companies.  This is selling at 15 times probable next years earnings.  If I'm going with this business I want to go with the best like Berkshire Hathaway or AIG. 

Peter Newcomb, senior editor: MAKER
I like this stock.  I think it's priced right and I think their premiums are going to go up next year.  I think this is a keeper.

International Rectifier (IRF)

Bob Olstein:  International Rectifier Corp. (IRF)  had a lot of proprietary property.  They make semi-conductors which control power in computers.  This is a change company.  They have more cash than debt which is the only kind of stock we buy in our fund.  They generate excess cash flow even in these troubled times. 

Peter Newcomb: BREAKER
I want to like this stock if only for it unbelievably boring name.  I think the sector is up now.  It's up 50% since its low since earlier this year.  I think the easy money is off the table.

Jim Michaels: MAKER
I like the stock but the thing is there was massive insider selling earlier this year in the mid-50's.  It's down 40% since then.  My guess is the insiders will be wanting to buy back at this level.  I like the stock and if you want a semiconductor stock this is the one to go with.