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Douglas Raborn of Raborn & Company Inc. (800-798-1124) provides the following stock idea on Recoton (RCOT 32 1/4).  Below is the write up.

Recoton has been managed by the same founding family since 1936. They started out
by selling phonograph needles. Now they are a leading developer and maker of consumer-electronics accessories. One of their leading products is wireless speaker
technology and they manufacture well known speaker brands such as Jensen, Advent and
Acoustic Research. Recoton recently put their entire speaker line into Sears Electronics
Stores. "That is a big win for Recoton," says Douglas Raborn of Raborn & Company Inc.

Douglas first started accumulating their shares in the low 20's back in March. He is
more bullish on Recoton now in the low 30's than when their shares were in the low 20's.
Here's the scoop: Douglas believes that sales for consumer electronics should be strong
over the next couple of years because of the development of new digital products including
DVD, flat screen TV's and more sophisticated stereo equipment. In the first quarter of this year, Recoton reported earnings of $0.30 Vs estimates of $0.12. The estimates for the upcoming 2nd quarter are $0.27 and are due out in the 2nd week of August. He is expecting another upside surprise in earnings.

Over the last 3 years, Recoton has made a rather large investment in inventory management. They use a perpetual inventory system with Wal-Mart Stores and Best Buy, shipping directly to them. "Every major retailer is doing some business with them," says Douglas. He adds, that Recoton offers a one stop shop to many stores so they do not have to rely on many suppliers. Recoton is working with many stores to develop new products as well as packaging and just in time inventory. Other customers include Circuit City, Office Max and Musicland Group.

Many of Recoton's products are made overseas and they taking advantage of the strong American Dollar. Douglas is expecting more institutional coverage on Recoton because only a handful of smaller brokerage houses cover their stock. Recoton could also put together a secondary stock offering "which would increase their cash position for further acquisitions." Recoton earned $1.18 in 1998, Douglas estimates they will earn $1.90 in calendar 1998 and $2.80 in 1999.  Based on a PE multiple of 20 for 1999 estimates, his price target is $56 per share.

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