(FORTUNE Magazine) – MAGMA COPPER CO. Nothing like a run-up in prices to polish up an old-line copper company. With $40.9 million in earnings in the first nine months of 1988, Magma is a sure bet to record its first profitable year in nine. Spun off a year and a half ago by Newmont Mining, Magma is getting itself set to make money even with prices likely to head down again. Slower than some competitors to adopt new technology, the company, based in San Manuel, Arizona, now is well into a $277 million program to switch to lower-cost processes and equipment. During the early 1980s copper prices got killed by the worldwide recession and too much capacity. Such Third World countries as Chile, Zaire, and Zambia were the low-cost producers. By 1987 the price bottomed out at 60 cents a pound, two-thirds the prerecession level. The copper picture then brightened: Demand rose while U.S. producers closed some facilities, and strikes in Peru and floods in Zambia curtailed output. The price bounced back to $1.50. Now production is once again rising faster than demand, and the cyclical industry anticipates a modest price decline next year. Magma looks ready. It has just opened a new flash furnace, in San Manuel, which is the largest copper smelter in the world. The unit will produce 890 tons a day, as much as three old furnaces, at a saving of 3 cents a pound. The company is also completing work on facilities to expand a process that uses acidic solutions to extract metal from ore more efficiently than smelting. Matters at Magma were complicated in April when the CEO, Brian Woolfe, died unexpectedly. His successor, J. Burgess Winter, 55, arrived in September from BP Minerals America, where he had been a senior vice president. In taking over the third-largest producer in the U.S. after Phelps Dodge and Cyprus Minerals, Winter says he will increase Magma's role in what the industry calls tolling -- processing ore for producers that lack sufficient smelting operations. J. Clarence Morrison, a security analyst at Dean Witter Reynolds, expects Magma's sales this year to come in at $525 million, and profits at $40 million. The stock sells for around $7.50, or seven times 1988 earnings. Newmont Mining still owns 15% of the shares outstanding, but Magma has offered to buy out Newmont. Magma wants to avoid paying its former parent the 20% of earnings and $16 million in annual preferred dividends that were part of the spinoff agreement.

A.L. LABORATORIES INC. A dozen years ago this producer of generic drugs was a $6 million subsidiary of a Norwegian company. Independent since 1984, it has built sales to $235 million. Of that, $65 million was picked up by purchasing Barre-National, the largest U.S. maker of generic cold medicines, from Revco D.S. a year ago. Generic-drug companies duplicate branded products whose patents have run out. A.L. Labs, in Fort Lee, New Jersey, sells mostly prescription drugs but also has over-the-counter items, including a Pepto-Bismol copy. The company concentrates on making drugs in liquid form, where duplicating taste and appearance of the branded product is more difficult than making pills. The company is also big in animal-feed additives. Analyst Jerry Treppel of Swergold Chefitz & Sinsabaugh, a New York securities firm, figures that the company's profits will rise 35% this year, to $8.9 million, and another 29% in 1989. Its stock has a P/E of 15, based on 1988 profits.

DIVI HOTELS NV A list of locations of this chain's properties reads like a Beach Boys song: Aruba, the Bahamas, Barbados. Walter Wiggins opened his first hotel, on Aruba in the Dutch Antilles, on July 20, 1969, the day man first set foot on the moon. ''That upstaged us a bit,'' says Divi's president. But it didn't stunt growth. Now Divi has ten hotels, plus some time shares and condominiums managed in conjunction with them, on eight islands, making it the largest independent operator in the Caribbean. The company is named after the divi- divi, a strange tree common to the area that appears to be bent in half as it adapts its growth to high wind. When a hurricane blew through this fall, the chain was as good as its name, losing only a dock and a waterside bar at one unit. The number of visitors to the Caribbean has increased 41% since 1980, and an 11th hotel is planned for St. Kitts. The stock sells at ten times earnings, which are expected to reach $4.5 million this year, thus tripling in three years.

NATURE'S SUNSHINE Like Shaklee and Avon, Nature's Sunshine Products Inc. sells its 350 items through direct distribution: Representatives peddle to friends and neighbors. Its line includes herbs, vitamins, cosmetics, a coffee substitute, and a water purifier. After growing steadily since its start in 1972, Nature's Sunshine hit some bad weather three years ago when a new compensation program drove off 20% of its distributors. To recover, the company courted recruits -- expanding the corps 50% to 36,000 -- reestablished a bonus program, and added medical benefits. It raised prices 5% last year and introduced 120 products; 50 more are in the works. The company has 15 foreign markets. Look for sales to hit $57 million, up 25%, next year and profits to reach $5.1 million -- 2 1/2 times the 1987 level, says analyst Gregg Hillman of R.G. Hillman Investment Services in Pittsburgh. The company's stock is selling for $12 a share, six times the 1989 profit projection.