(FORTUNE Magazine) – How would you like to get a jump on big institutional investors? Here's one area of the market where you can. Spinoffs, or divisions of large companies that have been turned into separate public companies, offer a chance for individuals to buy into stocks on the cheap -- before the big investors do. In the first year or so after a spinoff occurs, the infant companies generally do not pay dividends, so many institutional investors pass them by. Index funds also spurn these shares because many are too small to be included in any of the broad stock market indexes. But those reasons shouldn't keep you from looking at these stocks, because studies show that they are sterling performers. Says Scott Greiper, a special-situations analyst at S.G. Warburg in New York City: ''Over time, spinoffs have been huge winners.'' A Penn State University study of some 150 spinoffs by Patrick Cusatis, James Miles, and J. Randall Woolridge found that the average three-year total return of spinoffs was about 75%, beating the average return of a group of companies in similar industries with comparable market values by some 30 percentage points. And Barbara Goodstein, an analyst at Rothschild in New York, reports that the ten spinoffs done in the first half of 1993 enjoyed an average price rise of 40% by year-end, vs. 4.4% for the S&P 500 and 11.3% for Nasdaq. One reason for the spiffy performance, the Penn State study says, is takeovers. Once a division is spun off, it becomes a more attractive takeover candidate because it offers an acquirer a pure play in a particular business. Another reason, says Goodstein, is that many spinoffs enter the market with problems, like slow growth or meager profit margins. But once management gets fired up by the new independence, problems tend to get addressed and growth picks up. Says Goodstein: ''The reason these companies perform is that they're at their trough.'' Analysts recommend that investors buy spinoffs only after they have been trading for a few weeks. This allows time for institutions that received stock & in the spinoff to unload their shares. Typically, the price at this point is lower than when the shares first began trading. Here's a look at the best of the recent crop of spinoffs. AirTouch Communications, a brand-new spinoff from Pacific Telesis, owns cellular phone and paging licenses in some of the best markets in the U.S.: Los Angeles, Atlanta, Detroit, and San Francisco. And it is rapidly expanding in Europe and Asia. Says Salvatore Muoio, manager of the Gabelli Global Telecommunications fund: ''This is a very high-quality company, with smart management and a lot of growth ahead of it.'' He thinks the $23 stock could reach $40 over the next two years. Albemarle is an industrial chemical producer recently severed from petroleum giant Ethyl. Among Albemarle's main products are linear alpha olefins (LAOs), carbon compounds used in products ranging from plastics to detergents. The world has been glutted with LAOs since 1990; this year, as the global recession abates, demand should finally catch up with supply, stabilizing prices. Meanwhile, Albemarle's sales should strengthen because its specific types of LAOs -- those used in such specialty items as synthetic motor oil and plastic garbage bags -- are in greater demand than the garden variety. Michael Sargent, a specialty-chemicals analyst at Salomon Brothers, is urging clients to buy: ''You are buying assets at the absolute bottom of the cycle.'' He expects the $15 stock to trade in the low 20s over the next two years. Aviall, based in Dallas, is a large independent aircraft services company that was spun off by Ryder System in December 1993. Though Aviall lost money last year owing to a slump in the aviation industry, it is now well positioned to cash in on increased air travel as global economies revive. It also stands to benefit from the shift toward outsourcing among big carriers. To boost the bottom line further, Aviall plans to begin hiving off some of its less profitable operations, perhaps this year. Thomas Galvin of C.J. Lawrence looks for 15% earnings growth in 1994 and ''explosive'' growth of 40% next year. Aviall trades on the NYSE for $16.25, or 13.5 times Galvin's estimate of 1994 earnings per share. He forecasts that the stock will reach $25 within 12 months. Eastman Chemical: When you reach for that two-liter bottle of Coke, chances are you're grabbing an Eastman Chemical product. Eastman is the world's leading supplier of polyethylene terephthalate plastics (PET) and controls ! about 50% of the U.S. market. The company also makes compounds used in pharmaceuticals, detergents, cigarette filters, and paint. The December 1993 spinoff is the happy byproduct of Eastman Kodak's ongoing restructuring. Kimberly Ritrievi, an analyst at Lehman Brothers, points out that as an arm of Kodak, the company had to divert its robust cash flow to the parent. Now it can use the cash to pay down debt and expand operations. Says she: ''Eastman Chemical should have been a separate company a long time ago.'' Ritrievi estimates that Eastman trades for 15% below the P/E ratio for comparable U.S. chemical companies. Earnings, she says, should begin to pick up in the second half of 1994, powered by strong volume growth. She expects the $40 stock to reach $50 over the next 12 months. Marriott International, now liberated from the real estate woes and debt of its former parent, Marriott Corp., looks poised to profit handsomely as the hotel industry recovers from years of overbuilding. Marriott International manages 784 hotels, including 127 for Host Marriott, the other entity created when Marriott Corp. restructured in October 1993. Camille Humphries of Alex. Brown & Sons expects that figure to grow by 8% annually over the next three years as more hotel owners are lured to Marriott by its topnotch ratings from business travelers. Humphries forecasts annual earnings growth for Marriott International of at least 15% for the next three years. At $32 per share, Marriott International is trading at 21.5 times 1994 estimated earnings per share. ''We think the stock has a way to go,'' Humphries says, predicting it could hit $38 within 12 months. Rayonier, a forest products company based in Stamford, Connecticut, was too cyclical for the likes of its former parent, ITT, but that cyclicality may be a big profit driver in the next few years. As expanding world economies produce greater demand for a shrinking timber supply and as the paper pulp market recovers, Rayonier's profits could shoot up. It won't take much to send earnings higher. Analyst Mark Kurland of Bear Stearns figures that a 10% increase in prices for both timber and specialty pulp, Rayonier's two main businesses, will boost earnings per share by $1.80 from the $1.77 reported for 1993. Western Atlas: Never mind low oil prices. If you can help get crude out of the ground more efficiently, your services will be required. That's what's driving growth at Western Atlas, the oil field services business that was spun off from defense conglomerate Litton Industries in March 1994. About a third of Western's sales come from gathering three-dimensional seismic data for oil companies. Three-D data allow engineers to pinpoint the location of the crude much better than their two-dimensional antecedent and can lower drilling costs by reducing the number of wells drilled. Arvind Sanger, an oil field services analyst at Kidder Peabody, estimates that demand for 3-D services will expand 15% to 20% annually for the rest of the decade. The stock sells for $42 per share, but Sanger says it is worth at least $50, assuming oil prices hold steady. Another 40% of Western's revenues come from its industrial automation business, which sells equipment to the auto industry and other manufacturers. That business is booming as Western gains market share.

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