(FORTUNE Magazine) – EQUITY MARKETING

Los Angeles-based Equity Marketing aims to captivate kids with an age-old formula: Put a tiny Bart Simpson doll or other popular toy in a hamburger pack or at the bottom of a cereal box, and sales take off. Burger King, PepsiCo, and Arby's, among others, use the company's myriad figurines, stuffed animals, and other trinkets to keep young buyers coming back.

The company began in New York City in 1984 and moved west last year. Dennis McAlpine, an analyst at Josephthal Lyon & Ross in New York, expects 1995 net income to increase 33%, to $3.4 million, on a 10% rise in revenues, to $68 million. The stock traded recently on Nasdaq at $4.63, or eight times McAlpine's estimate of 1995 earnings per share. Co-CEOs Donald Kurz and Stephen Robeck together own 60%.

Equity's designers work in Los Angeles and New York, but manufacturing is done by more than 20 Asian producers, mostly in China. The company arranges delivery of the toys to customers, who give them away with their own products or sell them for a slight charge. Equity often works closely with Hollywood studios, developing promotional ideas from early copies of scripts long before a new movie hits theaters. When Disney released its Lion King movie last year, Burger King bought 30 million Equity figures of Simba, Mufasa, and the other jungle cats, and quickly sold nearly three times its normal number of kids' meals. "It was an unprecedented success for us," says John Cywinski, vice president of U.S. marketing. The fast-food chain has just launched a second Lion King promotion, tied to the release of the home video, that features finger puppets made by Equity.

Adults can become Equity collectors as well. To coax shoppers in European countries to buy its multipacks of film, Konica of Japan bought two million Looney Tunes figurines made by Equity. Konica will include the three-inch figures in its film packs starting in late March. Equity also sells lines directly to retailers, including mass merchants, gift shops, and toy stores. Retailers like Wal-Mart and Toys "R" Us will offer Mighty Morphin Power Rangers later this spring, before the Rangers' big-screen debut this summer.

CARAUSTAR INDUSTRIES

Industrial papermaker Caraustar has grown rapidly in recent years by acquiring new mills and paper plants throughout the Southeast, and as far west as Arizona. The company, founded in 1939, is based in Austell, Georgia, and runs 54 paper mills and plants, as well as another nine collection sites. Caraustar's main business is manufacturing recycled paperboard packaging, like shipping tubes, folded cartons, and boxes. Customers in many industries use them to deliver everything from textiles and carpets to food products and metals. The company also supplies paper sheets used in the production of gypsum wallboard for the building-construction market.

All its raw materials come from the company's own recycling plants, which get supplies from waste haulers like Browning-Ferris, as well as from Caraustar's own fleet of trucks. Lloyd Widom, an analyst at Prudential Securities in New York City, expects net income in 1995 to surge 31%, to $46 million, on a 26% rise in revenues, to $542 million. The stock traded recently on Nasdaq for $19, or 11 times Widom's estimate of 1995 earnings per share. An acquisition of a North Carolina packaging company that is not yet completed could add another $70 million to Caraustar's annual revenues, says Widom.

EFFECTIVE MANAGEMENT SYSTEMS

With computers involved in nearly all parts of any company's manufacturing process, EMS is finding a growing number of customers for its industrial software. The Milwaukee company's products are used by some 700 small and midsize outfits to track financial matters like purchasing and inventory schedules as well to organize production on the factory floor. Says CEO Michael Dunham: "Our products are used throughout a manufacturing company by all kinds of people who make decisions using their computers."

EMS software costs from $30,000 to $300,000. The company is in the process of acquiring a small maker of engineering and design software with sales of $4.5 million that will add another line--and some 700 new customers. Glenn Powers, an analyst at Dain Bosworth in Minneapolis, expects 1995 net income to rise 28%, to $2.2 million, on a 12% increase in revenues, to $25 million. The stock traded recently on Nasdaq at $6.50, or 11 times Powers's estimate of 1995 earnings per share.