(MONEY Magazine) – The 1990s may be remembered as the decade of due bills, as companies scramble to repay the enormous sums they borrowed in the 1980s to finance acquisitions and leveraged buy-outs. Some firms, such as Federated Department Stores and Southland, have already gone bankrupt because of their heavy debts. But many healthier companies are briskly selling assets, issuing new shares or replacing old bonds with new ones that cost them less. Still tarnished by profligate borrowing in the 1980s, many of these companies trade at price/earnings ratios below 17 times estimated 1991 earnings, the average for the stocks in Standard & Poor's 500. ''But what most people don't realize,'' says analyst Warren Lammert at the Janus Group of mutual funds in Denver, ''is that companies that pay off debt can enhance their earnings growth dramatically.'' To identify fundamentally solid stocks that are slimming down weighty debt loads, MONEY canvassed some two dozen mutual fund managers and investment analysts. Here are their five top picks, discussed in order of their present debt/capital ratios, starting with the least indebted companies: Gillette, with 1990 sales of $4.3 billion, borrowed $1.6 billion to fend off a takeover attempt by Ronald Perelman of Revlon in 1986 and a proxy fight by Coniston Partners in 1988. A year later, Warren Buffett, Omaha's renowned investment whiz, came to Gillette's rescue, investing $600 million in a convertible preferred stock created just for him. Then in January 1990, the company introduced Sensor, a smash-hit razor that quickly won 12.4% of the $800 million U.S. blade and razor market. The combination of Buffett's money and its own strong cash flow has enabled Gillette to cut its ratio of debt to capital from 105% in 1988 to 60% today. And Fredric E. Russell, a money manager in Tulsa, thinks the company will shave off 5% of its remaining debt annually as revenues from Sensor increase. Gillette introduced the new shaving system in Asia and Europe last year, and Russell believes that the company's greatest growth potential lies overseas. He thinks Gillette stock could rise more than 30% to $48 within a year. Georgia-Pacific, with $12.6 billion in sales, boosted its debt to $5.4 billion by acquiring Great Northern Nekoosa for $3.7 billion in March 1990. Since then, the giant paper-and-wood-products company has raised more than $1 billion by selling off its U.S. and French packaging operations and 708,000 acres of U.S. timberlands. In addition, Georgia-Pacific has completed several major modernization projects, such as a new papermaking facility costing $580 million. Its capital spending costs are budgeted to fall 31% to $600 million in 1991. The company's paper-and forest-products businesses have been mired in recession since last year, but analysts think that they are coming back as home building recovers. Mark Rogers, the paper analyst at Prudential Securities, expects increased sales and lower interest costs to boost Georgia- Pacific's earnings to $2.90 a share in 1992 after a loss of 25 cents this year. Rogers thinks the company's shares could leap 76% to $95 by the end of 1992. Fruit of the Loom, with $1.4 billion in sales, was once a subsidiary of Northwest Industries, a conglomerate that went private in a $1.4 billion leveraged buy-out put together by William Farley in 1985. Two years later, Northwest spun off Fruit of the Loom as an independent company, selling shares to the public at $9. Aggressive capital spending to modernize the company's / plants pushed its debt load from $762 million to more than $1 billion in 1990. As a result, the stock sank as low as $6. Since then, Fruit of the Loom has updated its product line and begun advertising heavily. The strategy has paid off; over the past five years, the company's share of the men's and boys' underwear business has grown from 36% to 40.5%. So far this year, Fruit of the Loom has retired $125 million of its debt, chiefly by selling 7.5 million new shares to the public. The company has also cut capital spending by $107.9 million, or a stunning 68%. With profits growing at 20% a year, Joel Tillinghast, manager of Fidelity's Low-Priced Stock Fund, thinks Fruit of the Loom can pay down another $300 million of borrowings by the end of 1992. He calculates that its stock could double to about $30 in the next year.

Black & Decker, with $4.8 billion in sales, took on $2.6 billion in debt to buy Emhart, a maker of industrial tools and equipment, in April 1989. While the recession hurt overall sales, do-it-yourself home remodelers have been buying more tools recently. And the company has boosted sales of other products by redesigning them and adding new features. In addition, Black & Decker has raised $1 billion since mid-1989 by selling off eight businesses, including its True Temper Hardware product line and Garden America, which makes garden sprinklers. Robert Renck Jr., a money manager in New York City, thinks Black & Decker will raise $300 million to pare debt over the next year by selling one or more businesses, such as its PRC computer software division or its True Temper Sports sporting goods subsidiary. ''Black & Decker's product line is vastly improved,'' he says, ''and now that it is getting debt under control, its earnings will grow at least 20% a year.'' He thinks the company's stock could double to $30 within a year. Kroger, with $20 billion in sales, paid a $40 special dividend to shareholders in 1988 in fighting off takeover attempts by the Haft family and the leveraged buy-out firm Kohlberg Kravis Roberts. That left the company $4.1 billion in hock. Since then, its cash flow has been growing by 8% a year, enabling the second largest U.S. supermarket company to redeem $300 million of its junk bonds annually. As Kroger's debt shrinks, analyst James Goff at the Janus Group projects that its earnings per share could rise by 35% a year through 1994. He believes the stock could reach $40 over the next 18 months.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: STOCKS GETTING OUT OF HOCK These companies are boosting their earnings by paying off debt. The stocks, ranked here by their debt levels, trade on the New York Stock Exchange, except for Fruit of the Loom, which is listed on the American Stock Exchange. Price/ earnings ratios reflect profit estimates for 1991.