STOCK OF THE MONTH MORTON IS WORTH MORE THAN ITS SALT
By Jordan E. Goodman

(MONEY Magazine) – In December, when General Motors announced that it was planning to install air bags in all its passenger cars, light trucks and vans by 1995, the venerable Chicago saltmaker Morton International saw money pouring from the sky. Why? It dominates the air bag business. With $2 billion in annual revenues, Morton is more gold mine than salt mine. The company has three product lines: specialty chemicals (70% of sales), salt (20%) and air bags (10%). In three years, Morton's air bag sales have quadrupled to $225 million -- 55% of the market. And since most major car makers plan to equip their U.S. models with both driver- and passenger-side air bags by 1997, analysts project that Morton's air bag sales could more than quintuple to $1.3 billion by 1995. Moreover, notes analyst Karen Lane Gilsenan at Merrill Lynch: ''Because automakers work with Morton to design the systems into their cars, it will be nearly impossible for competitors to gain market share.'' Morton's two other businesses are solid though not spectacular. The recession has hurt specialty chemicals, but Gilsenan expects profits to rebound strongly in the recovery. As for salt, the Morton Umbrella Girl still reigns. The company controls half the U.S. market for salt used for everything from seasoning food to de-icing highways. ''The business grows only 3% annually, but it throws off $91 million a year that Morton can invest,'' says analyst Robert Ottenstein at First Boston. Analysts project that, as the air bag division provides a larger part of the company's earnings, Morton's overall profits will grow at least 20% annually during the next five years. Yet the stock now sells at only 16 times projected earnings for the fiscal year ending June 30, 1992 -- about the same as the P/E for the S&P 500-stock index, which has an average growth rate of 11%. Says Lawrence Keblusek, chief of investment counseling at Northern Trust in Chicago: ''Morton International represents one of today's most reasonably priced quality growth companies.'' He and other analysts think the share price could rise more than 30% over the next 12 months to about $65.

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