(MONEY Magazine) – SARA LEE (SLE); NYSE, $33.50; 2.3% YIELD

For most investors, Sara Lee is as American as its famous apple pies and chocolate cake. But it's more than that. Some 40% of revenues now come from outside the U.S., while 57% of sales are generated by such heavyweight nonfood brands as Champion activewear and the wildly popular Wonderbra. Analysts say that after a stumble in 1994, the $17.7 billion consumer-products giant is back on track for a sustained period of double-digit earnings growth.

Researchers expect Sara Lee to generate more than $3 billion in excess cash over the next five years. Part of that newfound liquidity will come from shutting down factories in low-profit divisions, which is expected to save the company some $250 million per year by 1998. In addition, Sara Lee has shifted focus to higher-priced products such as Hanes Resilience pantyhose, which features increased snag resistance. Duff & Phelps analyst Ellen Baras thinks the new line could help revive the company's hosiery division where sales have been slowed by a shift toward more casual clothing in the office.

Baras predicts that Sara Lee will use its cash stream to finance a global shopping spree. The targets: local makers of apparel and other consumer staples, which can help Sara Lee expand beyond its established turf in the U.S. and Europe and into the fast-growing markets of Latin America and Asia. In late 1994, for example, the company began a joint venture to market its Kiwi shoe polish in China, the world's sixth-largest shoe-care market.

Lehman Bros. analyst Caroline Levy thinks new business abroad and more attractive products at home could boost earnings by 13% in 1996. Levy sees the stock hitting $38 by 1997. Combined with a 2.3% dividend, that works out to a 16% total return for the year. A tasty way to eat your cake and profit too.

--D.M.