I. Market News: Light Post-Holiday Action
II. Heroes: PP&L, Boston Beer, FB&T, Kahler, ValuJet, Silver King
III. Goats: Nanometrics, Cott, Staff Bldrs., Comp. Tel., System Soft.
IV. Investment Perspective: Sweeping the Sectors
V. Calendar: Monday's Economic Events

MARKET CLOSE

DJIA: 5048.84, up 7.23 (RECORD)
S&P 500: 599.97, up 1.57
NASDAQ: 1030.17, up 8.93

MARKET NEWS

A light trading day following the Thanksgiving holiday, today saw the DJIA add yet another record close to its credit. And for a change, technology stocks actually went in the same direction as the Dow. On the year now, the DJIA, S&P 500 and Nasdaq are all up over 30% and are tightly clustered, with the DJIA and the S&P catching up to the slipping Nasdaq in recent weeks.

HEROES

Allentown-based PP&L Resources <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:PPL)") else Response.Write("(NYSE:PPL)") end if %> was chosen to replace CBS Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:CBS)") else Response.Write("(NYSE:CBS)") end if %> in the S&P-500 today, causing shares of the electric utility to surge $2 1/2 to $25 7/8 in heavy trading. Various institutions that base their investment approach on mirroring the S&P-500 will be required to buy PP&L Resources in the coming days and weeks, giving the stock a substantial boost. Pennsylvania Power and Light (PP&L) serves industrial and residential customers in the Allentown, Harrisburg and Scranton regions. 36% of its power operations are nuclear.

Shares of Boston Beer Company <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:SAM)") else Response.Write("(NYSE:SAM)") end if %>, which only came public on Wednesday, continued to climb the day after Thanksgiving, rising $3 1/8 to $32 1/2. The bull story for the microbreweries is that these companies are growing in excess of 40% annually and currently only have 2-3% of the overall market for beer, meaning that giants like Coors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:ACCOB)") else Response.Write("(NASDAQ:ACCOB)") end if %> and Anheuser-Busch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:BUD)") else Response.Write("(NYSE:BUD)") end if %> have the most to lose. To accord, however, a company like Boston Beer, which has the largest share of the 2-3% craft-brewing market, the same market cap as Coors does seem a little dissonant. It should be interesting to watch Boston Beer, Red Hook <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:HOOK)") else Response.Write("(NASDAQ:HOOK)") end if %>, Pete's Wicked Ale <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:WCKD)") else Response.Write("(NASDAQ:WCKD)") end if %> and the like over the coming months.

Banks all over the country are closed today, but that did not stop F&M National <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:FMN)") else Response.Write("(NYSE:FMN)") end if %> from shopping for acquisitions. FB&T Financial <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:FBTC)") else Response.Write("(NASDAQ:FBTC)") end if %> shot up $8 1/2 to close at $32 when F&M Financial made a $35-per-share stock offer for the Northern Virginia-based thrift. Fairfax Bank and Trust (FB&T) operates 10 branches in Fairfax County, of all places. With a book value of $10.72, F&M is paying 3.26 times book, a pretty hefty premium. The normal price for such deals has been 2.0 times book in the past decade, although the premiums have been mounting in recent weeks for financial institutions. This news also caused First Citizens Financial <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:FCIT)") else Response.Write("(NASDAQ:FCIT)") end if %>, which runs 15 banks in Southern Maryland, to rise $1 1/8 to $19 1/2 on takeover speculation. With a book value of around $12, First Citizens would go at almost $40 if one of F&M's competitors were willing to pay the kind of premium F&M is.

Frustrated with the performance of your company's stock? Want to boost its value virtually overnight? Hire a brokerage firm to help you "maximize shareholder value." Kahler Realty <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:KHLR)") else Response.Write("(NASDAQ:KHLR)") end if %> did just that today, propping its share price up $1 3/8 to $11 1/2. Montgomery Securities will explore options to boost the price of Kahler, including the sale of all or part of its assets. Kahler Realty owns and operates four hotels in Minnesota and eight in Utah. The company is a hodgepodge of assets, with equity interest in seven other hotels, a laundry service called Textile Care, and a formal wear company called Anderson's Formal Wear. Its Minnesota hotels represent an odd play on the Mayo Clinic, as 75% of its guests at the Rochester locations are there because of the Mayo or its affiliated hospitals. The most likely scenario is the disposal of its non-hotel assets and a conversion into a REIT.

ValuJet <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:VJET)") else Response.Write("(NASDAQ:VJET)") end if %> benefited from today's release of industry trade numbers, rising $3 1/8 to $31. The Air Transport Association reported today that U.S. airlines had a revenue increase of around 7.3% in October. Even more bullish was the rise in average yield, or the fare per passenger per mile, which went up 8.1%. The significance is that not only are revenues rising, but profits will rise as well since the revenue increase is not being generated by fare wars. The recent sales on tickets have not killed airline profits as analysts expected. A spokesman at ValuJet stated that there was no other reason for the stock's rise today.

Barry Diller and John Malone are at it again. The on-again, off-again partnership between the two very rich men accelerated today when they announced that Diller would potentially get control of Home Shopping Network <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:HSN)") else Response.Write("(NYSE:HSN)") end if %> through his Silver King Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:SKTV)") else Response.Write("(NASDAQ:SKTV)") end if %> property, helping Silver King rise $4 1/4 to $35. Home Shopping Network is 75%-owned by John Malone's Liberty Media, a subsidiary of Tele-Communications Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:TCOMA)") else Response.Write("(NASDAQ:TCOMA)") end if %>. Malone would get shares of Silver King in return for the Home Shopping Network property. Diller would get the opportunity to launch yet another network with his UHF Silver King stations. Shares of Home Shopping Network were up $1 to $9 1/2 on the news.

GOATS

The speculative money is leaving the semiconductor equipment stocks in droves, as evidenced by Nanometrics' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:NANO)") else Response.Write("(NASDAQ:NANO)") end if %> precipitous drop today, losing $1 to $5 1/4. Low-priced issues such as Nanometrics, GenRad <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:GEN)") else Response.Write("(NYSE:GEN)") end if %>, and SubMicron Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:SUBM)") else Response.Write("(NASDAQ:SUBM)") end if %> tend to be where traders concentrate their attention when a sector turns red-hot. The big guns in the sector were mixed, with Applied Materials <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:AMAT)") else Response.Write("(NASDAQ:AMAT)") end if %> up $3/4 to $42 3/8, Novellus Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:NVLS)") else Response.Write("(NASDAQ:NVLS)") end if %> rising $3 1/4 to $56 1/4, but Integrated Process <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:IPEC)") else Response.Write("(NASDAQ:IPEC)") end if %> losing $1/2 to $27 3/4 and Kulicke & Soffa <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:KLIC)") else Response.Write("(NASDAQ:KLIC)") end if %> down $1/8 to $27 3/4.

A restructuring at Cott Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:COTTF)") else Response.Write("(NASDAQ:COTTF)") end if %> is scaring the bejeezus out of traders today, pushing the stock down $1 to $5 7/8. The $40 million (Canadian) charge in the third and fourth quarters of fiscal 1996, plus a one-time inventory write-down of $8.4 million (Canadian), will slow sales growth but will increase profits at the alternative cola company. These moves will save Cott $35 million (Canadian) over the next nine-months. The company is also discontinuing its investment in Lakeport Brewing Corp., either selling it or transforming it into a plastic-bottle manufacturing plant. Cott was a favorite of short-sellers last year when it was bid up to lofty heights on the theory that generic colas were taking market share from powerhouses like Coke and Pepsi. Consumers, however, apparently want the Real Thing.

Staff Builders <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:SBLI)") else Response.Write("(NASDAQ:SBLI)") end if %> slumped $15/16 to $3 1/8 after Wednesday's news that the company's second half would fall short of analysts' estimates. Staff Builders, which offers permanent and part-time nursing staff, is going to take a $2.5 million charge to close two unprofitable divisions. More details are coming in a press release next week; the company just wanted to get the news out before Thanksgiving for some reason.

Computer Telephone Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:CPTL)") else Response.Write("(NASDAQ:CPTL)") end if %> is one of those stocks that comes out of nowhere to double and triple in a year. A classic CANSLIM stock, it was down $1 1/8 to $13 1/2 today in typically light trading volume. The company has been mentioned in Investor's Business Daily, the Wall Street Journal and Institutional Investor. It recently split 2-for-1. They market discount telephone services, targeting companies and professional organizations. The stock has a 99 Relative Strength and had profits increase by 125% last quarter on a revenue increase of 50%.

A lawsuit by Owens-Illinois <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:OI)") else Response.Write("(NYSE:OI)") end if %>, once part of the Dow Jones Industrial Average, against System Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:SSAX)") else Response.Write("(NASDAQ:SSAX)") end if %> for "failing to provide adequate software" dumped System Software $4 5/8 to $32 7/8 today. Robertson Stephens analyst Eric B. Upin apparently felt the lawsuit is serious enough to downgrade System Software. System Software has counter-sued for non-payment, but Upin is worried that other customers might be unhappy with System Software's products as well, which could hurt overall revenue growth. A highly publicized debacle like this is definitely not a marketing plus. "Hey, try our UNIX solution. Owens-Illinois liked it so much they sued us over it!"

INVESTMENT PERSPECTIVE: And Behind Door #2. . .

An abbreviated trading session, which America Online customers had to endure without 15 minute delayed quotes, wrapped up unceremoniously with a new high for the Dow and the S&P 500 and the Nasdaq Composite heading in an upward direction. For the benefit of those who operated without quotes for the majority of the day, I thought that it might be interesting to recap some of the daily action---something we normally avoid here in Investment Perspective, preferring to focus on a company, a cluster, a sector or a group of stocks.

Technology stocks were mixed, as the old standard goes. If you were involved with the Internet or networking today, odds are you made some money. Coherent Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:CCSC)") else Response.Write("(NASDAQ:CCSC)") end if %> rose $1/4 to $17 and Netstar <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:NTSR)") else Response.Write("(NASDAQ:NTSR)") end if %> rose $1 1/2 to $21 1/4, continuing their dramatic rises on the basis of private meetings with institutional investors and no real news as far as earnings. Either these are amazing opportunities or great shorts; we at Fool HQ can't tell yet.

Somebody finally woke up and realized Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:CSCO)") else Response.Write("(NASDAQ:CSCO)") end if %> is cheap, as the stock rose $3 to $78 3/4. Trading at around 25 times next year's rising estimates, the stock looks cheap for investors who are interested in buying into routers, switches, hubs and all the gizmos that make the Internet work. Why anyone would by buying speculative commercial plays like CMG Information Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:CMGI)") else Response.Write("(NASDAQ:CMGI)") end if %>, up $1 1/2 to $55 3/4, or browser companies that might be de-facto standards but are not *the* standard yet like Netscape <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:NSCP)") else Response.Write("(NASDAQ:NSCP)") end if %>, up $4 1/4 to $109 3/4, or Spyglass <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:SPYG)") else Response.Write("(NASDAQ:SPYG)") end if %>, unchanged at $83 1/2, is beyond me. America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:AMER)") else Response.Write("(NASDAQ:AMER)") end if %>, the premiere commercial online service provider, swam ahead $3 3/4 to $70 3/4 on good volume.

Semiconductors anyone? The shares were on sale today, as they have been for the past two weeks. (Yes, it has only been two weeks since the bottom fell out of the chip market). DRAM did better, with Micron Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:MU)") else Response.Write("(NYSE:MU)") end if %> up $1 5/8 to $49 3/8 and Texas Instruments <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:TXN)") else Response.Write("(NYSE:TXN)") end if %> popping an attractive $2 5/8 to $55 1/8. We take special pride here in the Texas Instruments move, given that we went out on a limb for the company in Wednesday's Evening News. More than just a low-cost producer of DRAM, Texas Instruments is a diversified technology company with a heck of a lot of R&D spending; this one has proven as good as gold over the last 30 years.

SRAM, EPROM and PLDs were not as hot, with Cypress Semiconductor <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:CY)") else Response.Write("(NYSE:CY)") end if %>, Integrated Silicon Solutions <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:ISSI)") else Response.Write("(NASDAQ:ISSI)") end if %> and Integrated Device Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:IDTI)") else Response.Write("(NASDAQ:IDTI)") end if %> all posting marginal gains. One school of thought says that these chips are just too complex for portfolio managers to understand; they would rather buy something simple, like Coca-Cola or Genzyme. Video chips fared moderately well, with S3 <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:SIII)") else Response.Write("(NASDAQ:SIII)") end if %> moving up $3/4 to $18 1/4 and Cirrus Logic <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:CRUS)") else Response.Write("(NASDAQ:CRUS)") end if %> cruising ahead $1 1/8 to $27 1/8.

Semiconductor equipment stocks? Don't bother to look. Unless you are short, you don't want to know. Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:MSFT)") else Response.Write("(NASDAQ:MSFT)") end if %>, Intel Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:INTC)") else Response.Write("(NASDAQ:INTC)") end if %>, US Robotics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:USRX)") else Response.Write("(NASDAQ:USRX)") end if %>, Motorola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:MOT)") else Response.Write("(NYSE:MOT)") end if %>? All flat or marginally up.

Finance companies did well with some merger and acquisition activity in the banking industry. The low-grade lenders like the Money Store <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:MONE)") else Response.Write("(NASDAQ:MONE)") end if %> have been recovering a bit since they got killed last month, but no great shakes yet. Base metals like Nucor <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:NUE)") else Response.Write("(NYSE:NUE)") end if %> were mixed after recent strength, losing $1/8 to $50 5/8 and Kaiser Aluminum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:KLU)") else Response.Write("(NYSE:KLU)") end if %>, up $1/4 to $14 1/8. Paper stocks also picked up as well, with International Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:IP)") else Response.Write("(NYSE:IP)") end if %> unchanged at $36 3/4, off of its 52-week low. Did you know that International Paper was a Beating the Dow stock right now? Maybe some contrarian money should head toward the papers?

Autos were mixed, with Chrysler <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:C)") else Response.Write("(NYSE:C)") end if %> up on the on-again, off-again Kurt Kerkorian news. Healthcare stocks? The pharmaceuticals were mostly down; the hospitals and HMOs were pretty quiet, while the long-term care stocks had a decidedly negative spin to them. Utilities got a boost from PP&L's addition to the S&P 500 Index. Telephone companies were also mixed.

Penny-stock promoters got a lift today from Positron <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:POSI)") else Response.Write("(NASDAQ:POSI)") end if %>, rising a whole $1/4 to close at $2 5/8. Imatron <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:IMAT)") else Response.Write("(NASDAQ:IMAT)") end if %>, that great technology play (read that VERY sarcastically), fell a whole $1/16. Will it get back to its 52-week low of $3/4? We're watching closely.

Enjoy your weekend, Fools. 75% of you are making a four-day weekend out of it. See you at market open on Monday.

CALENDAR: Monday's Economic Events

---13- and 26-Week Treasury Bill Auction
---October Existing Home Sales (8:45)

Byline: Befumo/Sheard (MF Templar/MF DowMan)