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HEROES

Telecommunications equipment and software company Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> powered up $5 3/16 to $97 3/4 after making a number of announcements in the last couple days. Lucent today announced the establishment of a venture capital fund aimed at identifying and investing in emerging technologies. The new subsidiary, initially capitalized with $100 million in equity, will focus on technology in high-growth areas such as wireless, data networking, semiconductors, communications software, and professional services. This follows Lucent's announcement yesterday that it will acquire Hewlett-Packard's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %> local multipoint distribution service wireless business and launch a new wireless broadband networks division in Milpitas, Calif. Today the company also announced a two-for-one stock split, the first since Lucent went public in April 1996. Lucent will also change its quarterly dividend rate to $0.04 from $0.075 for dividends payable after April 1.

Manufactured homes retailer HomeUSA Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HSH)") else Response.Write("(NYSE: HSH)") end if %> surged $1 7/16 to $9 13/16 after announcing late yesterday that it has agreed to be acquired by Fleetwood Enterprises <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLE)") else Response.Write("(NYSE: FLE)") end if %>, one of the nation's largest makers of manufactured housing and recreational vehicles, for about $162 million. HomeUSA shareholders will receive $10.25 payable in cash or Fleetwood stock for each HomeUSA share. It's not surprising that HomeUSA would want to merge with a company more than 10 times its revenue size, not to mention one that is both "well-known" and "highly respected," in the words of HomeUSA CFO Michael Loy. After all, HomeUSA was founded in 1996 in a consolidation of nine smaller regional companies with a mission of continued growth through acquisitions. Plus, HomeUSA already buys 60% of the factory-built homes it sells from Fleetwood. In an industry that is undergoing rapid consolidation as an answer to overcapacity, Fleetwood is positioning itself by adding a new retail division that will also include Expression Homes Inc., a joint venture formed with Pulte Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PHM)") else Response.Write("(NYSE: PHM)") end if %> in 1997. Fleetwood, which finished up $1 7/8 to $46 5/8, also announced that it will buy Pulte's 51% interest in Expression Homes.

Campbell Soup Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPB)") else Response.Write("(NYSE: CPB)") end if %> ticked up $1/2 to $55 1/16 on reporting Q2 EPS of $0.67 before charges, within the range of analysts' estimates of $0.66 to $0.69. Soups and sauces were the best-performing company segment, reporting a 7% increase in sales from last year's second quarter. Other divisions such as Biscuits & Confectionery and Foodservice reported less-robust growth of 1%. Total sales rose approximately 1% for the quarter while pre-tax income increased by 13%. Combined with a 2.3% decrease in shares and equivalents from last year, Q2 EPS grew an "m'm good" 16%. The company also announced today that it will sell its can-making unit to Silgan Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SLGN)") else Response.Write("(Nasdaq: SLGN)") end if %>, which popped up $4 3/4 to $33 1/2 on the news. Making cans for Campbell is an attractive proposition, but not as attractive for Campbell itself, which generates its shareholder returns through good capital management and from the pricing power it enjoys in its "Best In Show" products.

A number of credit card issuers got a boost today after CIBC Oppenheimer said consumers refinancing their mortgages bodes well for credit quality down the road. Analyst Steve Eisen raised his rating to "strong buy" from "hold" on the following: Capital One Financial <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COF)") else Response.Write("(NYSE: COF)") end if %>, which rose $1 3/8 to $69 1/2; Citicorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %>, which moved $1/2 higher to $128 1/4; First Chicago/NBD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FCN)") else Response.Write("(NYSE: FCN)") end if %>, which climbed $1 3/16 to $81 3/4; and MBNA Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KRB)") else Response.Write("(NYSE: KRB)") end if %>, which rang up a $1 3/16 gain to $35 3/8. Banc One Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ONE)") else Response.Write("(NYSE: ONE)") end if %>, which about this time last year announced its acquisition of credit card issuer First USA, gained $1 3/8 to $57 1/4 on a rating upgrade to "buy" from "hold." Some would argue, though, that consumers will replace lower-rate mortgage debt with high-rate credit card debt, which jeopardizes credit quality. More liquidity for borrowers also means more liquidity for lenders, too, meaning that competition in credit card lending will also be heating up from its current not-so-tepid level.

QUICK TAKES: Video duplication and distribution company VDI Media <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VDIM)") else Response.Write("(Nasdaq: VDIM)") end if %> rocketed up $4 to $14 1/4 after yesterday announcing fourth quarter earnings of $0.14 per share, which beat the First Call consensus estimate of $0.12. After making four acquisitions in 1997, VDI Media said it will continue its "aggressive acquisition strategy" and has "a robust pipeline of opportunities"... OHSL Financial Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OHSL)") else Response.Write("(Nasdaq: OHSL)") end if %>, the parent company of Oak Hills Savings & Loan Co., jumped $5 3/4 to $36 1/4 after declaring a two-for-one stock split... Collision repair parts distributor Republic Automotive Parts <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAUT)") else Response.Write("(Nasdaq: RAUT)") end if %> soared $2 27/32 to $16 3/8 after announcing that it has agreed to be acquired by competitor Keystone Automotive Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KEYS)") else Response.Write("(Nasdaq: KEYS)") end if %>. Republic shareholders will get 0.8 of a Keystone share for each Republic share.

Information security software provider MEMCO Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MEMCF)") else Response.Write("(Nasdaq: MEMCF)") end if %> gained $3 1/4 to $24 3/8 after announcing fourth quarter earnings of $0.22 per share, double the $0.11 it earned in Q4 1996 and better than the $0.18 First Call consensus estimate. For the year, EPS increased to $0.55 from $0.25 the year before... GT Interactive Software Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GTIS)") else Response.Write("(Nasdaq: GTIS)") end if %> rose $1 3/16 to $7 13/16 after reporting fourth quarter EPS before charges of $0.24 compared with $0.13 for the prior-year period. The First Call mean estimate was $0.21... Electronic scoreboard manufacturer Daktronics Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DAKT)") else Response.Write("(Nasdaq: DAKT)") end if %> bounced up $1/2 to $6 1/2 after announcing earnings of $0.16 per share for the third quarter, up from $0.02 the year before. That far exceeded the First Call earnings estimate of $0.08.

Robertson-Ceco Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RHH)") else Response.Write("(NYSE: RHH)") end if %>, which builds metal buildings for commercial and industrial use, leapt $1 3/16 to $10 after yesterday reporting fourth-quarter earnings of $0.36 a share compared with $0.20 for the prior-year period and topping the $0.26 First Call mean estimate... Signal processor chip maker Analog Devices <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ADI)") else Response.Write("(NYSE: ADI)") end if %> rallied $4 to $31 5/8 after announcing fourth quarter earnings before charges of $0.29 per share, up from $0.23 in the year-earlier period and the same as the First Call estimate. Taking into account the special charge related to the company's GSM wireless handset business, Q1 EPS was $0.26... Movie studio Metro-Goldwyn-Mayer Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MGM)") else Response.Write("(NYSE: MGM)") end if %> jumped $1 3/16 to $19 7/16 after the Chicago Board Options Exchange announced that MGM will begin trading options on the board on Monday... Women's fashion accessories retailer Claire's Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CLE)") else Response.Write("(NYSE: CLE)") end if %> added $1 to $17 3/4 on reporting record fiscal '98 sales of about $500 million, up from $440 million last year. For Q4 1998, the company reported EPS of $0.60 versus $0.49 for Q4 1997.

Wireless communications company 360 Communications Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XO)") else Response.Write("(NYSE: XO)") end if %> shot up $1 3/8 to $25 1/8 after reporting record fourth quarter earnings of $0.18 per share, topping the First Call mean estimate of $0.12... Automotive parts supplier Noble International <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: NIL)") else Response.Write("(AMEX: NIL)") end if %> added $3/4 to $10 after announcing 1997 earnings on a pro forma basis of $0.40 per share. Historical EPS also rose to $0.13 from a loss of $0.02 in 1996. The pro forma operating results reflect the effect of Noble's recent acquisitions of DCT Component Systems Inc. and Utilase Inc. as if the acquisitions had been completed on January 1... Metals USA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MUI)") else Response.Write("(NYSE: MUI)") end if %>, a consolidator of metals processing and distribution companies, gained $7/8 to $15 1/2 after announcing yesterday that it has entered an agreement to acquire Pacific Metal Co. in a transaction involving a combination of cash, stock, and assumption of debt.

Steelcase Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SCS)") else Response.Write("(NYSE: SCS)") end if %> vaulted $5 5/8 to $33 5/8 from an initial offering price of $28. Steelcase is one of the world's largest manufacturers of office furniture with sales totaling $2.4 billion in 1997... Telecom equipment maker ADC Telecommunications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADCT)") else Response.Write("(Nasdaq: ADCT)") end if %> gained $1 5/16 to $22 9/16 before reporting earnings after the bell. In-line with its pre-announcements, the company reported Q1 EPS of $0.19 on revenues of $286 million... Household International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HI)") else Response.Write("(NYSE: HI)") end if %> rose $3 7/8 to $141 1/4 after the company said it may be interested in acquiring consumer finance and specialty insurance company Beneficial Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BNL)") else Response.Write("(NYSE: BNL)") end if %>, which yesterday as much as said that it's up for sale.

Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> gained $1 7/8 to $113 3/16 in advance of reporting earnings after the bell. Q4 EPS of $0.81 rose a healthy 62% over last year on a 55% increase in revenues of $3.7 billion.... PC maker Hewlett-Packard Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %> gained $1 1/2 to $63 1/8 despite reporting Q4 earnings of $0.86 per share, which was a penny shy of the First Call mean estimate. The company said currency problems in Asia and a shift by consumers to low-end computers and printers held down earnings.

GOATS

Year 2000 problem-solver Data Dimensions <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DDIM)") else Response.Write("(Nasdaq: DDIM)") end if %> fell $1 3/4 to $14 3/8 after reporting a break-even Q4 (before charges) versus EPS of $0.08 a year ago. The results fell far short of the First call mean estimate of $0.13 per share. Revenues jumped 100% during the period to $14.1 million, but operating income (which excludes the one-time charges) fell dramatically to $29,000 from $388,000. Part of this slide can be attributed to SG&A expenses, which nearly doubled in the period to about $5.2 million. This sounds bad until one notices that SG&A as a percentage of sales actually fell from 39% to 37%. The only other possible culprit, then, is costs of goods sold. Et voila, costs rose from 55% of sales to 63% of sales in the quarter, indicating that services are accounting for more of the company's revenues than software is. On the bright side, Data Dimensions said new contracts with Merck <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRK)") else Response.Write("(NYSE: MRK)") end if %> and Kaiser Permanente <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KLU)") else Response.Write("(NYSE: KLU)") end if %> for Y2K services will generate $30 million in revenues.

MicroAge Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MICA)") else Response.Write("(Nasdaq: MICA)") end if %> was hammered for $1 7/16 to $12 3/16 after reporting a fiscal Q1 loss of $0.28 per share, missing the mean First Call estimate of positive $0.16 per share. The computer distributor and reseller said that lower-than-anticipated sales, pricing pressures, and reduced rebates from vendors caused the losses. Gross profit margins dropped to 6.26% from 7.01% while operating income as a percentage of sales tumbled to 0.06% from 1.52%. Moving to the balance sheet, working capital increased 30% to $174 million from $144 million at the end of last quarter, but that was funded by debt and equity issuance and not really from operations. That's bad news for a company whose debt-to-equity ratio has reached 3.22. In other words, the company is using $3.22 of liabilities for every dollar of shareholder's equity. To prevent future earnings disappointments, the firm will speed up its proposed restructuring program and begin streamlining its sales and support operations starting in early March. It refrained from saying how many jobs would be cut or how much the reorganization will cost.

QUICK CUTS: Other Year 2000 companies followed Data Dimensions down today. ViaSoft Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VIAS)") else Response.Write("(Nasdaq: VIAS)") end if %> lost $1 7/16 to $29 3/16 and Peritus Software Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PTUS)") else Response.Write("(Nasdaq: PTUS)") end if %> fell $1 1/4 to $15... Eli Lilly & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLY)") else Response.Write("(NYSE: LLY)") end if %> sank another $1 3/4 to $60 after a drug industry group yesterday said Lilly's new Evista drug is getting off to a slow start... Yarn maker Unifi Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UFI)") else Response.Write("(NYSE: UFI)") end if %> was strung for a $4 1/16 loss to $35 5/16 after analysts warned that the company's revenues may suffer in the near term due to delivery delays and the strong dollar, according to Bloomberg News... Drug company Bio-Technology Group Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BTGC)") else Response.Write("(Nasdaq: BTGC)") end if %> lost $1 1/2 to $8 5/16 after an independent Data Safety and Monitoring Committee said it wants to review more data concerning the firm's OxSODrol drug for premature babies. The company said the decision will hurt its Q1 financial results.

Drug testing products maker Diagnostic Products Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DP)") else Response.Write("(NYSE: DP)") end if %> fell $2 1/4 to $27 after reporting Q4 EPS of $0.26, missing the First Call mean estimate of $0.41... Business communications services provider View Tech Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VUTK)") else Response.Write("(Nasdaq: VUTK)") end if %> slipped $11/16 to $5 3/16 after reporting Q4 EPS of $0.01 versus a loss of $0.61 a year ago. The company's CFO also stepped down to "pursue other interests"... Englewood, Colorado-based mining company Getcell Gold Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Amex: GGO)") else Response.Write("(Amex: GGO)") end if %> slid $2 3/16 to $20 7/8 on reporting a Q4 loss of $0.13 per share, which was better than the First Call mean estimate of a loss of $0.25 per share. However, Bloomberg News reported the company doesn't have enough money to finish its new gold mine because a Canadian bank cancelled a $25 million line of credit.

Microwave test equipment maker ORBIT/FR Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORFR)") else Response.Write("(Nasdaq: ORFR)") end if %> dropped $3 1/4 to $11 1/4 after the company said that its Q4 revenues will be "materially lower than expectations" due to the Asian financial crisis. The First Call mean estimate had called for earnings of $0.20 per share... Microcomputer products distributor CHS Electronics <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CHSE)") else Response.Write("(Nasdaq: CHSE)") end if %> tumbled $4 3/4 to $19 1/4 despite reporting Q4 EPS of $0.45, beating the First Call consensus estimate of $0.41. However, some investors believe the strong earnings are a result of a lower tax rate rather than higher revenues... Ski, snowboard, and in-line skate maker K2 Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KTO)") else Response.Write("(NYSE: KTO)") end if %> skidded $1 3/16 to $19 3/8 after reporting Q4 EPS of $0.26 versus $0.38 a year ago, missing the street's expectations of $0.43. A.G. Edwards downgraded the company to "accumulate" from "buy."

Wireless communications supplier Allen Telecom <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALN)") else Response.Write("(NYSE: ALN)") end if %> lost $1 9/16 to $17 3/8 after reporting Q4 EPS of $0.30, which was in-line with the First Call mean estimate. The company said it is "difficult to imagine" that the Asian financial crisis will not lead to softer sales in the region, and added that it is "uncertain" about its prospects for revenue growth in fiscal 1998... Chemical and metal components company Sigma-Aldrich Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SIAL)") else Response.Write("(Nasdaq: SIAL)") end if %> slipped $1 15/16 to $38 3/8 after Merrill Lynch cut its rating on the stock to "near-term neutral" from "near-term accumulate"... Computer generated TV graphics firm Princeton Video Image <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PVII)") else Response.Write("(Nasdaq: PVII)") end if %> fizzled $1/4 to $7 after reporting a fiscal Q2 loss of $0.83 per share compared with a loss of $0.56 per share a year ago.

International telecommunications carrier Pacific Gateway Exchange <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PGEX)") else Response.Write("(Nasdaq: PGEX)") end if %> lost $3 3/8 to $46 13/16 despite reporting Q4 EPS of $0.19, slightly ahead of the First Call mean estimate of $0.18... Internet commerce software developer Elcom International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ELCO)") else Response.Write("(Nasdaq: ELCO)") end if %> dropped $5/8 to $5 7/8 after reporting Q4 EPS of $0.10 versus $0.07 a year ago, topping the street estimate of $0.09. The company said it is continuing talks with several firms concerning "strategic options to enable the company to grow more quickly"... Centennial Cellular Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYCL)") else Response.Write("(Nasdaq: CYCL)") end if %> dropped $1 1/4 to $18 1/4 after Merrill Lynch downgraded the cellular telephone service provider's shares to "long-term accumulate" from "long-term buy."

FOOL ON THE HILL
An Investment Opinion
by Louis Corrigan

Quigley's Cold-Eeze Warms Up

Once just the little company that could, Quigley Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QGLY)") else Response.Write("(Nasdaq: QGLY)") end if %>, the maker of the popular zinc gluconate-glycine lozenges marketed as Cold-Eeze, is fast becoming the little company that both has and perhaps will. Since the Federal Reserve pronounced the stock marginable on February 9 and presumably enticed some previously hesitant investors to jump in, Quigley's stock has bounced from $12 a share to yesterday's close of $15 3/16, a gain of 27%.

The rally picked up steam yesterday when the stock rose $2 1/8 following the company's announcement of a Canadian distribution deal with Genpharm Inc., a subsidiary of the $5 billion German pharmaceutical firm Merck KGaA. This agreement is Quigley's first venture outside the U.S. and a launch in the United Kingdom is expected shortly. Such international distribution deals mark the next chapter in a remarkable growth story that continues to surprise skeptics.

Quigley sells one product, a zinc lozenge that has been shown in two clinical studies to reduce by 42% the duration and severity of the common cold. The company rode a tidal wave of favorable media coverage following the summer 1996 publication of the second study, conducted by investigators at the Cleveland Clinic. Cold-Eeze quickly became a runaway hit with consumers who shared testimonials and thumbed their noses at the distinguished cold experts who chalked the results up to the placebo effect. After trading below $1 a share two years ago, Quigley shares exploded, rising to $18 early last year.

Along the way, though, this tiny Doylestown, Pennsylvania company connected itself with a crew of questionable characters, some of whom got rich. Diversified Corporate Consulting, for example, was targeted by the SEC as part of an investigation into the manipulation of microcap stocks by the online tip sheet SGA Goldstar. Diversified worked for Quigley Corp. and ended up with warrants to acquire 350,000 Quigley shares for just $1.75 a piece.

While vocal short-sellers and a Barron's expose were raising questions, the crucial Cleveland Clinic study fell under scrutiny when it came to light that lead investigator Dr. Michael Macknin had purchased Quigley shares apparently after the study was completed but before it was written up. The case raised doubts about Quigley's efficacy claims for Cold-Eeze and led to some soul-searching articles in the mainstream media and the medical journals about the conflicts of interest plaguing medical research more generally.

In the past year, though, Quigley has managed to grow up by saying goodbye to its Brooklyn auditor -- who Barron's reported had connections with mob figures -- and hello to Coopers & Lybrand; ending its contract with Diversified; and bringing in new CFO George Longo, formerly of Rhone-Poulenc. Bracketing off its troubled history, Quigley today looks remarkably solid. From virtually no sales just a year ago, the company expects to report at least $70 million in revenue for FY97, incredible numbers for a company selling a seasonal retail product for $5 apiece. With gross margins around 70% and net margins of 30%, Quigley should earn $1.24 per share for FY97. Gross margins should fall a bit this year due to international distribution deals, and ad spending will double to $6 million. Even so, net margins should come in around 27% to 28%.

Quigley sees 1998 revenues rising 20%, suggesting EPS of at least $1.32. Plus, at the end of the September quarter, Quigley had $7.7 million in cash and working capital of $22.5 million with no debt and the expectation of generating another $32 million in profit by this time next year. Moreover, manufacturing capacity for the foreseeable future is already lined up, meaning that capital expenditures should be minimal.

Quigley has done so well because the combination of terrific publicity from the likes of ABC's 20/20 and a radio ad campaign focused on the big three (Howard Stern, Rush Limbaugh, and Dr. Laura) has worked to build an exceptional brand despite the multimillion dollar television advertising by Warner Lambert <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WLA)") else Response.Write("(NYSE: WLA)") end if %> to support its copycat Hall's Zinc Defense lozenges. According to Quigley, an early November report from Information Resources <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IRIC)") else Response.Write("(Nasdaq: IRIC)") end if %> showed Cold-Eeze leading the cough/cold throat category, outselling Zinc Defense 8 to 1. Three months later, Cold-Eeze has held up quite well, still outselling Zinc Defense by 5 to 1. Indeed, Quigley recently reported that Cold-Eeze is outselling Hall's entire 40 SKU product lineup despite being in just 80% of U.S. drug stores versus Hall's market saturation.

While even Quigley's main patent holder, Dr. John Godfrey, has said that Hall's zinc acetate product could work as well as Quigley's zinc gluconate-glycine, no clinical study has shown that to be the case. Meanwhile, Quigley has been pushing its own unique zinc formulation, the only zinc lozenge ever to be shown effective against the cold, as "ZIGG." That additional branding strategy is part of a broader and apparently successful effort to educate both consumers and pharmacists about why Cold-Eeze is different from the competition.

The company also hopes to extend its market by pushing it in Kmart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KM)") else Response.Write("(NYSE: KM)") end if %> stores this spring as a form of allergy relief. Quigley hopes to eventually support that and other claims based on additional clinical studies, such as one testing whether Cold-Eeze prolongs life in patients suffering from lung disease and another testing to see if adding different vitamins to the mix increases the product's efficacy. Also, the firm expects to introduce a new sugar-free Cold-Eeze within the next two months.

Investment risks abound, of course. There are still shares hanging over the market from last July's massive registration. Another worry is that Cold-Eeze's success might play out like CNS's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNXS)") else Response.Write("(Nasdaq: CNXS)") end if %> Breathe-Right nasal strip, whose soaring sales had more to do with simply filling the retail sales channel than with strong sell-through. Still, Quigley has so far managed to eke out increasing credibility despite some very long odds. And the company's continued success keeps reducing the risks even as the stock continues to trade at a discount to the market. As a speculation, Quigley's siren call persists.

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Dale Wettlaufer (TMF Ralegh), Fool
Alex Schay (TMF Nexus6), Fool
Louis Corrigan (TMF Seymor), Fool
Yi-Hsin Chang (TMF Puck), Fool
Brian Graney (TMF Panic), Fool
Contributing Writers

Brian Bauer (TMF Hoops), Fool
Editor