American Greetings Retains Its Popularity But a Slower Rate of Growth Is in the Cards
American Greetings is a Wall Street darling today, but can the romance endure?</br></br>For investors who favor long-term relationships, the answer is probably yes. For those more interested in quick flings, probably not.</br></br>The stock of the Cleveland-based greeting card maker is currently near its trading high of 37 1/2, reached last month, and the company expects sales to top $1 billion for the first time in the fiscal year beginning next Friday. That's pretty spectacular, considering that only three years ago the company's stock was trading at roughly one-fourth its current price (adjusted for a 2-for-1 stock split in February 1983) and sales were a tad over $600 million.</br></br>Therein lies the catch for short-term investors. Analysts say, and company executives readily concede, that the growth rate of the next three years is unlikely to match that of the past three. As growth slows, some analysts believe, the company's price-earnings ratio, now about 16, may also soften. Even some long-term holders contend the stock now is fully priced.</br></br>"We wouldn't be buying the stock today," says William J. Goldsborough, a vice president at Lincoln Capital Management Co., Chicago, which holds about 1.4 million American Greetings shares. But that doesn't mean that Mr. Goldsborough isn't a fan.