At a time when investors could be expected to be more than careful about where they channel their resources, most participants in a weekend investment fair here were eagerly seeking solid investments in local companies.
And the D.C. area companies' presentations Saturday at the Washington Investors Fair, sponsored by the Metropolitan Washington Council of the National Association of Investment Clubs, reflected that investor enthusiasm. But no one speaking at the conference was more bullish than Kenneth M. Miller, president of Penril Corp.
The chief executive at Penril, the thriving electronics and communications firm in Rockville, said the soaring cost of borrowing money should not alter his firm's rising profit levels: In 1979, Penril reported revenues of $22 million, up $9 million from 1978.
Miller told the group of potential investors that although he worries about the inflationary consequences of interest rate hikes, companies like his own can maintain increasing profit levels despite that trend.
Miller said "the high cost of money displeases everyone," but he also noted that he does "not fret about higher interest cost as it relates to the business of Penril."
Miller's presentation was one of a series of sales pitches made by area companies to about 200 investment club members.
Typical of club members' attitudes was the remark of one middle-aged woman, who asked that she not be identified. "I've got to make sure the banks don't hang on to my money," she said. "A savings account isn't going to ensure my happy retirement."
Miller explained his view of rising interest rates in terms of the prospects of a hypothetical company with $10 million in revenues. If that company, Miller explained, had to borrow at a 20 percent interest rate, up from 15 percent in several months, a product price hike of only three-quarters of a percent would cover the interest rate increase and enable the firm to match its previous profit mark.
"Therefore, the real threat of higher cost money is not the direct impact on profits -- it is the indirect impact it has in fueling inflation through the higher costs of labor, material and supplies purchased by business," Miller concluded.
Penril, which manufactures data communications, testing power supply and high fidelity electronics equipment, has reported consistent revenue and profit gains since its formation 12 years ago. For 1979, Penril showed a profit of $1.5 million, 33 percent higher than 1978. The company's profits last year matched its total sales in 1973.
Miller said the company has not seen indications that a recession would alter the company's prospects. The company's backlog, he said, is about $7 million, the highest in the company's history.
"The Penril Corp. and the overall electronics industry should continue to experience growth in revenue and earnings in 1980 and in the golden age of the 80s lying ahead for electronics, in spite of our government's official declaration that we are in a recession," he said.
In addition, Miller said investors are showing increasing interest in the electronics industry, and the result is that firms like Penril are replacing high-cost debt financing with permanent capital.
Miller, along with executives from Potomac Electric Power Co. and Scope Inc., had generally favorable things to say about the Carter anti-inflation program. W. Reid Thompson, Pepco's chairman, said Carter's pledge to balance the federal budget "is certainly a move in the right direction."
Thompson said the restraints on borrowing in the economic package should not alter Pepco's ability to raise funds. But he also said Pepco is "reviewing very carefully our planned financing.
"It would be foolish to market new securities today with the thought that you'll get a better deal now than later this year," Thompson said. "I don't want to sell any securities at these rates."