A story and charts in yesterday's Washington Business Section incorrectly reported the increase in the price of the stock of Geico Corp. Geico stock sold for $24 a share in mid-August and at last Friday's $42 a share had gone up 75 percent.

The three-month surge in the stock market has produced billions of dollars of gains for investors in Washington companies, pushing the shares of many local firms to the highest prices ever and creating an unprecedented boom for local stockbrokers.

A share of Geico Corp. stock that sold for $15 in mid-August has skyrocketed to $42 today. The stratospheric 180 percent gain in just three months amounts to a paper profit of more than $560 million on Geico's 21 million shares.

Other 90-day wonder stocks that have doubled in value since last summer include CACI Inc., up 171 percent; Radiation Systems, up 146 percent; Federal National Mortgage Association, up 130 percent; Manor Care, up 124 percent; Computer Data Systems, up 110 percent; Flow General, up 98 percent; and MCI Communications, up 96 percent.

Gains of 50 percent or better have been racked up by the shares of Best Products, USAir, Commmunications Satellite Corp., Planning Research, Martin Marietta Inc., The Washington Post Co., Marriott, Hechinger, Giant Food, Dart Drug, Peoples Drug Stores, McCormick and Black & Decker.

But the biggest winner among local stocks is Washington Homes Corp., of Waldorf, whose stock is up more than 500 percent, thanks to an unanticipated and unexplained batch of buy orders late last week. Selling for 1 1/8 in mid-August, the stock had gained only a point -- to 2 1/8 -- by last Monday. The shares were up another 50 cents after Tuesday's trading and then took off, jumping to $3.50 on Wednesday, $5.375 Thursday and $7 Friday.

Washington Homes is expected to announce substantially improved earnings today, but, said President Lawrence M. Breneman, "what we know doesn't explain what has happened." Like many companies in the homebuilding business, Washington Homes is expected to benefit from lower interest rates, he added.

The best explanation for the stunning jump in the stock, Breneman said, seems to be that "we're rather thinly traded and there's a lot of speculative interest in home builders."

Usually only 1,500 to 2,000 shares of Washington Homes are traded in a week, but last Thursday 45,000 shares changed hands, a huge volume considering there are only 1.2 million shares and half of them are owned by insiders and others who aren't buying and selling.

Extraordinarily active trading and extensive speculative buying have enabled many Washington companies to outperform the Dow Jones Industrial Average during the raging bull rally on Wall Street.

The closely watched Dow index measuring prices of blue-chip manufacturing companies has climbed about 35 percent since hitting a 27-month low on Aug. 13. Other measures of overall stock market activity are also up about one-third in the last 90 days.

But Washington-area stocks are up 56 percent in the same period, as measured by the Johnston Lemon Index, a compilation of local securities created by Johnston Lemon & Co.

"In 22 years in the brokerage business in this town I can't remember anything like this," said Patrick C. Ryan, vice president and manager of trading for the local firm. October was the biggest month in the 62-year history of Johnston Lemon "in commission revenues, trading volume or any other yardstick you want to use," he added. The number of orders handled daily jumped from around 200 to 1,400 as a result of what Ryan calls "a complete turnaround in the psychology of investors."

"It's really spectacular what's happened," agreed Eliot Benson, director of research for Ferris & Co., another specialist in Washington-area companies.

The local leaders of the rally are virtually all companies that have not merely ridden with the Wall Street bulls, but have outrun the Dow thanks to attributes of their own that attract investors, the local brokers point out.

The biggest profit producer for local investors -- as well as brokers -- has been Geico, the Chevy Chase insurance company. While Geico common stock is up 180 percent, Geico warrants have jumped from 6 1/2 to 37.

Geico Corp.'s gains have come from what spokesman Robert Jackson calls "a culmination of several factors," including recommendations by two major investment advisors, Morgan Stanley Inc. and Warburg Paribas Becker -- A. G. Becker Inc.

Morgan Stanley was the first to put out a "buy" recommendation on Geico, said Jackson. "Right after that the stock started to move. Combined with a very favorable market, good earnings potential and a reasonably good third quarter, things have all come together for us."

As an insurance company, Geico gains several benefits from the booming stock and bond markets, a synergism that pushes the company's stock up faster than most other shares.

Geico's investments in stocks and bonds have increased dramatically in value because of the rally, providing real increases in asset value that make the company's own shares worth more. At the same time, lower interest rates help reduce Geico's borrowing costs, boosting profits.

Higher profits, in turn, add their own impetus to stock prices. Projections are that Geico will earn profits of $3.50 to $3.60 a share this year and will hit the $4.25-to-$4.50 range in 1983.

Such healthy earnings have made a born-again bull stock of Geico, bringing new life to a company that in 1975 was close to going broke. The current $42 price is the highest since before Geico's brush with bankruptcy. Anyone smart enough -- or brave enough -- to buy Geico stock then could have picked it up for around $3 a share.

Geico's shattered fortunes were swept up by a new managment team that made -- and is continuing to make -- major changes in the company's operations. Similar restructuring has helped make Manor Care Inc. of Silver Spring one of the big winners among Washington companies in the last three months, up 124 percent from $13.25 a share to $29.75.

Manor Care acquired Quality Inns and the Cenco health care chain last year and this year has disposed of the dregs of the Cenco operation -- eliminating poor performers and simultaneously gaining cash to pay off debts.

The drop in interest rates that benefited Geico has also been a boon to the Federal National Mortgage Association, another fair-weather favorite of Wall Street analysts. Fannie Mae shares dropped as low as 7 1/8 when interest rates were peaking earlier this year; as rates came down, the stock moved up slowly and was trading around $12 in mid-August. Friday it closed at 26 5/8, the high for the year.

While small companies like Washington Homes can get big gains because so few shares are traded, Fannie Mae attracts investors because of the huge blocks of its shares that change hands constantly. On Friday, 784,000 FNMA shares were traded on the New York Stock Exchange.

Other high-volume, high flyers among local firms are MCI, Comsat, Martin Marietta and Marriott Corp.

MCI shares were selling for 38 7/8 in mid-August and closed at 37 1/2 on Friday. But MCI declared a two-for-one stock split effective Sept. 10, so the price has effectively doubled. Every share worth 38 7/8 three months ago is now two shares worth a total of $75 today.

Probably not many investors bought stock at the market's low point on Friday, Aug. 13, but plenty of people who missed that lucky day have made out handsomely on the steady rise in stock prices since then, local brokers report. The bull market has also made healthy some investors who bought stock in local companies some time ago, then steadily watched the value of their investment slip when the economy got sick.

So far most beneficiaries of the stock market climb seem to be hanging on to their profits, though several of the stocks show evidence of profit-taking. The clue that investors are cashing in comes when a steadily rising stock suddenly loses a little bit, indicating more people were selling than buying.

That happened last week to MCI, whose shares hit 38 7/8, then slipped to 37 1/2, and CSX, which slipped from 55 1/4 to 53 3/4 after a steady uptrend.

"Definitely there have been clients taking profits, but many are waiting for higher prices," said Benson of Ferris & Co. "The market seems to have the momentum and investers are staying in."

Johnston Lemon's Ryan said some of that company's customers have been cashing in profits earned on one fast-moving local stock, then switching their money to another company that seems to have more room to grow.

The question of whether to sell or not to sell depends on the individual stock, notes Benson. Shares of a company that has already begun to show substantially improved profits may be hitting their peak, while companies with strong future earning potential could see their stocks continue to rise.

Woodward & Lothrop is "a stock that has a long way to go," Benson believes. He is also recommending Dynatch Corp., a Boston-based high-tech communications and medical company that has four plants in the Washington suburbs.

Other high-tech companies whose stockholders are prospering in this market include CACI, Computer Data Systems and Radiation Systems.

At its facility near Dulles Airport, Radiation Systems makes antennas -- the dishes that listen to communication satellites. Founded in 1960, Radiation Systems almost failed in 1974 and its stock dropped to 25 cents a share. It's been uphill since then and since summer the shares have really climbed, from 11 1/4 to 27 3/4 in the last 90 days.

Bethesda-based Computer Data is a 1,200-employe computer services and software outfit that has made money for customers of Johnston Lemon and Ferris, both of which have recommended the stock for some time.

In the last three months alone, Computer Data has jumped from $9.50 a share to $20. Computer Data's biggest day was Oct. 27, when investment advisor Marty Zweig recommended the shares in his newsletter, and they soared in a single hour of trading from $16 to $21 before slipping back.

"I started buying Computer Data in 1980 at about $8 or $9," recalled Ferris broker Tom Jones. Since then the stock has split twice (first a five-shares-for-four split, then a two-for-one) and the price has climbed sharply. As a result of the splits and gains, 100 shares of Computer Data purchased a couple of years ago for $8 each are now 250 shares worth $20 each; the $800 investment in 1980 is worth $5,000 today.

Now ripe for stock splits, analysts believe, are The Washington Post Co. (up from 33 a share to 55 3/4 since August) and CACI Inc., an Arlington research firm. Selling for just under $39 a share in August, CACI stock is up 170 percent, hitting $105 on Friday.