It was a year of vanishing profits for Washington investors. By the time traders rang the final bell on 1987, there were far more losers than winners among area stocks. Few stockholders expected it to turn out that way.

The year began with euphoria as many local stocks soared to record highs in the spring and summer. But optimism gave way to panic when the market's October collapse wiped out the gains.

When the investment climate changed, it changed suddenly. As recently as Aug. 21, local stocks that showed gains for 1987 outnumbered losing stocks by 3 to 1. But many of the winners vanished when the market cracked on Black Monday, Oct. 19. At year's end, the number of stocks that showed losses outpaced gainers by more than 2 to 1.

The few stocks that survived the plunge and made it to the winner's list included those involved in takeover or turnaround situations or the shares of companies with extremely strong business prospects.

The much-longer loser's list featured stocks in retailing, computer software and housing, businesses that can be hurt by a slowdown in consumer spending and higher interest rates.

"It's been a very mediocre year for area stocks. All things being equal, I would just as soon forget last year," said Joseph A. Clorety III, portfolio manager for the Washington Area Growth Fund, which lost 8.5 percent in 1987.

In the aftermath of the October massacre, investors may find it hard to recall the giddiness that gripped the stock market last January and February as the bull market roared on and stocks climbed higher day after day.

By the end of March, the Dow Jones industrial average, which measures the performance of 30 national blue chip stocks, was up 21.6 percent. The Johnston, Lemon Co., index, which tracks 30 area blue chips, was up 16.3 percent. The three mutual funds that specialize in stocks in the Washington region were up between 15 and 18 percent.

Nine months later, the picture was dramatically different. The Dow, which had climbed 43.5 percent by August, ended the year with only a tiny gain of 2.3 percent -- and it took an end-of-the-year rally to accomplish even that small gain. At the end, the Johnston, Lemon index was down 4 percent.

Of the three area mutual funds, one was up slightly. Two were down sharply.

The Growth Fund of Washington, sponsored by Johnston, Lemon, gained 4.2 percent. The Washington Area Growth Fund, operated by Calvert Group, lost 8.5 percent. The Southeastern Growth Fund, run by Wheat, First Securities, lost 9.9 percent, all with dividends and capital gains reinvested.

Among individual stocks, one of the most dramatic turnaround performances was offered by MCI Communications Corp. of Washington, which rose 50 percent in 1987 after falling 44 percent in 1986.

The long-distance firm, which rang up a $448 million loss at the end of 1986, has seen its profits start to climb once again as it reaped the benefits of cost cutting and a concentrated strategy of offering new products.

Giant Food of Landover, whose stock has been a notable gainer over the years, returned to its winning ways in 1987 with a gain of 39.5 percent. In 1986, the stock lost 5.7 percent because of Giant's decision to compete in the "warehouse price" battle.

Two of 1986's big winners became losers last year.

Richmond's Circuit City, whose sales of video and audio equipment topped $1 billion last year, saw its stock climb 146.2 percent in 1986 but then watched it drop 40 percent in 1987.

Similarly, the shares of Tultex Corp. of Martinsville, Va., climbed 90.8 percent in 1986 but fell 37 percent in 1987. Tultex makes fleeced knitwear, the material used in sweatshirts and jogging suits.

Analysts said both Circuit City and Tultex stocks had fallen, in part, because investors feared that in an economic decline, consumers would curtail their spending on electronic equipment and leisure wear.

For Smithfield Foods of Arlington, a Fortune 500 company, it was another year in the winner's column. The shares of the meatpacker moved up 31 percent, after rising 86.8 percent in 1986 and 149 percent in 1985.

Smithfield has continued to strengthen its industry position through mergers and marketing arrangements.

On the minus side, some stocks lost ground simply because all stocks lost ground. Others fell because of poor profits. Still others were dragged down by a combination of reasons.

Topping the loser's list was Sporting Life of Alexandria, a mail-order catalogue merchandiser of women's apparel. The problem, said Charles B. Howard II, president, was that the firm spent heavily to increase its catalog mailings but the catalogs did not produce the desired sales.

"Our catalogues have gotten too dressy," he said, adding that he had launched a "painstaking" review of the firm's marketing. Sporting Life shares were down 80.7 percent.

Cerberonics of Baileys Crossroads, down 77.8 percent, is a professional services company that has been swimming upstream in a river of red ink as its defense contracts have expired. It holds a major position in Insituform East stock. Cerberonics also has diversified by acquiring a copying machine dealership.

Landover-based Insituform East repairs sewer pipes without digging them up. After a year of lagging profits, the company has seen its earnings begin to pick up. Still, Insituform shares lost 65.5 percent for the year.

Universal Security Instruments of Owings Mills, Md., which distributes security and communications equipment, dropped 70 percent. The firm reported losses for the first half of fiscal 1987.

Old Dominion Systems of Germantown, off 68.8 percent, is a professional services firm that provides computer and voice-messaging systems. Old Dominion also was caught in the double jeopardy of falling earnings and the stock market decline.

Polk Audio of Baltimore, down 63.2 percent, has been hit by a combination of earnings disappointments and a negative investor reaction to companies selling high-end consumer products.

Dominion Federal Savings & Loan of McLean, which fell 62 percent, was hurt by the $129 million judgment in a court case brought by Penthouse magazine.

NV Ryan L.P. of McLean soared 239.6 percent from June of 1986 to March of 1987, rising from an adjusted $6 to $20.50 a unit. But then it was zapped by both the rise in interest rates, which softened the new home market, and by the stock market's slide, which helped take the units down to $3.75, for a 1987 loss of 61 percent.

Survival Technology of Bethesda, down 59.4 percent, produces medical equipment, including devices used by the Defense Department. The company moved into the black in fiscal 1987 after posting losses during several previous years. The firm is working on devices that can be used by heart attack victims to self-administer TPA, an anticlotting agent.

Topping the 1987 winner's list with a 160.3 percent gain was A.H. Robins of Richmond, a pharmaceutical manufacturer, whose troubles seemingly resemble a prescription for disaster, not for gain.

Robins, in bankruptcy proceedings, faces a judicial demand that it come up with $2.475 billion for women who claim they were injured by using Robins' Dalkon Shield intrauterine device.

Investors have bid up Robins stock in expectation of a buyout. After considering offers from Rorer Group and American Home Products, Robins' board last week selected Sanofi SA, a French pharmaceutical company, as its merger partner. The decision will be submitted to the bankruptcy court.

A takeover also catapulted the 68-year-old Arundel Corp. of Baltimore to the winner's list. The firm, which produces construction materials, agreed to be sold for $40 a share, or $85 million, to Florida Rock Industries Corp. of Jacksonvile, Fla. Arundel stock rose 94.9 percent.

The big news in 1987 for Reynolds Metals Co. of Richmond was the discovery of gold on its bauxite mining property in Western Australia. The Boddington Gold Mine is expected to produce 165,000 ounces a year. The other good news was the dramatic growth in the use of aluminum beverage cans.

Reynolds' bottom line also has been helped by a five-year, $600 million cost reduction program that included a 30 percent cut in employes. For 1987, Reynolds was the second best gainer among area stocks, up 138.1 percent.

Strong or improving business niches helped other companies survive the market's plunge and make it to the winner's list.

Iverson Technology Corp. of McLean rose 81.9 percent. Iverson is a key player in the field of Tempest technology, which is used to protect computers and other electronic equipment from electronic surveillance.

Media General of Richmond, a communications conglomerate, saw its stock rise 70.6 percent, although it had been up 118 percent in August. The rise was fueled initially by rising prices for newspaper stocks. The stock rose again on takeover speculation.

The shares of a newcomer to the Washington area, World Corp., located at Dulles Airport, rose 60.6 percent. World Corp. is a contract air carrier, flying passengers and cargo on two subsidiaries, World Airways and Key Airlines. World moved from Oakland, Calif., to be closer to its operations -- including a prime customer, the Military Air Command.

Entre Computer Centers of Vienna, which had been hard hit by the shakeout in the computer industry in 1985 and 1986, moved back into marginal profitability in fiscal 1987, and its stock followed. Entre, a franchiser of retail computer stores, was up 56.1 percent for the year after being down 62.7 percent in 1986.

The gain in Entre stock was a portrait of what might have been had the stock market not collapsed. In September, Entre stock was selling at $7.38 a share, a rise of 187 percent, after starting the year at $2.56. Following the October selloff, Entre stock dropped to $3 a share. It closed the year at $4.

The same scenario was seen with QuesTech of McLean, a professional services company involved in defense work. The company's stock price has gone up as its profits improved. QuesTech profits were up 63 percent for the first nine months of 1987.

QuesTech, which opened the year at $5.25, closed at $8.50, a gain of 61.9 percent. However, before the market's plunge, QuesTech stock sold as high as $15.25, a 190 percent increase.

*Stocks trading for more than $1.

*Stocks trading for more than $1.