Leading Companies Turn Inventory Quickly.(A)(INVESTOR'S CORNER)

Byline: Christina Wise

In the 1990s, Dell Computer cut out distributors to sellits made-to-order PCs directly to customers. Discount retailer Wal-Mart focused on logistics and just-in-time inventory to keep its costs low.

What do these two have in common? Both edged out the competition by focusingon managing inventory. Their stocks also turned out to be mega-winners of the last decade.

How well a company manages the storage and manufacturing of its products canmake the difference between standing out in the crowd and blending in with thescenery.

When trolling for investment candidates, first compare a stock's earnings and sales growth, margins and price performance to others in its industry group. To dig a little deeper, take a look at its inventory figures.

Inventory is the sum of raw materials, work in progress and finished goods. Look at it across several years or quarters.

In general, a big jump could be a sign of trouble. But remember, increased inventory often goes hand in hand with a rise or an expected rise in sales. A retailer, for instance, may boost inventories ahead of the summer back-to-school shopping season.