THERE is little doubt that the stock market is in for a rough ride, with political and MFN uncertainties inevitably leading to some nervousness. In these circumstances, Laws International appeals as one of the cheapest stocks in a textile industry which offers high yields, and little local exposure. Laws has had a chequered past, with profits dropping from $140 million in the year to March 1990 to $67 million in the following year, as it mirrored the global economic downturn. However, now it looks to be a massive beneficiary on the upside. The share price collapsed last year, with news that its 80 per cent owned Judy's retail store had become one of many retail fatalities in the US and bequeathed to Laws a $236 million extraordinary loss. The group also has reshaped, hiving off its property interests into Laws Property in late 1991, thereby slashing its debt levels. Buyers of Laws International are now gaining exposure to a business which has re-focused its attentions on low-cost garment manufacturing and the result should be explosive growth. Last year, the group reported an operating loss of close to $90 million from its retailing operations in the US and Hongkong. With the US operation closed, the Hongkong operations have been substantially rationalised, with the Sparkle stores shut down and a small contribution is expected during the current year. At the interim stage, the company reported a 224 per cent rise in profit, reflecting the axing of its retail arm. Wardley James Capel is forecasting net profit of $201 million for the full year. On yesterday's closing price of $1.71, the shares are trading on a price-earnings ratio of 4.6 and a yield of 7.6 per cent. This suggests a highly limited downside potential. The company has no exposure to the US debate over China's most-favoured nation status, since production is 70 per cent based in Hongkong, with the remainder in Sri Lanka and the Philippines. In addition, sales in Hongkong are limited, due to the reduction of its local retail operation. The company is a geared play on the recovery of the US retail market, and the signs coming out are extremely encouraging. The company sells three quarters of its products to specialty retail chains, such as the Gap, Limited and Casual Corner. Around the same proportion of overall sales are to the US. Given the extent of the US recession, many garment companies endeavoured to break into the European market, but Laws is very much focused on the US, where inventory levels have been wound down to the extent that there should be a sharp acceleration in orders. Capel is forecasting net profits growth of 19 per cent to $240 million for the year to March 1994, putting the shares on a prospective PE of 3.9 and yield of 8.8 per cent. The shares are unlikely to remain immune to market turmoil, but he fundamentals will be undamaged. And they even offer the scent of China, through the expansion of the lean Bossini retail business across the border.