Stocks of most companies based in the San Fernando Valley finished a roller-coaster second quarter on the plus side, extending a recovery from their post-crash beating in late 1987.
The stocks thus kept in line with the broader stock market, which posted moderate gains in the first and second quarters of this year after suffering a massive blow Oct. 19, when the Dow Jones industrial average crashed a historic 508 points.
In the three months that ended June 30, 37 of the area's 64 major stocks rose from their levels at the end of the first quarter, while 25 lost ground and two were unchanged. One of every three stocks climbed 10% or more in the latest period.
Companies included in the list are those with headquarters from Glendale to Camarillo. The stocks' performances are tracked for The Times by Communications Research Group of Austin, Tex. Stocks that were worth less than $1.50 a share were not included in the survey.
By comparison, the NASDAQ composite index for the over-the-counter market--where most Valley stocks are traded--rose a modest 5% in the second quarter and advanced 19% for the first six months of the year. The Dow Jones average of 30 industrials rose 8% and 11% for the second quarter and six months that ended June 30, respectively.
Merger proposals and other one-time events played a role in some of the Valley stocks' results, but in many cases the stocks followed the simple formula of rising when their companies' profits improved, and dropping quickly when profits ebbed.
Alpharel's stock, for instance, posted the biggest drop in the second quarter as the maker of data-storage devices continued to suffer losses and management turnover. The stock skidded 44% to close at $1.62 a share.
During the quarter, Camarillo-based Alpharel announced it had lost $3.6 million in the preceding quarter, which ended March 31. The company also named M. Dean Johnson as interim chief executive, the third person to fill the position since Alpharel founder Michael McGovern, who had been chief executive, was removed by Alpharel's board in December.
Conversely, Tekelec showed how an upturn in profits can do wonders for a stock. During the latest quarter, the Calabasas-based maker of telecommunications testing equipment said its first-quarter earnings soared 12-fold from a year earlier to $1.1 million, and that revenue was up 85% to $6.7 million.
The result: Tekelec's stock more than doubled in the second quarter to $17.75, its highest level since the company went public in May, 1986, at $12.25 a share. And for the first half of 1988, Tekelec's stock--which traded at $3.75 a share in January--is up more than fourfold.
Other stocks benefiting from improved earnings included Amwest Insurance, a Woodland Hills-based underwriter of surety bonds, whose stock rose 46% to $13.87 a share despite Amwest's sale of an additional 550,000 shares; Semtech, a semiconductor concern in Newbury Park whose stock rose 60% to $5 a share, and Syncor, a Chatsworth-based distributor of specialized pharmaceuticals whose stock climbed 47% to $6.62 a share.
Drop Despite Gain
To every rule there are exceptions: National Technical Systems, despite reporting a 24% profit gain for its fiscal first quarter, which ended April 30, watched its stock drop 33% in the second quarter to $2.50 a share.
The biggest gainer was Verit Industries, but its jump had little to do with earnings. The stock of Verit, a Sun Valley-based builder of stereo loudspeakers and a wholesaler of other consumer goods, nearly tripled to $7.50 a share in the second quarter, even though Verit announced it lost $726,000 in the nine months that ended March 31.
The stock got a boost after two investors bought major stakes in the company. Arthur Dalfen of Bermuda acquired 6.8% of Verit, and Meson Investments of Canada bought 5.4%. Both said they purchased their shares for investment reasons only.
Another gainer was Nu-Med, an Encino-based health care concern. Its stock also more than doubled to $3.87 a share, a jump that puzzled analyst Roger Gordon of Donaldson Lufkin & Jenrette Securities in New York. "There isn't any fundamental reason why the stock should be up," he said in reference to Nu-Med's business prospects.
Nu-Med operates of hospitals and other health-care facilities. In the nine months that ended Jan. 31, it lost $20.2 million on revenue of $326 million, and Gordon said he expects "the company will again report lackluster results" for its fiscal fourth quarter, which ended April 30.
Nu-Med President William Hartauer did not return a telephone call requesting comment on the stock's performance.
Delphi Information Systems' stock doubled to $7 a share. During the quarter, the Westlake Village-based marketer of computer systems for insurance agents hinted it would sign a major sales agreement. Last week, Delphi formally announced it had reached the agreement with insurance giant CIGNA.
Redken Up 66%
Redken Laboratories climbed 66% in the quarter to $34.37 after top executives of the Canoga Park-based maker of hair-care supplies offered to buy the 52% of Redken they do not already own for $34.90 a share, or about $49 million.
Big losers in the quarter besides Alpharel included Drewry Photocolor, whose stock lost 34% to $8.25 a share. In May, Drewry's shareholders approved a plan to liquidate the Burbank-based photo processor, and the company said the plan eventually could yield $11 or more a share to the stockholders.
But in the meantime, the stock has been very thinly traded, and just a handful of trades totaling a few hundred shares during the quarter were enough to push the stock lower, said Harold Ellis, Drewry's chief financial officer.
Judy's, a struggling apparel chain headquartered in Van Nuys, lost 33% of its value to $2.50 a share. The company reported a $771,000 loss for its fiscal fourth quarter, which ended Jan. 31, and its profit for the full year plunged 98% to $7,000 from $426,000 the previous year.
The stock of United Education & Software, which soared 142% in 1987 as the top gainer among Valley-area issues, dropped 29% in this year's second quarter, to $10.25 a share. The slide came as state officials disclosed they were reviewing student-aid programs at the career schools operated by Encino-based UES.
SECOND-QUARTER STOCK RESULTS 10 BIGGEST GAINERS
Closing Price on Percent Line of Stock 6-30-88 Change Business Verit Industries $7.50 +185% Electronics Nu-Med $3.87 +158% Hospitals Tekelec $17.75 +137% Telecommun. Delphi Information $7.00 +100% Computers Redken Labs $34.37 +66% Hair care Semtech $5.00 +60% Electronics St. Ives Labs $10.75 +59% Beauty products Syncor $6.62 +47% Pharmacy products Amwest $13.87 +46% Insurance Digitext $2.00 +45% Computer keyboard
10 BIGGEST LOSERS
Closing Price on Percent Line of Stock 6-30-88 Change Business Alpharel $1.62 -44% Data storage Drewry $8.25 -34% Photography Judy's $2.50 -33% Apparel National Technical $2.50 -33% Testing United Education $10.25 -29% Career schools American Mobile $2.87 -26% Mobile phones Olson Industries $6.00 -25% Packaging Micropolis $17.75 -25% Disk drives Valley Federal $12.25 -23% Savings & loan Andrews Group $4.62 -20% Holding company
Note: Excludes stocks whose closing price was below $1.50.
FIRST-HALF STOCK RESULTS 10 BIGGEST GAINERS
Closing Price on Percent Line of Stock 6-30-88 Change Business Tekelec $17.75 +344% Telecomm. Verit Industries $7.50 +217% Electronics Price Pfister* $18.25 +161% Plumbing supplies Delphi Information $7.00 +115% Computers Nu-Med $3.87 +107% Hospitals Andrews Group $4.62 +105% Holding company Micom $15.50 +100% Data commun. Sierracin $8.00 +94% Pharmacy products Superior Industries $16.37 +78% Auto wheels Diodes $3.50 +75% Semiconductors
10 BIGGEST LOSERS
Closing Price on Percent Line of Stock 6-30-88 Change Business Alpharel $1.62 -44% Data storage Valley Federal $12.25 -30% Savings & loan Dick Clark $4.37 -27% Entertainment Micropolis $17.75 -24% Disk drives Datametrics $2.37 -21% Computer printers Patlex $12.00 -20% Lasers SFE Technologies $1.50 -20% Electronics Amgen $27.00 -12% Biotechnology Judy's $2.50 -9% Apparel Drewry $8.25 -8% Photography
* Stock stopped trading May 23 due to merger
Note: Excludes stocks whose closing price was below $1.50.