Ups & Downs : As Crash of ’87 Recedes, Gainers Outpace Losers 3 to 2 Across a Broad Range of Issues in 1988 Stock Scoreboard
Stocks of companies based in the San Fernando Valley joined the overall market in moving mostly higher last year, a sharp turnaround from 1987 when losing Valley issues outpaced gainers by more than 2 to 1.
In 1988, three Valley stocks rose for every two that declined, and the top performers came from a diverse list of industries, from high-technology concerns and banks to a car-wheel maker and an operator of art galleries.
The stocks suffering big setbacks in 1988 also were varied, with real estate developers joining computer and entertainment concerns in the loss column.
Overall, 30 out of the 47 local stocks that began the year at $3 a share or higher ended 1988 with gains, while 16 fell and one was unchanged. Among the advancing issues were 19 that jumped 30% or more in price. The data was compiled for The Times by Communications Research Group in Austin, Tex., and includes stocks of companies with headquarters from Glendale to Camarillo.
Broad Advance
The broader market ended 1988 with a sizable if not spectacular advance. The Dow Jones average of 30 industrial stocks climbed 229.74 to 2,168.57, or 11.9%, within striking distance of its post-crash high of 2,183.50. For all of 1987, the average inched up only 2.3%, largely due to the Oct. 19 stock market crash. The Standard & Poor’s composite index of 500 stocks gained 30.64 to 277.72, or 12.4%, in 1988.
The scoreboard for Valley area stocks last year included some notable rebounds and some sharp setbacks.
For instance, United Education & Software led 1987’s list of winners with a 142% gain. But last year, the Encino operator of trade schools suffered major problems with another subsidiary that serviced student loans, and by year’s end, UES had shed the business. In the meantime, UES’ stock skidded 56% for 1988, to $3.63 a share, making it the second-biggest loser among Valley stocks.
The biggest loser, Chatsworth disk-drive maker Micropolis, likewise had come off a strong 1987, when its stock rose 25%. But last year the company, hampered by high production costs, suffered major losses and its stock plunged 68% to $7.38 a share.
Big Winners
But some other high-technology stocks fared well. The area’s biggest gainer was Tekelec, a Calabasas producer of testing equipment for telecommunications systems, whose stock nearly quadrupled to close at $15.50 a share. The company reported steadily improving earnings in 1988.
Delphi Information Systems, a Westlake Village producer of computer systems for the insurance industry, also enjoyed a rebound in earnings. Its stock jumped 154% to $8.25 a share.
And the stock of Datron Systems in Simi Valley, which makes communications systems for defense and aerospace customers, doubled last year, to $10.50 a share. Among other things, Datron reported a 65% surge in profit for its fiscal year that ended March 31.
Lincoln Bancorp’s stock also rode strong earnings growth at the Encino-based bank holding company to more than double in price to $15.63 a share. Consistent profit gains at Superior Industries, a Van Nuys manufacturer of wheels for the Big Three auto makers, also helped Superior’s stock double to $19.75 a share.
Martin Lawrence Limited Editions, a Van Nuys operator of art galleries, likewise posted big profit gains, with net income for the first 9 months of 1988 doubling from a year earlier. The result: Martin Lawrence’s stock rose 93% last year to $9.88 a share.
Fueled by Takeover
The takeover mania on Wall Street last year also spilled over to some Valley area companies, naturally boosting their stocks. AME, a Burbank company that provides videotape services for the entertainment industry, rose 68% to $13 after AME’s chairman and founder, Andrew M. McIntyre, offered to buy the 56% of AME that he doesn’t already own for $13.75 a share.
Cherokee Group, a Sunland apparel maker, has agreed to be acquired for $14 a share in cash and securities by Green Acquisition, an investor group that includes three top Cherokee executives. Cherokee’s stock also ended the year at $13 a share, up 65%.
Newhall Land & Farming, a Valencia real-estate partnership that is among California’s biggest landowners, has ownership units that trade like shares of stock on the New York Stock Exchange. Last year, Newhall successfully urged its unit holders to pass anti-takeover provisions, but last week rumors of a management-led buyout drove the units higher and the unit closed at $56.63, up 89% for the year. Newhall declined comment on the rumors, but said it could not account for the unit’s sharp rise.
House of Fabrics, a Sherman Oaks operator of fabric stores, also was the subject of takeover rumors at year’s end, giving its stock a 46% gain for 1988 to $21.50 a share.
Poor Performers
Just as the list of Valley winners was peppered with companies showing strong earnings, so too was the list of losers dominated by companies that showed poor profits or outright losses.
Along with Micropolis and United Education, Olson Industries saw its stock slide under the weight of the company’s poor performance. Olson, a Sherman Oaks manufacturer of plastic packaging products that has been hurt by high raw materials prices, lost $3.1 million in the first 9 months of 1988. Its stock finished the year down 50% at $4.25 a share.
The stock of Alpharel, a Camarillo maker of computer data storage equipment that has been struggling because of weak orders, fell 54% to $1.38 a share. Valley Federal Savings & Loan in Van Nuys, which also has posted poor results, fell 24% to $13.25 a share.
Hotel Earnings Drop
Hotel Investors Trust and Hotel Investors Corp., a Woodland Hills real estate investment trust and hotel management concern whose shares trade as one, reported a combined 58% earnings drop for the first 9 months of 1988 and slashed the stock’s dividend in half in November. Investors weren’t pleased; Hotel Investors stock fell 39% for the year to $9.25 a share.
Some stocks that began the year at less than $3 a share also gained notice.
HOH Water Technology, a Newbury Park company that is developing a water-purification system, began that year at 50 cents a share but finished at $3.09, a sixfold increase. Flamemaster, a Sun Valley manufacturer of coatings and sealants that also was approached by unidentified parties about a possible merger, more than tripled to $6.75 a share. And Nu-Med, an Encino hospital operator that had been struggling, enjoyed a 173% surge in its stock to $5.13 a share.
10 BIGGEST VALLEY AREA STOCK WINNERS FOR 1988
Closing Price on Percent Stock Dec. 30, 1988 Change Line of Business Tekelec $15.50 +288 Telecomm Lincoln Bancorp 15.63 +174 Banking Delphi Info Systems 8.25 +154 Computers Superior Industries 19.75 +117 Car wheels Datron Systems 10.50 +100 Communications Martin Lawrence 9.88 +93 Art galleries Newhall Land 56.63 +89 Real estate AME 13.00 +68 Film services Cherokee Group 13.00 +65 Apparel Dataproducts 13.50 +59 Printers
Note: Excludes stocks whose Jan. 1, 1988, price was below $3.00 a share
Source: Communications Research Group, Austin, Tex.
10 BIGGEST VALLEY AREA STOCK LOSERS FOR 1988
Closing Price on Percent Stock Dec. 30, 1988 Change Line of Business Micropolis $7.38 -68 Disk drives United Educ’n 3.63 -56 Career schools Alpharel 1.38 -54 Data storage Olson Inds 4.25 -50 Plastics Hotel Investors 9.25 -39 Real estate Dick Clark 4.00 -33 TV, films Datametrics 2.25 -25 Printers Valley Federal 13.25 -24 Savings & loan Patlex 11.75 -24 Lasers American Ecology 9.75 -20 Waste disposal
Note: Excludes stocks whose Jan. 1, 1988 price was below $3.00 a share
