17 Regional Stocks Buck Bear Market : Economy: Takeovers and fiscal turnarounds buoyed some firms. The biggest gainer this year is an obscure oil company.
It’s been a tough year on Wall Street, but some San Fernando Valley area companies have bucked the bear market. While the Dow Jones Industrial Average has tumbled 7% since the beginning of the year, and the Standard & Poor’s Composite Index of 500 Index is down 21%, 17 local stocks have increased in value.
Some of these stalwart stocks are shares in companies with a special market that seems untouched--or even helped--by economic troubles. One example is Amgen, a Thousand Oaks biotechnology company that makes a drug too essential for patients to stop taking when times are tough. And financial turnarounds at companies such as disk-drive maker Micropolis, and takeovers at companies such as entertainment giant MCA Inc., helped keep stocks up too.
Of the 50 public companies with headquarters in the region stretching from Glendale to Oxnard, 17, or 34%, saw their stock prices increase this year through Friday. (Companies whose stocks sold for less than $2 as of Friday were not included.)
Headline-making companies such as MCA weren’t the biggest winners in the survey. In fact, MCA, whose acquisition by Matsushita, a Japanese conglomerate, has made a splash in Hollywood, saw its stock rise only 6% as of last Friday. MCA’s stock rose from $62.25 per share on Dec. 31, 1989, to $66, the price per share that the Japanese company offered for the entertainment concern last week.
The biggest gainer this year is an obscure company: Benton Oil & Gas, a Ventura oil and gas exploration and production company, which has thrived recently on rising oil prices due to the Persian Gulf crisis. Benton’s stock rose 228% to $16 per share on Friday from $9.75 per share (adjusted for a stock split) at the end of last year. Although it lost $177,462 in the nine months that ended Sept. 30, Benton’s revenues surged in the third quarter and gave the company a profit of $503,068 for the period. And despite a string of losses, Benton’s shareholders have long seemed convinced that the company--which has a cadre of experienced oil business executives--will strike it rich.
A number of companies have investors betting that they can outperform most competitors during hard times.
The most prominent example is Amgen, based in Thousand Oaks, whose stock climbed 137% from $24.50 at the beginning of the year (adjusted for a stock split) to $58 on Friday. Amgen produces EPO, a drug for treating anemia in patients with kidney disease. Amgen’s profits have soared since the drug was approved for sale in June, 1989. In the most recent quarter that ended Sept. 30, the company’s net income jumped 266% to $14.3 million. And because there is no medical alternative for the patients--and much of the drug’s costs are paid by Medicare and insurance plans--sales won’t be hurt by a recession.
House of Fabrics, a Sherman Oaks fabric and sewing store chain, has become a favorite of some financial analysts who believe that the company can resist a recession. House of Fabrics’ stock has surged 67% to $29 per share on Friday, from $17.38 at the end of last year. Some analysts theorize that more people make their own clothes during an economic downturn and that House of Fabrics is in a good position to thrive in the coming quarters. The company said its profit was up 5% for the most recent quarter that ended Oct. 31 to $4.52 million from $4.3 million a year ago, while sales grew 13% to $104 million.
Companies that seem to be bouncing back after earlier troubles also made the list.
Micropolis, the Chatsworth disk-drive maker, has seen its stock rise in response to the recent signs of a turnaround at the company. Micropolis’ stock closed Friday at $7.13, a 104% increase from $3.50 at the beginning of the year.
In 1988 and 1989, Micropolis was hurt by tough competition and a glut on the market for disk drives, which store computer data. But after a round of cost cutting, Micropolis has shown better results as its sales surged 50% to $99.8 million for the third quarter that ended Sept. 30.
The company had a profit of $2.88 million, compared to a $23.7-million loss a year earlier.
Another company whose stock seemed to rise because of an improved performance was Pinkerton’s Inc., the Van Nuys security guard concern.
After selling its stock to the public in April for $14 per share, the shares have risen 61% to close Friday at $22.50 per share. Pinkerton’s sold stock to raise money to pay off some of its debts as a result of a 1988 leveraged buyout by company Chairman Thomas W. Wathen.
Although the company’s sales fell 4% in the third quarter that ended Sept. 7, its profit was $2.79 million, 61% more than a year earlier.
A similar comeback story helped the stock of Summit Health Ltd., a Burbank hospital and nursing-home chain. Summit increased its debts when it bought a string of hospitals in the mid-1980s and wound up losing a combined $14.9 million in its 1988 and 1989 fiscal years.
But in the most recent quarter, Summit’s profit increased 56% to $1.6 million. Summit’s stock has climbed 58% this year, from $1.50 per share to $2.38 on Friday.
American Ecology Corp., an Agoura Hills waste disposal company, also seemed to please investors with a turnaround. Its stock has risen 32% to its $8.25 close on Friday, from $6.25 at the beginning of the year.
American Ecology recently reported its second profitable quarter in a row, earning $498,000 compared to a year-earlier loss of $1.79 million.
American Ecology, which operates a number of hazardous-waste sites, was in a severe cash crunch after it was forced to set up a $23.5-million fund in 1988 for settling lawsuits stemming from problems at some of the dump sites.
Another example of better results bouying a stock is Amwest Insurance Group, which saw its stock rise about 5% this year to $11.38 on Friday. Amwest doubled its profit to $1.76 million in the third quarter that ended Sept. 30, from $729,000 last year.The picture looks brighter than it did a year ago when Amwest was having to put aside money in an account to cover potential rebates to customers under Proposition 103, the insurance-reform initiative. But in August, the state exempted companies such as Amwest--whose business is bail bonds and other surety bonds, not traditional auto or home insurance--from the terms of Proposition 103. As a result, Amwest was able to close the $800,000 reserve account.
But not every company whose stock climbed is doing well. North Hollywood-based Ventura Entertainment’s stock soared 51% to close at $8.50 on Friday from $5.63 (adjusted for a stock split) at the beginning of the year.
But Ventura lost $3.5 million between Oct. 31, 1989, and last Sept. 30 on sales of $7.16 million. (The company recently shifted its fiscal year-end to June 30 from Oct. 31.)
Although the stock has increased dramatically, Ventura recently filed suit in federal court claiming that two brokerages and a stock-newsletter writer had been spreading misinformation about the company to drive the stock down.
LOCAL STOCKS THAT CLIMBED WHILE WALL STREET FELL The stocks listed below have increased in price since the start of the year. By comparison, in the same period, the Dow Jones Industrial Average fell 7%, and the Standard & Poor’s Composite Index of 500 Stocks dropped 21%.
12/31/89 Closing 11/30/90 Company Industry Stock Price Close American Ecology Waste disposal $6.25 $8.25 Amgen Biotechnology $24.50* $58.00 Amwest Insurance Insurance $10.88 $11.38 Benton Oil & Gas Oil $9.75* $16.00 House of Fabrics Fabrics $17.38 $29.00 K-Swiss Inc. Footwear $17.50** $17.75 MCA Entertainment $62.25 $66.00 Micropolis Disk drives $3.50 $7.13 Pinkerton’s Security $14.00** $22.50 Players International Entertainment $3.63 $4.00 Spear Financial Insurance/Stocks $2.00 $2.50 Summit Health Hospitals $1.50 $2.38 Superior Industries Car wheels $17.50* $19.88 Syncor International Pharmacy $7.88 $9.88 Tekelec Telecommunications $8.50 $11.25 Twentieth Century Insurance $23.00 $24.13 Ventura Entertainment Entertainment $5.63* $8.50
Company % Change American Ecology +32% Amgen +137% Amwest Insurance +5% Benton Oil & Gas +228% House of Fabrics +67% K-Swiss Inc. +1% MCA +6% Micropolis +104% Pinkerton’s +61% Players International +10% Spear Financial +25% Summit Health +58% Superior Industries +14% Syncor International +25% Tekelec +32% Twentieth Century +5% Ventura Entertainment +51%
* Price adjusted for stock split or stock dividend.
** Initial public offering price
