‘91 Proves Good Year for Local Stocks : Economy: Despite the recession, the Valley index outpaced Dow Jones Industrials, rising 26.2%. Amgen and American Ecology were among the big winners.
The recession worsened, IBM and General Motors announced tens of thousands of layoffs, factories closed, lines grew at unemployment offices--and 1991 was a great year for the stock market, both nationwide and for most local companies.
Last year, the Dow Jones Industrial Average, a group of 30 blue-chip stocks, surged 20.3%; the Standard & Poor’s 500 Index jumped 26.3% and the Valley Stocks index, a collection of 80 stocks in the San Fernando Valley and Ventura County areas, rose 26.2%.
Of the local group, 54 stocks, or 68%, climbed in price last year, while 25 stocks, or 31%, declined in value; one closed the year unchanged. The Valley Stocks index is compiled for The Times by Media General Financial Services in Richmond, Va., and includes companies with headquarters from Oxnard to Glendale.
One reason for the strong showing was that most of the local stocks are medium- to small-sized companies that trade on NASDAQ, the computerized over-the-counter market run by the National Assn. of Securities Dealers. During the 1980s when the overall stock market surged, many smaller companies lagged behind and, as a result, many analysts expected the prices of smaller stocks to eventually catch up.
And it happened last year. The NASDAQ composite index--based on nearly 4,000 stocks--jumped 56.8% in 1991.
One of the most impressive showings in the country was by Amgen Inc., the Thousand Oaks biotechnology company whose stock more than tripled in value and closed 1991 at $75.75 per share. The company is now the flagship in the biotechnology industry, and last year it continued to enjoy its monopoly on a $400-million market with its drug Epogen, which combats anemia in patients with kidney disease.
In 1991, Amgen’s second drug, Neupogen, which fights a variety of infections, was introduced and is also selling briskly. The two drugs helped Amgen post a $49.4-million profit in its latest quarter.
Another strong performer was American Ecology, the Agoura Hills-based operator of hazardous waste dumps, whose stock surged 178% and closed the year at $18.75 per share.
Investors were encouraged by the controlling interest in the company taken by a Houston investment group that helped shore up American Ecology’s finances. The company also appears close to getting the go-ahead to build a low-level radioactive waste dump in the Mojave Desert, which could boost its annual revenues by 20%.
Syncor International, a Chatsworth distributor of special radioactive drugs to hospitals, saw its profits rebound under a new management team. In its latest six-month period, Syncor’s profits jumped 47% from a year earlier. Because of the turnaround, Syncor’s stock recovered as well last year, closing at $26.50 per share, up 165% for the year.
Another company that posted a steady profit increase was Datron Systems, a Simi Valley maker of satellite antennas and high-frequency radios sold to the Pentagon. Datron cut its production costs on various Pentagon projects, helping the company post a $2.2-million profit in its latest six-month period, contrasted with a $107,000 loss a year earlier. The turnaround was also reflected in Datron’s stock as its shares climbed 117% last year to close at $11.38.
Another profit turnaround occurred at Summit Health, a Burbank-based operator of hospitals and nursing homes. The company has steadily cut its debt to reduce its interest costs, while working on shoring up business at its hospitals. In Summit’s most recent quarter, its profits jumped 50%, and its improved financial health attracted investors. Last year, Summit’s stock jumped 92% to close the year at $5.75.
House of Fabrics, the Sherman Oaks-based fabric retail chain, saw its profits and sales climb after its $58-million purchase of a rival chain called Fabricland. In its latest nine-month period, House of Fabrics’ profits surged 54%. Last year, its stock also rallied to close the year at $27 a share, up 78%.
Despite the impressive showing, however, House of Fabrics’ stock tumbled late in the year and was off from its high of $41.50. The company conceded that its same-store sales--those stores open at least a year--were flat in early December, and that seemed to dampen investors’ enthusiasm.
And Walt Disney Co., whose stock was one of the strongest performers in the past seven years, had a relatively unimpressive year as its stock climbed only 13% in 1991 to close at $114.50 per share. The company’s earnings fell 23% last year, and its theme parks suffered because of the recession--attendance at Disneyland reportedly fell 10%.
Things were far worse at another entertainment concern, Live Entertainment, a Van Nuys distributor of videocassettes, whose stock plummeted 74% to close at $3.25 per share. The company’s planned merger with Carolco Pictures, a movie production company that owns 53% of Live’s stock, was canceled in December after both companies saw their stock prices plummet.
Although Carolco produced last year’s hit film “Terminator 2: Judgment Day,” it ran into severe financial difficulties and may not be able to complete production of all its films this year. There is speculation that Carolco may be headed toward bankruptcy.
Live, which relies heavily on Carolco’s films to sell on cassettes, has also undergone financial worries and its chairman recently resigned.
Landlord and tenant problems also hurt two related stocks, Medical Properties, an Encino-based real estate investment trust, and Nu-Med Inc., an Encino hospital operator.
Medical Properties had to suspend its dividend because of problems collecting rents at a hospital in La Mirada that it leases to Nu-Med. That one hospital accounted for 80% of Medical Properties’ rental income, but the company conceded that “future rent payments, if any, is very uncertain.” As a result, Medical Properties’ stock plunged 68% last year to close at $1.50 per share.
Meanwhile, Nu-Med has been struggling because of a low occupancy rate at the La Mirada hospital and has been posting losses. Its stock also declined 45% last year and closed at $1.13 per share.
The slump in the local commercial and residential real estate markets also caused problems for banks and savings and loans, which had to boost their loan-loss reserves.
CU Bancorp, based in Encino, expects to post its first annual loss in 1991 and saw its stock decline 44% to close the year at $5 per share.
It was also a tough year for Glenfed Inc., the parent of Glendale Federal Bank, which posted a $232-million loss in its 1991 fiscal year and said it was considering possible mergers. Last year, Glenfed’s stock tumbled 27% and closed at $4.63 per share.
And, like many retailers, Martin Lawrence Limited Editions suffered a painful year. The company, which operates a chain of art galleries, discovered that in a recession, people don’t buy much art, and the company lost $5.6 million in the first nine months of 1991 as sales were cut in half. In December, the company said it would close nearly 40% of its galleries in hopes of returning to profitability.
For the year, Martin Lawrence’s stock sank 35% to close at $1.88 per share, well below its high of $13 a share a few years ago.
Top 10 Regional Stock Winners for 1991
Closing price Percent Line of Stock on 12/31/91 change business Amgen $75.75 +265 Biotechnology Hemacare $5.38 +207 Medical American Ecology $18.75 +178 Waste disposal Syncor $26.50 +165 Pharmacy Datron Systems $11.38 +117 Communications Summit Health $5.75 + 92 Hospitals Otra Securities $5.63 + 87 Clearinghouse Huntway Partners $4.63 + 85 Oil refining House of Fabrics $27.00 + 78 Fabrics Superior Industries $32.75 + 77 Car wheels
Note: excludes stocks whose Jan. 1, 1991 price was below $1.50
Source: Media General Financial Services, Richmond, Va.
Top 10 Regional Stock Losers for 1991
Closing price Percent Line of Stock on 12/31/91 change business Live Entertainment $3.25 -74 Entertainment Medical Properties $1.50 -68 Real estate CII Financial $8.00 -47 Insurance Nu-Med Inc. $1.13 -45 Hospitals CU Bancorp $5.00 -44 Banking Players International $2.06 -41 Entertainment Martin Lawrence $1.88 -35 Art Tejon Ranch $17.13 -34 Real estate New Image $1.25 -34 Computer imaging Glenfed Inc. $4.63 -27 Banking
Note: excludes stocks whose Jan. 1, 1991 price was below $1.50
Source: Media General Financial Services, Richmond, Va.
