Area Stocks Eke Out 2% Gain in 3rd Quarter : Investing: Smaller issues outperformed larger ones, mirroring the trend on Wall Street. But there were more losers than winners.
In the third quarter, stocks of smaller companies performed best in the Valley, as they did on Wall Street.
Prices of the area’s stocks, which are mostly companies with less than $100 million in annual revenue, registered a 2% gain in the three months ended Sept. 30.
The Dow Jones Industrial Average of 30 big companies crept up a meager 1% in the latest quarter. Meanwhile, the NASDAQ composite index of about 4,300 mostly small companies traded in the national over-the-counter market climbed 8%. The NASDAQ index is considered the stock market’s broadest measure of smaller-company issues.
The Valley-area stock index, which is also heavily weighted with small companies, rose 2% between June 30 and Sept. 30 to 172.5. That was its highest level since October of 1988, when the index was created for The Times by Media General Financial Services, a Richmond, Va., securities research firm.
The Valley index represents stocks of 98 companies in the San Fernando, Santa Clarita and Conejo valleys and Ventura County. The index showed virtually no change in the second quarter.
The regional-stock index managed to make some headway in the latest quarter even though the number of losers, at 49, edged out the gainers, 48, with one issue unchanged.
Top performers in the quarter came from a variety of industries, from communications to electric car and apparel companies. Their improvement typically reflected a spurt in sales or profits, or a change in corporate strategy that garnered a favorable reaction from investors.
The best performer was Tekelec Inc., a struggling Calabasas maker of telecommunications-testing equipment that has suffered a steep decline in domestic orders this year. After posting a $7-million net loss for the first six months, the company underwent a reorganization in July that appears to have met with Wall Street’s approval. Tekelec’s stock price more than doubled in the third quarter, to $11.25 a share as of Sept. 30.
National Technical Systems Inc., another Calabasas testing company, saw its stock surge 61%, to $3.63 a share, despite the problems of the aerospace industry, one of National Technical’s key markets. The surge came after the company signed a 10-year agreement in June to operate a ballistic test-firing range for Olin Ordnance Division in St. Petersburg, Fla.
Cherokee Inc., a Sunland-based women’s clothing maker that recently emerged from bankruptcy reorganization, rose 42%, to $6.38 a share. The stock’s upward move has been driven lately by speculation that French designer Georges Marciano, who owns about 20% of Cherokee, might take a more active role in the company. Marciano resigned in August as chief executive of Guess? Inc., the Los Angeles-based clothing company that he and his three brothers founded.
A court settlement ending Simi Valley-based Flamemaster Corp.’s yearlong antitrust battle with Morton International Inc. helped boost Flamemaster’s stock price 38%, to $5.50 a share. Flamemaster and Morton in Chicago are rivals in the business of making high-performance sealants used mainly in the aerospace industry. Terms of the settlement were not disclosed.
Investors applauded Century City-based Teledyne Inc.’s planned restructuring, announced in August, by boosting the defense and industrial concern’s stock 30%, to $27.50 a share, despite continuing legal woes at its Teledyne Systems unit in Northridge.
Teledyne Systems agreed to plead guilty and pay a $1.5-million fine last month for making false statements to the U.S. government. The statements regarded commission payments to a Taiwanese agent for helping the company win Taiwan military contracts from 1984 to 1988. Teledyne Systems is also the target of a civil action by the U.S. government that accuses the unit of fraudulently inflating bids. The government is seeking to treble its estimated $70 million in alleged damages.
Wall Street also approved of Van Nuys-based Authentic Fitness Corp.’s decision last month to expand its apparel offerings that include Speedo swimwear by purchasing two venerable swimwear lines, Cole and Catalina, from Taren Holdings Inc. Taren is a privately held Los Angeles company that filed for bankruptcy court protection in August.
But the stocks of even more Valley companies suffered declines as they attempted to shift gears in the third quarter.
A striking example is Voice Powered Technology Inc. in Canoga Park. The stock dropped 48%, to $3.13 a share, after Voice Powered said it would move away from direct sales of its voice-activated VCR programmer in favor of retail distribution.
Another is Special Devices Inc., a Newhall-based supplier of parts that ignite missile systems and trigger automobile air bags. Its stock fell 44%, to $5.88 a share, following a 24% decline in the company’s latest quarterly profit.
Although Special Devices’ posted a 22% increase in sales for its fiscal third quarter ended Aug. 1, the company’s earnings fell to $376,000 from $498,000 a year earlier because a larger percentage of those sales came from its automotive division. And the automotive division operates on smaller profit margins than the company’s aerospace division.
10 Biggest Regional Stock Winners for 3rd Quarter
Closing Percent price on change in Stock 9/30/93 3rd quarter Line of business Tekelec $11.25 +105 Telecommunications National Technical Systems $3.63 +61 Testing Cherokee $6.38 +42 Clothing Flamemaster $5.50 +38 Coatings Datron Systems $8.50 +36 Communications MBCommunications $16.00 +33 Communications Teledyne $27.50 +30 Aerospace Authentic Fitness $27.25 +28 Clothing Storage Equities $14.50 +25 Real estate Amerigon Cl A $10.50 +24 Automotive
Note: Excludes stocks whose June 30, 1993, price was below $2.00 a share
Source: Media General Financial Services Inc., Richmond, Va.
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10 Biggest Regional Stock Losers for 3rd Quarter
Closing Percent price on change in Stock 9/30/93 3rd quarter Line of business Voice-Powered Technology $3.13 -48 Electronics Special Devices $5.88 -44 Automotive Fortune Petroleum $3.63 -37 Energy Kenfil $2.88 -36 Software New Image $13.50 -33 Dental Products Biopool $1.50 -30 Medical H&H; Oil Tool $5.50 -24 Oil Services On Assignment $10.00 -24 Personnel Leslie’s Poolmart $8.25 -21 Pool Supplies Syncor Int’l $16.25 -21 Pharmacy
Note: Excludes stocks whose June 30, 1993, price was below $2.00 a share
Source: Media General Financial Services Inc., Richmond, Va.
