Local Stocks Make Modest Rebound in 3rd Quarter : Markets: Some 58% of regional issues post gains in the three months ended Sept. 30, mirroring the national market.
Local stocks staged a modest turnaround in the third quarter, as 58% of the stocks showed gains in value. This was an improvement over the first and second quarters of 1994, when three in five local stocks suffered a loss in value.
On average, area stocks increased 6% in value in the three months ended Sept. 30, roughly mirroring gains seen in larger markets. The NASDAQ Composite Index of about 4,000 mostly small company stocks rose 8% in the third quarter. The Dow Jones Industrial Average of 30 blue-chip stocks grew 6%, while the broader S&P; 500 Index increased 4% in the quarter.
Locally, those stocks faring the best included a producer of television infomercials, a provider of payroll processing services and a maker of bar-code labeling products, which were rewarded for solid earnings growth. They were among the 105 stocks based in the San Fernando Valley, Antelope Valley and Ventura County whose performance was tracked in the third quarter by Media General Financial Services.
Of these local firms, Positive Response Television Inc. in Sherman Oaks showed the biggest gain, with its stock nearly tripling to $15.75 a share from $5.75 at the end of the second quarter. The company went public in May in one of the year’s hottest new stock offerings, raising $6 million to help pay for its expansion. It also recently sold 400,000 new shares of its common stock to an investment group for $12.50 each, with the $5 million raised to be used to increase air time for existing infomercials and for new infomercials.
In the three months ended June 30, Positive Response’s profit fell 67% due to earthquake damage that delayed production. But for the six months ended June 30, its earnings grew 53%, to $336,000, from $220,000 a year earlier, while its revenue surged fivefold, to $6.55 million from $1.28 million.
Mike Levey, Positive Response chairman and chief executive, said investors are responding to the company’s financial performance and growth prospects. “One of the reasons Positive Response is so successful is our extreme visibility. About 85 million viewers see our shows every month.”
Levey added that as new cable stations open up and venues such as computer networks open to advertising, this technology will fuel the growth of the infomercial industry.
Another big gainer for the quarter was Pay-Fone Systems Inc. in Van Nuys, which provides automated payroll processing services. Its stock rose to $4.44 a share in the third quarter from $2.25 three months earlier. The company recently reported a $21,526 profit for its fiscal fourth quarter ended June 30, following a year-earlier loss of $49,720, while its revenue rose 8% to $1.09 million. Pay-Fone attributed the revenue and earnings growth largely to its February acquisition of Concentric Computer Corp.
Chatsworth-based Eltron International Inc., a maker of bar-code label printers and software, saw its stock nearly double to $15 a share from $8.25. Eltron’s initial public stock offering in February was also one of the best received initial public offerings this year. It went public at $6 per share, raising $6.6 million to buy equipment and repay debt.
For the second quarter ended June 30, Eltron’s earnings rose nearly sixfold, to $598,110 from $103,929 a year earlier, while its sales tripled to $3.87 million from $1.29 million. Also, last spring it received a $2.6-million printer order from United Parcel Service.
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Brisk sales of automotive products helped Special Devices Inc. in Newhall to more than double its earnings in its fiscal third quarter ended July 31, to $858,000 from $376,000 a year earlier, while its sales grew 81% to $17.1 million. As of Sept. 30, the company’s stock had gained 59%, to $14.81 from $9.34 on June 30.
Special Devices, which makes devices used in defense and automotive industries, also recently announced that it was expanding its Arizona facilities to accommodate increased demand for its products. In July it also agreed to acquire a Chicago company that makes aircraft-crew escape components and life support equipment, thus expanding its customer base in the aerospace industry.
Two small high-tech companies also saw sizable gains in the third quarter--MRV Communications Inc. in Chatsworth and Calabasas-based Tekelec. Semiconductor maker MRV had record earnings and revenue in the second quarter ended June 30. Tekelec, a supplier of communications diagnostic and switching systems, turned around a year-earlier loss with an $877,000 profit in the second quarter ended June 30. Last month it announced that AT&T; would distribute its telephone switching equipment.
One of the poorest performances among local stocks in the third quarter was by troubled apparel maker Cherokee Inc. in Sunland. The company has continued to suffer financial woes--stemming largely from its heavy debt--since emerging from bankruptcy reorganization last year. In the year ended May 28, Cherokee lost $24.8 million on $114.1 million in sales.
Despite scrapping certain clothing lines and refocusing on casual wear, investors apparently view Cherokee’s prospects as bleak. Its stock plunged 78% in the third quarter, to 25 cents a share from $1.13.
Simi Valley-based Golden Systems Inc., a producer of power-switching devices for computers, saw its stock plunge by more than half, to $1.53 a share from $3.50. Last month, the company said it expected to report a loss of between $1 million and $1.5 million for the third quarter ended Sept. 30, while sales would remain flat at about $9.9 million. It blamed the anticipated loss on fewer orders from its largest customer, Compaq Computer Corp.
An expected loss also sent the stock of Pollution Research and Control Corp. tumbling. The Glendale maker of pollution-monitoring instruments finished the third quarter at 75 cents a share, compared to $1.31 on June 30, after announcing last month that fierce pricing competition and a drop in orders would result in a loss for the three months ended Sept. 30.
Another big loser for the quarter was struggling House of Fabric Inc., the Sherman Oaks fabrics retailer. The company has suffered since 1992, when the recession hurt its sales.
In August, it said it would close 200 of its 624 stores by Jan. 31 and reported an $11.6-million loss for its fiscal second quarter ended July 31, on a 15% decline in revenue to $110 million.
House of Fabrics is pinning its hopes on a new strategy to expand its fabric stores to include more crafts and home decorating items.
But the financial community remains skeptical. The company’s stock fell 41% in the third quarter, to $2 a share from $3.38.
10 Biggest Regional Stock Winners for 3rd Quarter
Closing Percent price on change in Stock 9/30/94 3rd quarter Line of business Positive Response TV $15.75 +174 Infomercials Pay Fone Systems $4.44 +97 Payroll Eltron International $15.00 +82 Bar code devices Special Devices $14.81 +59 Pyrotechnical MRV Comm Inc $10.38 +57 Semiconductors 3-D Systems $3.44 +53 Product design Tekelec $12.88 +52 Telecommunications Harman International $34.88 +39 Stereo equipment Fortune Petroleum $2.81 +36 Energy Xircom Inc $20.75 +36 Computer
Note: Excludes stocks whose June 30, 1994, price was below $1.50 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 9/30/94 3rd quarter Line of business Golden Systems $1.53 -56 Electronics House of Fabrics $2.00 -41 Fabric Astro Sciences $1.63 -41 Computer Huntway Partners $1.13 -35 Oil refineries Diodes Inc $5.50 -34 Semiconductors OroAmerica Inc $7.00 -34 Jewelry New Image Ind. $7.06 -29 Dental cameras Citadel Holding $4.25 -29 Banking Live Entertainment $1.38 -27 Videocassettes Iwerks Entertainment $4.88 -26 Entertainment
Note: Excludes stocks whose June 30, 1994, price was below $1.50 a share
Source: Media General Financial Services Inc., Richmond, Va.
