1997 Was Generous to Most Local Stocks

A rising tide lifts all boats. Or so it seemed once again on Wall Street in 1997 as the stock market posted its third consecutive year of 25%-plus gains, while the value of most local stocks floated up as well.

In 1997 the Dow Jones industrial average skyrocketed 25%, after having jumped by 29% in 1996 and 37% in 1995. Since this great bull market began its climb in August 1982, the Dow Jones average has spiked up a dizzying tenfold. But baby boomers and Generation X-ers should note that these Everest-like rises are, at least in a historical sense, uncommon--given that the average annual return for the stock market, dating to the 1920s, is 10%.

Still, for most of the 86 publicly traded companies headquartered, or with major operations, in the San Fernando Valley, Antelope Valley or Ventura County, 1997 was a bountiful year as the Valley Stocks index jumped by 25% in value. Of these local stocks, the value of 53 increased last year, while 32 declined and one closed the year at the price it began, according to data tracked for The Times by Media General Financial Services in Richmond, Va.

The best local stock performer last year was Tekelec, the Calabasas-based maker of diagnostic systems for testing computer network switching systems, whose shares jumped a stunning 287% and closed the year at $30.50 after a split. The stock mirrored the company’s U-turn last year, from posting hefty losses in 1996 to enjoying a profit margin of 10 cents for every $1 of sales, while its equipment orders more than doubled.

The remaining top 10 local stock list was a mix of real estate, clothing, entertainment, technology, temporary staffing and restaurant companies.

National Technical Systems was the second-best of the group, as its shares climbed 186% and closed the year at $6.44. National Technical is a thriving, Calabasas-based provider of engineering and testing services to a broad base of aerospace clients, ranging from Lockheed Martin’s Skunk Works unit in Palmdale to the Lyndon B. Johnson Space Center in Houston, as well as TRW Inc. and Loral Corp.

Another stunning showing came from Cherokee Inc., the Van Nuys apparel company that has been through various corporate incarnations in the past decade and has come back to life as a licensor of the Cherokee brand name.

Last year Cherokee struck a potentially lucrative licensing deal with the Target retail chain and on the strength of that was able to raise $48 million in private financing. Cherokee then said it would issue a cash distribution of $5.50 per share this month. That helped drive up its shares, which closed at $15.50 for a 158% gain for the year.

Semtech Corp., the Newbury Park maker of analog semiconductors used by computer, automotive and military customers, continues to do well because of its lucrative niche supplying semiconductors that handle the trend toward lower voltages in electronic circuitry. Analysts expect Semtech’s profits to grow another 25% over the next three to five years, and the company’s performance helped land it on Forbes magazine’s list of the 200 best small companies in America. Last year Semtech’s stock climbed 128%, to finish 1997 at $39.13 per share.

The Southern California real estate market is also on the rebound, from commercial projects to residential sales, and investors in Newhall Land & Farming Co., the developer of the vast Valencia master-planned community, enjoyed the ride. Newhall’s units, which trade like shares of common stock, rose 78% in 1997 and closed the year at $30. In its third quarter alone, Newhall sold a record 617 residential lots, compared to 318 residential sales for all of 1996.

At the other end of the stock market’s seesaw was Trikon Technologies Inc., the Chatsworth-based supplier of etching equipment used in making semiconductors, which had to lay off 20% of its work force due to unexpected losses in its third quarter. The only investors who did well with Trikon last year were short sellers--those who bet on a plunge in value. Trikon’s stock lost 91% during 1997, and ended the year at a mere $1.03 per share.

Indeed, six of the 10 poorest-performing local stocks last year were technology issues, including:

* ChatCom Inc., a Chatsworth maker of systems for network computing, whose shares sank 87% in value to finish at a minuscule 34 cents.

* ACT Networks Inc. in Camarillo, which makes hardware and software used by satellite and wireless communication systems. Its shares plummeted 80% in 1997 and closed the year at $7.31.

* California Amplifier, a Camarillo manufacturer of amplifiers and antennas used in the television industry, which saw its stock fall 65%, ending up at $2.13 a share.

* Spatializer Audio Laboratories Inc., a Woodland Hills consumer electronics and multimedia concern, whose stock tumbled 59% to $1.50 a share.

* Xircom Inc., a Thousand Oaks communications equipment maker, which finished 1997 at $10.06 per share, down 54%.

And one local victim of the near-collapse in several Asian economies was Iwerks Entertainment, the Burbank-based maker of giant-screen theaters and other entertainment centers. Late in the year, Iwerks said it would post a quarterly loss between $2.7 million and $3.4 million due to a drop of about $4 million in sales to Asian customers. The news further battered the company’s stock--Iwerks’ finished at $2.25 a share, down 55% for the year.

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10 Biggest Regional Stock Winners for 1997

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Closing Percent price on change in Stock 12/31/97 1997 Line of business Tekelec $30.50 +287 Technology National Technical Systems $6.44 +186 Product testing Cherokee $15.50 +158 Clothing T HQ Inc. $23.00 +145 Games Semtech Corp. $39.13 +128 Technology On Assignment $26.50 +80 Temporary staffing Newhall Land & Farming $30.00 +78 Real estate Matthews Studio $4.00 +71 Entertainment equipment Tejon Ranch $24.31 +69 Real estate Cheesecake Factory $30.50 +68 Restaurants

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Note: Excludes stocks whose Jan. 1, 1997, price was below $2 a share.

Source: Media General Financial Services Inc., Richmond, Va.

10 Biggest Regional

Stock Losers for 1997

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Closing Percent price on change in Stock 12/31/97 1997 Line of business Trikon Tech Inc. $1.03 -91 Technology ChatCom Inc. $0.34 -87 Technology Hemacare $0.47 -85 Medical ACT Networks Inc. $7.31 -80 Technology Right Start $1.75 -73 Infant products California Amplifier $2.13 -65 Technology Incomnet $1.19 -60 Telecommunications Spatializer Audio Laboratories $1.50 -59 Technology Iwerks Entertainment $2.25 -55 Entertainment centers Xircom Inc. $10.06 -54 Technology

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Note: Excludes stocks whose Jan. 1, 1997, price was below $2 a share.

Source: Media General Financial Services Inc., Richmond, Va.