The Dow Jones industrial average made national headlines March 5, closing at a record 14253.77 high. But it didn’t stop there. The market indicator comprising 30 leading U.S. stocks went on a tear, climbing for eight straight days, its longest winning streak since February 2011. The index rallied again March 26, setting a second record high – 14559.65 – in less than a month.
“A lot of this has to do with the Federal Reserve printing so much money right now, but it also reflects the turmoil in the European market,” said David Mitchell, associate professor of economics at Missouri State University and director of the Missouri Bureau of Economic Research. “The market looks good right now, but it’s a little like being the prettiest person in an ugly contest – nobody is really winning.”
Despite the Dow’s recent upward trend, Mitchell said he doesn’t expect to see much impact on Ozarks-based publicly traded stocks, which on average have continued a slight upward trend since 2008’s financial industry collapse.
“These smaller stocks are working their way back up, but it all takes time,” he said.
Highs and lowsStephen Evans, wealth management adviser and owner of Evans Wealth Planning LLC, said local stock trends shed light on changes that have taken place within American companies.
“Americans are very resourceful and these companies are eager to get back to or better than where they were before the meltdown,” he said. “Despite the common misconception, the U.S. is the largest manufacturer in the world, not China. I believe the U.S. has poised itself correctly to be the premier provider for an emerging middle class in countries like Mexico, China and Brazil. Middle class people want goods and services, goods America is prepared to offer.”
Evans said shares of Springfield-based O’Reilly Automotive Inc. (Nasdaq: ORLY) – which posted 2012 earnings of $585.7 million, a 15 percent increase from the prior year – slumped as low as $22.35 apiece in June 2008 but climbed to a peak of $105.50 in April 2012.
“O’Reilly has done wonderful since 2008, not only because they have built and acquired a lot of stores, but because in a recession, people need car parts,” he said. “Consumers are less likely to buy a new car, instead opting to fix up the one they have.”
In January, the auto parts company hit a milestone, opening its 4,000th store in Tampa, Fla., the cap on a 56-store deal in New England through the purchase of Lewiston, Maine-based VIP Parts Tires & Service.
Conversely, Evans said stocks from manufacturing companies like Paul Mueller Co. (OTC: MUEL) haven’t stood up to the recession.
“People can afford small car parts, but buying a large metal tank is the equivalent to buying the new car,” he said. “People can’t afford the added expense right now, so they are making due with what they have.”
Despite posting 2012 third-quarter profits of $852,000, an 834 percent increase compared to a net loss of $116,000 in the same quarter last year, the stainless steel manufacturer reported a fourth-quarter net loss of $1.6 million, a 143 percent drop from profits of $3.6 million in the same quarter of 2011. For the full year, net income decreased 2 percent to $1.97 million.
Mueller Co. stock traded as high as $59.17 per share in the early months of 2008, before dropping into the teens. For the three months ended Dec. 31, the company lost $1.28 per share, compared to earnings of $2.96 per share in fourth-quarter 2011.
“Like all stocks, Mueller has had its ups and downs,” Evans said. “They are at the bottom right now, but because stock is low, that makes them a good buy for the future.”
Mueller Co. officials said the results were adversely affected by an arbitration with former President and CEO Matthew Detelich, which was settled Dec. 19, 2012, according to SBJ archives. The settlement, which satisfied all remaining obligations to Detelich under his employment agreement and supplementary retirement plan, resulted in expenses of $1.3 million in the fourth quarter and $2 million for the year. Detelich also received $3.8 million from the company in 2011, Mueller Co. officials said.
Holding steadyEvans said companies such as Jack Henry & Associates Inc. (Nasdaq: JKHY) have set themselves up to ride out the recession good or bad.
“This is a company who makes banking software, so in bank mergers they make a useful product, or if a bank is succeeding and needs an upgrade, they make a useful product,” Evans said.
The Monett-based company, which provides technology solutions and payment processing services for the financial services industry, posted profits of $40.5 million in its second quarter ending Dec. 31, 2012, a 5 percent increase compared to $38.5 million in the same quarter of 2011.
Historically, JKHY shares fell into the $15 range in early 2008, but the company has seen its stock increase or hold steady since, with a 52-week range of $32.17 to $45.96.
Carthage-based manufacturer Leggett & Platt Inc. (NYSE: LEG) has held steady in the five years since the meltdown, in part, Evans says, because of company diversification.
“Their success speaks to a diversified nature. They don’t have all their eggs in one basket,” he said.
Falling as low as $9.17 a share in February 2009, the company bounced back and held with a 52-week range of $19.26 to $33.24. For the year ending Dec. 31, Leggett & Platt posted profits of $248.2 million, a 62 percent increase compared to $153.3 million in profits a year before.
Evans said Empire District Electric Co. (NYSE: EDE) stocks have floated between $16 and $20 throughout the recession.
“There is not a lot of room for growth with a utility company, but there’s also not a lot of room to decline,” he said.
The Joplin-based company reported 2012 earnings of $55.7 million, a roughly 1.5 percent increase compared to $54.9 million in 2011.[[In-content Ad]]
