Equity markets posted significant gains in 2012, and several locally based public companies rode those stock-market tails during the calendar year.
Area businesses with double-digit percentage increases in their per-share price last year include O’Reilly Automotive Inc. (Nasdaq: ORLY), Paul Mueller Co. (OTC: MUEL), Jack Henry & Associates Inc. (Nasdaq: JKHY) and Leggett & Platt Inc. (NYSE: LEG). Joplin-based Empire District Electric Co.’s stock (NYSE: EDE) slid 3.4 percent on the year.
Other movement of local interest include northwest Arkansas’ Wal-Mart Stores Inc. (NYSE: WMT), which watched its stock jump 14.2 percent last year, and Charlotte, N.C.-based Bank of America, which saw its stock price climb by 108 percent in 2012 – making it the top-performing stock among members of the Dow Jones Industrial average. Bank of America operates six branches in Springfield.
In the area, Paul Mueller Co.’s stock showed the greatest improvement in stock price among the public companies tracked by Springfield Business Journal, with a 41.4 percent rise during the calendar year to $24.75 from $17.50. Mueller Co. shares, which are traded over the counter, marked a 52-week high of $29.75 in mid-August. The MUEL stock rode the high for a few days on the heels of a second-quarter earnings turnaround: Quarterly profits were $1.4 million, reversing a $1.2 million loss in second-quarter 2011. Representatives of Mueller Co. and Jack Henry & Associates did not return calls for comment by press time.
Jeff Layman, a principal and chief investment officer of Springfield-based BKD Wealth Advisors LLC, said many of his clients have been pleasantly surprised by the performance of their portfolios in 2012.
“The markets performed a lot better than I think it felt to most investors,” Layman said. “One thing we’ve observed is that our clients are surprised when they realize how things actually went last year because all the extraneous influences on the markets – whether it is ‘fiscal cliff’ issues or European debt issues – created a kind of cloud. It turned out to be a pretty good year.”
The Standard & Poor’s 500 index grew by 13 percent in 2012; the Dow Jones Industrial average gained 7.3 percent on the year; and the Nasdaq composite index increased by 16 percent.
ORLY peaks and valleysWhile Layman declined to analyze local stock activity – citing BKD LLP’s accounting relationship with some of the firms – he has followed the rise of O’Reilly Auto stock in recent years. Ernst & Young Inc. handles O’Reilly’s accounting work.
“We do have some clients who own O’Reilly shares, and it has been a wonderful investment over time,” Layman said. “O’Reilly got a lot of positive mileage out of the conversion of CSK stores that they merged with a few years ago. I think it has had a pretty significant impact on improving same-store sales over time.”
He noted through the recession the average age of corporate fleets increased across the country, growing the volume of repairs and maintenance and boosting earnings for the auto parts dealer.
O’Reilly stock hit an all-time high of $106.71 on May 2, following the release of its first-quarter results that featured record-highs in sales of $1.53 billion and earnings of $45 million. Between January 2008 and May 2012, O’Reilly’s stock price climbed nearly $80 per share from around $30.
But when second quarter 2012 same-store sales growth was downgraded to 2.5 percent from expectations of 5 percent, investors lost confidence in the company, which led to a midyear hiccup that saw its stock price fall by roughly $30 per share.
“In the last year, maybe we’ve seen the CSK integration largely executed and auto sales have come back up to around 15 million new units in the U.S. from a low of around 9 million at the bottom of the recession. The point is that the average age of cars on the road is starting to decrease now,” Layman said. “I think it is a great company and still has a lot of potential going forward, but … I think the stock price kind of stalled out and is waiting for earnings to catch up.”
ORLY stock closed out 2012 at $89.42 per share.
Building blocksLayman said the building blocks for good returns are in place for 2013.
“The fundamentals of companies and stocks are pretty good right now,” he said.
Price-to-earnings ratios are very reasonable, he said, corporate profits are at all-time highs, and borrowing rates are low. With a slowly improving economy, Layman said the overall investment climate is positive.
He said even with the market’s positive response to Congress averting the fiscal cliff – the Dow Jones Industrial average on Jan. 2 swelled 308 points, its largest gain since June – more work needs to be done.
“As we get closer to the next deadline, I do think volatility could come back to the market,” Layman said, referring to the debt ceiling deadline, which is coming as soon as Feb. 15. “The heavy lifting to improve our government’s debt situation really hasn’t been done yet.
“If we can get some of this uncertainty resolved and get some decisions made, then at least we’d know what the rules are and you could plan for them whether you are a business or individual.”
With shale production for natural gas receiving much attention lately, Layman said the energy industry is trending among investors.
“There are some projections out there that would suggest the U.S. could be energy independent in 10 to 15 years, which is pretty remarkable, if you think about it,” Layman said.
