Northwest stocks: Sorting through the winners and losers
Plenty of Washington-based businesses operating in Clark County saw big improvements in their share prices in 2010, with more gains possible this year.
Among the winners were Vancouver-based Riverview Bancorp, which saw a 21 percent improvement in share price from the start of 2010.
According to a D.A. Davidson & Co. analysis of 113 publicly traded companies in the Northwest states of Washington, Oregon, Idaho and Montana, publicly owned companies based in the region easily outperformed other markets with an average stock price gain of 26 percent last year. That compares to an 11 percent increase in the S&P 500.
Top performers were Coinstar, which operates Red Box DVD-rental kiosks at a number of high-traffic retail locations, including chain grocery stores and convenience stores, with a share price increase of 103 percent last year, and Zumiez, a teenage clothing retail chain with a store at Westfield Vancouver, up 111 percent.
Alaska Air Group, the biggest operator at Portland International Airport, saw a share-price improvement of 64 percent. Starbucks, Red Lion Hotels, Costco and Nordstrom were also among the winners.
Meanwhile, Vancouver-based fitness equipment company, Nautilus Inc., faced declining sales and net losses that pushed its stock price down 12.3 percent to a dreary $1.78 per share by year's end. In its latest reported quarter, Nautilus lost $2.4 million on sales of $38.5 million. That's down from $41.4 million in 2009 sales.
While some Washington banks showed signs of recovery, others continued to struggle. Among those with operations in Clark County was Spokane-based Sterling Financial, with a share price loss of 53 percent, and Cascade Financial, down 79 percent.
The road ahead
Fred Dickson, chief investment strategist at D.A. Davidson, a regional financial services business with offices in Montana and Portland, said even though many Northwest companies enjoyed a strong financial performance in 2010, they remain cautious about adding workers.
"My best guess is that many companies are in position to consider adding employees but will refrain from making significant employment additions until they get more details on health care costs associated with the 2010 Health Care Reform Act," Dickson said.
According to Dickson, other company worries on the horizon are as follows:
Will the nation's economic recovery continue and at what pace?
Will consumers become more confident?
How will retailers adjust to rising product prices from China where inflation is heating up? And how will any price increases affect consumer spending in the U.S.?
Tax advantages
"Given the recent enactment of the Tax Reform Act, industrial, technology and industrial material companies operating in the region should benefit from the tax break extensions including the opportunity to claim full depreciation on 2011 capital expenditures," Dickson said.
Companies holding record levels of cash have a "terrific incentive to invest in new technology and productivity solutions or simply expand their businesses," he said. "Such investments might temporarily hurt 2011 earnings because of higher depreciation charges, but should stimulate producers of industrial equipment to expand businesses to meet pent-up deferred demand."
While 2010 was a year of recovery in Washington, many businesses will continue to see good growth this year, especially those tied to consumer products and consumer spending. Unfortunately, the job outlook remains weak through much of 2011 and many companies especially those in financial services, will continue to work their way out of the 2007-2009 recession. Some banks, Dickson said, may not make it.
The good news, Dickson said, is that many Pacific Northwest companies heavily weighted to small and mid-cap categories dramatically outperformed major stock markets in 2010, and are positioned to see further revenue and earnings growth in the coming 12 months.
Julia Anderson is a regular business expert on Portland's KXL-750 AM radio. She writes about women, money, investing and retirement planning at www.sixtyandsingle.com.
