WNY stocks beat the market in the second quarter
The energy boom gave a nice boost to the Buffalo Niagara region’s stocks during the second quarter.
While soaring energy prices are a big drag on consumers and are holding the economy in check, the sky high oil and natural gas prices are propelling three key Buffalo Niagara region stocks to new heights.
Three of the top five local stocks during the quarter — Graham Corp., Dresser-Rand Group and National Fuel Gas Co. — all get a big portion of their business from the energy industry, so the oil and gas boom is putting a shine on their bottom line.
Those gains were more than enough to overcome an otherwise dreary showing by most of the stocks that make up the Buffalo Portfolio. An investor who owned a single share in each of the 22 publicly traded companies based in the Buffalo area reaped a 3.9 percent gain during the quarter, nicely outshining all of the major market indexes in a very difficult quarter.
The Dow Jones industrial average fell 7.4 percent in the second quarter; the Standard & Poor’s 500 index fell 3.2 percent, and the Nasdaq composite index rose an anemic 0.6 percent.
The local stocks even did better than the 0.25 percent increase in the Russell 2000 index of small company stocks, which is a better benchmark for the small company shares that dominate the Buffalo Portfolio.
Despite the overall rise in the Buffalo Portfolio, most local stocks fell during the quarter. Of the 22 local stocks, just seven managed gains during the quarter, while 15 lost value.
Yet it also tended to be a quarter of extremes. Five local stocks posted gains of more than than 20 percent, and four fell more than 20 percent.
The winners
No stock had a better quarter than Graham Corp., the Batavia-based company whose condensers and ejector systems are in high demand for oil refinery expansion projects and petrochemical plants.
Graham’s stock soared by 108.1 percent during the three-month period, the best quarterly performance by any local stock since aircraft lighting and electronics manufacturer Astronics Corp.’s shares shot up by 81 percent during the second quarter of last year.
Graham’s first quarter profits jumped by 23 percent, and the company’s chief executive officer, James Lines, said he expected the firm’s markets to remain robust for at least the next couple of years.
Graham’s gains overshadowed the strong 36.1 percent rebound by Gibraltar Industries’ battered stock, which had dipped below $10 to an all-time low in January.
The Hamburg-based building materials and processed steel manufacturer was bolstered by a surprising 9 percent jump in its first-quarter profits and forecasts by company executives that its cost-cutting efforts over the last year will accelerate its recovery once its key auto and construction markets rebound.
Another long-struggling local stock, Computer Task Group, rebounded sharply during the second quarter with a 24.3 percent gain, fueled by a 25 percent jump in the company’s profits during the first quarter.
James R. Boldt, CTG’s chairman and chief executive officer, said CTG is getting a boost from its decision several years ago to concentrate on the health care industry, as well as technology and financial services.
Two other hot stocks during the quarter — National Fuel, up 26 percent, and Dresser- Rand, up 27.2 percent — were bolstered by the energy boom, which fueled higher profits in National Fuel’s oil and natural gas drilling business and boosted Dresser-Rand’s turbine sales to the energy industry.
“With only about 29 percent of the company’s oil and gas production hedged through 2009, National Fuel is clearly levered to the current commodity price environment,” Citigroup analyst Faisal Kahn said in a research note.
The losers
It’s been a topsy-turvy year for Rand Capital Corp.’s shares. The Buffalo venture capital firm’s stock was one of the hottest local stocks during the first quarter, posting a 27 percent gain, only to give all of that back in the second quarter, tumbling by 29 percent.
While Rand has nearly $6 million to invest at a time when the struggling economy is tightening other funding sources for development stage companies, the value of the venture capital firm’s portfolio slipped by 2 cents per share during the first quarter.
Former high-flyer Astronics Corp. came tumbling back to earth during the second quarter, losing 28 percent of its value.
After years of rapid growth, Astronics’ first-quarter sales slipped by 4 percent and profits tumbled by 45 percent as company President Peter Gundermann warned that the company is in the midst of a pivotal year that will require increased spending on research and development and a focus on efforts to win new projects that could fuel sales in future years.
Servotronics Inc., which has been one of the shining stars among the local stocks since the end of 2005, gave back some of those gains in the second quarter with a 25.6 percent slide, even as its first-quarter profits quadrupled on strong sales of its military knife products.
Columbus McKinnon’s stock ended the quarter down 22.3 percent after the Amherst manufacturer of materials handling equipment posted a surprising 24 drop in fourth-quarter profits due to troubles at a Danish subsidiary.
