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St. Louis Stocks Outperform S&P 500

01 January 2010

(St. Louis Business Journal)

If you had these companies at the beginning of the decade, you’d be on the cover of many magazines,” said Ken Crawford, senior portfolio manager of Argent Capital in Clayton.  If on the eve of the new millennium, you had invested $1,000 in the newly named Panera Bread Co., your investment would be worth more than $17,500 today.

 January 1, 2010
“If you had those companies at the beginning of the decade and held them, you’d be on the cover of many magazines,” said Ken Crawford, senior portfolio manager for Argent Capital in Clayton.
As a group, St. Louis’ public companies have posted solid gains over the past 10 years. If your New Year’s resolution a decade ago was to focus your overall investing solely on St. Louis firms, you’d be entering 2010 with returns that well outperformed the overall market.
Stocks of the 35 St. Louis public companies that were in existence in 1999 and are still publicly traded today increased an average of 76 percent over the past 10 years, as compared with the S&P 500, which dropped 23 percent over the decade. St. Louis stocks also eclipsed the American Stock Exchange Index, which increased by 29 percent over the past 10 years.
If you had invested $1,000 in each of these 35 companies in 1999, your $35,000 would be worth more than $103,000 today.
“If you had invested in all St. Louis companies, you would have clearly outperformed the S&P 500,” said Ron Kruszewski, chairman and chief executive of Stifel Financial. “That’s a testament maybe to Midwestern values and conservatism.”
Crawford pointed out that the average results for the 35 companies may enjoy “survivors’ bias,” since the list includes only publicly held companies still in operation.
A $1,000 investment in Stifel in 1999 would be worth more than $11,800 today. Stifel’s stock price has jumped more than 1,000 percent from $4.94 a share at the end of 1999 to close at $58.58 a share on Dec. 28, 2009.
“It’s been a good decade for us, no question,” Kruszewski said. “It’s just been consistent growth, both organically and through acquisition.”
Over the past 10 years, Stifel has made a number of acquisitions to expand the firm’s reach. In 2005, it acquired Baltimore-based Legg Mason Capital Markets in a $91 million deal. In 2006, it acquired the private client business of Minneapolis-based Miller Johnson Steichen Kinnard Inc. for an undisclosed amount, and in 2007, it acquired local firm First Service Financial Corp. for about $38 million. Earlier this year, Stifel completed its $12 million acquisition of Youngstown, Ohio-based financial services firm Butler Wick & Co.
“Stifel’s 10-year stock price performance has been the most significant of the 20-plus brokerage firms that I follow,” said Michael Flanagan, an independent Philadelphia-based brokerage industry analyst.
In 2008, Stifel reported record revenue of $888 million, up 488 percent from $151 million in 1999.
“The industry went through what people would say was an Armageddon in 2008, but in 2008 we had record revenue and record profits,” Kruszewski said. “That was one of the signature years for our company in the decade.”
What a difference a decade makes.
In 1999, a newly created Panera Bread emerged. The company, which had bought St. Louis Bread Co. and previously been known as Au Bon Pain Co. Inc., sold all of the Au Bon Pain business units in August 1998 and renamed the company Panera Bread.
Since then, the company’s revenue has multiplied by 658 percent, from $171 million in 1999 to $1.3 billion in 2008. In 2008, Panera’s stock price increased 50 percent, making it the second best performing stock in the Russell 1000 Index. Panera was the best performing stock in the restaurant industry with a market capitalization of $200 million or greater over the 10 years ended Dec. 31, 2008.
“In those 10 years, our stock has appreciated at an annualized growth rate north of 30 percent — more than three times better than the next best performing restaurant stock,” Chief Executive Ron Shaich said in a statement. “It is also worth noting that we have been the 10th best performing stock in the entire Russell 1000 Index these past 10 years.”
Panera, which owns and franchises more than 1,300 bakery-cafes in 40 states and in Canada, ranked 18th in total sales among restaurant chains in restaurant industry research firm Technomic Inc.’s 2009 “Technomic Top 500” report.
“Panera has been able to exploit a niche that the casual dining sector was looking for,” Argent’s Crawford said.