News & Our Thinking

(St, Louis Business Journal)

October 5,2020 (Greg Edwards)

St. Louis public company stocks fell further behind national indexes in the third quarter, unable to compete with the software and technology companies propelling U.S. markets.

The stocks of 34 companies based in St. Louis, or with a large presence here, fell 29.5% for the year through Sept. 30, according to the equally weighted Argent St. Louis Stock Index. That compared with gains of 4.1% in the S&P 500 and 24.5.% in the Nasdaq. The Dow Jones Industrial Average was down 2.7%.

What’s more, 30 of the 34 local stocks remain negative for the year.

It has been a persistent problem. St. Louis stocks were down 28.6% through the second quarter and 38.5% in the first quarter.

The main reason is that St. Louis has relatively few public companies in software and technology sectors in a year when companies such as Apple, Google, Microsoft and Amazon have been driving markets nationally. In addition, many of the St. Louis companies are in economically sensitive industries such as energy and financials.

“The rebound in the stock market has not been distributed evenly since the March lows as the market’s performance has been concentrated in some of the larger growth stocks in the S&P 500,” said Scott Harrison, a portfolio manager at Argent Capital Management. “Many software and technology companies are hitting all-time highs as the disruption from the shutdown appears manageable and long-term investors expect accelerated demand for their services as some of the effects of work from home, virtual meetings, etc., continue.”

The best performers locally were Charter Communications Inc. (CHTR), up 28.7%; Bunzl (BZLFF), up 18.8%; Jacobs Engineering Group (J), up 3.3%; and Centene Corp. (CNC), down 7.2%.

“The top performing stocks in the St. Louis index for the quarter are in the information technology and consumer discretionary sectors,” Harrison said. “Charter was the top performer as its earnings are generally less economically sensitive, and they are seen as a virus ‘winner’ as more people stay home and need bandwidth to work from home effectively.”

The five worst performers were Peabody Energy (BTU), down 74.8%; Mallinckrodt (MNK), down 72.1%; Caleres (CAL), down 59.8%; Boeing Co. (BA), down 49.3%; and Enterprise Financial Services Corp. (EFSC), down 43.4%.

“The bottom performing stocks all tended to fall on the other end of the spectrum — energy and coal, financials and industrials,” Harrison said. “Peabody remains an underperformer as total energy demand suffered with offices, schools, and stores shut down as well as the shift from to natural gas and renewable power sources continues.”