News & Our Thinking

(St, Louis Business Journal)

July 7, 2021 (Diana Barr)

St. Louis public company stocks continued to outperform national indexes year to date through the second quarter, a trend that began in the first quarter.

The stocks of 34 companies based in St. Louis, or with a large presence here, rose nearly 19% through the quarter ended June 30, according to the equally weighted Argent St. Louis Stock Index. That compared with gains of 14.4% in the S&P 500, 12.5% in the Nasdaq, and 12.7% in the Dow Jones Industrial Average.

This quarter, Argent added 1847 Goedeker (GOED) to its local index to replace Aegion Corp. (AEGN), a rehabber of infrastructure pipes that was taken private when its buyout affiliates of New York investment firm New Mountain Capital LLC closed in May. Goedeker, an online appliance and furniture retailer, went public in August.

While the Argent index underperformed the S&P 500 in the second quarter itself, it “remains well ahead of national indices on a year to-date basis,” according to Ithiel Turrado, small cap portfolio analyst for Argent Capital Management. “The last three months seemed to be uneventful but a number of rotations unfolded beneath the surface. High quality companies led during the first half of the quarter but that trend quickly reversed back to what we witnessed during the first quarter, with low quality and economic sensitive companies outperforming.

“All in all, the economy keeps moving forward and pushing the S&P 500 to all-time highs and the St. Louis Index continues to benefit from its outsized exposure to economically sensitive sectors such as energy and financials,” Turrado said.

St. Louis public companies ranked as the top five performers in the Argent St. Louis index through the second quarter were Peabody Energy (BTU), up 229.1%; Stereotaxis Inc. (STXS), up 89.4%; Olin Corp. (OLN), up 88.4%; Caleres Inc. (CAL), up 74.4%; and Perficient Inc. (PRFT), up 68.8%.

“Peabody Energy has had an impressive performance year to date as the business benefits from continued demand strength in the energy markets driven by the surge in economic activity in the post-pandemic world,” Turrado commented. The company, a major coal producer, narrowed its first-quarter net loss from last year’s quarter, and in May named Jim Grech as its new president and CEO.

“Stereotaxis has seen a re-rating in its valuation multiples in 2021 as the business continues to grow rapidly while achieving break-even and the sell-side sentiment continues to improve,” Turrado said. The company reported double-digit revenue growth in the first quarter, and said it continues to expect that growth in 2021.

Chemical and ammunition maker Olin “continues its strong performance as the business benefits from a more robust economic backdrop and the new strategy starts to bear fruit on the margin front,” he said. Olin has taken steps to exit high-capital, low-return chlor alkali production capacity.

The worst performers on the local index through the second quarter were 1847 Goedeker (GOED), down 54.3%; FutureFuel (FF),down 24.4%; ESCO Technologies (ESE), down 9.1%; Galera Therapeutics (GRTX), down 3.9%; and Reinsurance Group of America (RGA), down 1.6%.

Goedeker’s stock closed the second quarter 54% lower than when the year started as a result of a $205 million capital raise in May that was nearly seven times its market cap at the time (about $30million), according to Turrado. The company used the funds to buy New York-based Appliances Connection, an ecommerce leader in appliance sales that Goedeker officials said would significantly expand the company’s size.

Turrado also pointed out that earnings for FutureFuel, a producer of biofuels, have been hit by the winter storm in Texas, and ESCO Technologies’ market weakness follows the retirement this spring of CFO Gary Muenster, who was succeeded by Chris Tucker.