Local Stocks Mirror National Performance

By Christopher Boyce, St. Louis Post-Dispatch

Jan. 13–In the closing quarter of the calendar year, the stock performance of St. Louis’ publicly traded companies followed the highs and lows of the nation’s economy. Local companies linked to energy markets finished strong, while those linked to housing and retail mirrored the economy’s weakness.

Overall, the 51-company Bloomberg St. Louis stock index gained 2 percent in fourth quarter. By comparison, the Standard & Poor’s 500 index — a broad national index of stock prices composed of major industrials, utilities, financial firms and transportation companies — fell about 4 percent in the quarter.

The area company with the best stock performance in the quarter, MEMC Electronic Materials Inc., had a 50 percent increase in its price.

Like many companies with ties to solar energy, O’Fallon, Mo.-based MEMC’s share run-up was driven by investors who believe soaring oil prices will push innovation in alternative energies. MEMC makes silicon wafers used in many electronic applications, including solar batteries.

In addition to strong performance among St. Louis companies, MEMC — along with Monsanto Co. of Creve Coeur and Express Scripts Inc., of north St. Louis County — were also among the top 10 performers in the S&P 500 during 2007. MEMC had the fifth-best return, while Monsanto and Express Scripts were ninth and tenth, respectively.

Meanwhile, cable operator provider Charter Communications Inc., took the largest hit among area companies in the quarter. The Town and Country-based company’s stock fell about 55 percent in the quarter.

Charter has debt of nearly $20 billion, which raises red flags among investors who already are running from debt in the housing market, said Scott Harrison, senior analyst with Argent Capital Management in Clayton. Growth of cable services from AT&T and other telecommunications companies has made pricing much more competitive, which is good for customers but bad for Charter, Harrison said.

Another company suffering from woes tied to the housing industry was Huttig Building Products Inc., which saw its stock tumble 35 percent in the quarter. Huttig, based in Town and Country, distributes millwork, building materials and wood products for the housing market. The company closed three distribution facilities in 2007 as a cost-cutting measure; in December, it scheduled closing of two more.

Bakers Footwear Group Inc. is also in cost-cutting mode, it said in its third-quarter earnings report in December. Despite some success with its plan, the St. Louis-based company’s stock fell 48 percent in the year’s fourth quarter as it reported slow sales of its sandals throughout the year and slow boot sales in the fall due to unseasonably warm weather.

Among companies that fared better were Arch Coal Inc. and Peabody Energy Corp., which saw increases in stock prices of 33 percent and 37 percent, respectively.

Harrison said both companies were beneficiaries of climbing natural-gas prices that drove demand and prices for alternatives such as coal. While continued rising energy costs could hurt the economy at large, Harrison said it’s unclear when that downturn would start to affect companies such as Arch Coal and Peabody.

“If the economy goes into a recession, ultimately, there’s some point where demand starts to taper off … but nobody knows where that point is,” Harrison said.

cboyce@post-dispatch.com — 314-340-8345

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