Times 10

Column: Bay area stocks are more fizzle than sizzle

Gerdau Ameristeel, one of the two winners, has capitalized on a global construction boom. The fourth-largest steel company in North America produces products made primarily from scrap, like these cars at one of its mills.

Times files

Gerdau Ameristeel, one of the two winners, has capitalized on a global construction boom. The fourth-largest steel company in North America produces products made primarily from scrap, like these cars at one of its mills.

Legendary money manager Peter Lynch wrote a famous book in which he proclaimed that amateur investors could outsmart the professionals by picking their own stocks. If you're half alert you can find great choices right in your own neighborhood, he claimed in One Up on Wall Street.

I wonder if he ever visited the Tampa Bay area.

The cream of our crop, the Times 10, produced two fabulous picks over the past two years. The rest: four subpar performers and four outright bombs. If you were smart enough to pick the two winners, you proved Lynch right. But if you didn't ... well, maybe you should have put a little more distance between your home and your stock picks.

The two years I looked at, from April 2006 to April of this year, was a not-so-great time for the stock market. The Standard & Poor's 500 index rose and then fell, ending up just 5.7 percent higher than where it started. But eight out of 10 of our Times 10 stocks fared worse. The average return for the period: a loss of 11.2 percent.

Our two winners, both from Tampa, stood out:

On top is Walter Industries, the incredible shrinking company riding the energy wave to high shareholder returns. Only 13 years removed from Chapter 11 bankruptcy, the company once considered dumping its underperforming coal mining operation. Now it's shedding other operations instead and reaping the benefits of high energy prices.

Walter spun off its Mueller Water Products division in December 2006 and hopes to offload its home building and finance division by the end of the year. The sharper the focus on coal, the more investors like it.

Gerdau Ameristeel has been able to capitalize on a global construction boom. It's the fourth largest steel company in North America — the second largest small-mill operator — and it keeps on growing. Last year it acquired Chaparral Steel, with locations in Texas and Virginia, and last month it added the assets of Century Steel, with operations in Nevada, California, Utah and New Mexico. A major expansion of its Jacksonville mill is under way. Brazil's Gerdau Group is the majority shareholder.

Then there's the rest of the field. Some of the reasons for poor performance are obvious. When the economy is sinking and gas prices are soaring, a lot of people lose interest in buying a big boat with a gas-guzzling engine. MarineMax feels the pain, and so do its shareholders.

Two companies in the Times 10 have had investigations into possible improprieties that were serious enough to delay filing their financial returns. The dust has settled at Jabil Circuit, which resumed filing, but at WellCare the turmoil is continuing.

Of course these numbers are just a snapshot in time. Stock prices of some of the companies have perked up since I did my analysis. And when you're down, even small gains start to look good.

Times 10: annual revenue
1. Tech Data Corp.$23.4-billion
2. Jabil Circuit Inc. $12.3-billion
3. Gerdau Ameristeel Corp. $5.8-billion
4. WellCare Health Plans*
5. TECO Energy Inc. $3.5-billion
6. Raymond James Financial Inc. $2.6-billion
7. Lincare Holdings Inc. $1.6-billion
8. MarineMax Inc. $1.3-billion
9. Walter Industries Inc. $1.2-billion
10. Kforce Inc. $1.0-billion
* Current information not available; $3.8-billion in revenue reported for 2006.


Returns on 2008 Times 10 stocks
Two-year return*
Walter Industries +66.6 percent
Gerdau Ameristeel +48.1 percent
WellCare Health Plans +4.5 percent
TECO Energy +0.2 percent
Raymond James -5.5 percent
Tech Data Corp. -8.5 percent
Lincare Holdings -38.4 percent
Kforce Inc. -41.4 percent
MarineMax -65.2 percent
Jabil Circuit -72.1 percent
*Adjusted for spinoffs, but not for dividends

About the Times 10
The Times 10 features the 10 largest public companies, by revenue, with headquarters in the Tampa Bay area. To be included, a company had to have stock traded on the New York Stock Exchange, American Stock Exchange or Nasdaq. Financial results are for the most recently completed fiscal year with one exception. WellCare Health Plans has delayed financial reporting while a federal investigation is under way, but the Times decided to keep the company in fourth place based on results from the previous year. A percent change in net income is shown only for companies that were profitable for the past two fiscal years. Return on equity is net income divided by average equity. It is shown only for companies that were profitable last year. Two-year stock return is based on the change in share price between April 28, 2006, and April 30, 2008, adjusted for splits and spinoffs, but not for dividends. Market capitalization is the value of the company’s outstanding shares based on the April 30 closing price.

Column: Bay area stocks are more fizzle than sizzle 05/16/08 [Last modified: Friday, May 16, 2008 6:29pm]

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