B-to-B DM Stocks Eke Out Slight Increase
Without the impressive stock price gains by computer hardware and peripherals vendors, business-to-business direct marketing companies would not have been able to modestly improve the overall average price of their stocks during the 12 months ended Oct. 30.
The 31 B-to-B stocks in Gruppo, Levey & Capell Inc.’s GLC Portfolio recorded an average price increase of 0.9% for the 12-month time frame, compared with a 22% rise in the Standard & Poor’s 500 during the same period.
If Dell Computer Corp.’s 227% 12-month stock price leap was not taken into account, the B-to-B sector would have posted an overall average decline of almost 7%.
B-to-B catalogs took the hardest hit over the last fiscal year. Average stock prices in the segment dropped 13%, compared with the relatively healthy jump of nearly 50% in marketing services.
JLK Direct Distribution, a cataloger that offers a wide range of industrial supplies, registered the largest downturn in average stock price, falling 61% to $11.56 over the course of the 12 months.
JLK’s stock began to plummet after the company’s early October announcement that first quarter sales and earnings would fall below analysts’ estimates due to weaker demand for its metalworking equipment and the General Motors Corp. strike.
For the three months ended Oct. 30, average stock prices for the 31 companies in the two B-to-B segments tracked by GLC fell 7%, compared with a 4% drop in the S&P 500 during the period. Marketing services companies took the worst losses in average stock price, dropping some 11%.
Factoring Dell out of the marketing services category (due to a Sept. 8th stock split that cut its issue price in half) the segment fell 6%-the same as the catalog companies’ average decrease in their stock prices.
CDW Computer Centers Inc. was the biggest gainer over the three months. The company’s stock price rose 65% from August to October, outpacing the group’s second biggest achiever, Tessco Technologies Inc., by 31%. CDW’s strong showing was jump-started in mid-October when the company exceeded analysts’ third quarter earnings forecasts amid concerns of a possible shortfall.
Laurel Imig is a senior analyst at DM investment firm Gruppo, Levey & Capell Inc., New York.
