Analysis of Public Electrical Company Share Prices Tell a Tale of Woe and Woah!

May 7, 2010
The publicly held companies with interests in the electrical or distribution markets generally don't attract as much interest as Wall Street's trendy

The publicly held companies with interests in the electrical or distribution markets generally don't attract as much interest as Wall Street's trendy tech stocks. While many investors are going ga-ga over companies like Apple, Netflix, Priceline, Baidu and Amazon, manufacturers of electrical products or publicly held distribution companies for the most part are safe and solid investments over the long haul that don't produce the meteoric returns — or mind-bending losses — of many tech stocks.

Over the past few years, EM's editors have gotten calls from investment analysts looking for market insight into distribution companies like WESCO, Houston Wire & Cable, Fastenal and Grainger because they popped up on analysts' screens as intriguing and potentially profitable plays. We also get calls from analysts regarding wire and cable companies when the copper market starts going whacky.

Since the stock market hit its all-time high on Oct. 9, 2007 (just before the recession took root) and then bottomed out on March 6, 2009 (several months before key economic indicators started turning positive), public companies in the electrical or distribution markets have beat Wall Street in some areas and been humbled by it in others. For instance, through May 3, many companies' stock prices have doubled or even tripled since the market bottomed out and have clearly outperformed the three major stock indexes — NASDAQ (+93.1%); S&P 500 (+75.9%); and Dow Jones Index (+68.3%) — during this period. The top five gainers from the electrical and distribution markets in terms of percentage from March 6, 2009 through May 3, 2010 were Littelfuse (+348%); Cree Inc. (+301%); Coleman Cable (+299.3%); Baldor Electric (274.3%): and Rockwell Automation (+250.2%). In all, 19 of the 23 public companies that EM collected data on for this article saw their stock prices double during this time.

While these are indeed gaudy gains, the stock market did have a lot of ground to make up. All of the market indexes lost more than 50 percent between Oct. 9, 2007 and March 6, 2009. The only electrical stocks to post higher percentage gains than the Dow Jones Index during this time period were Acuity Brands, Cree, Emerson Electric, Encore Wire, Fastenal, Grainger and Quanta.

Another cruel reality is that most of the public companies with interests in the electrical or distribution markets are still trying to get back to their stock prices from the stock market's overall high-water mark on Oct. 9, 2007. Only four companies have so far topped that lofty plateau — Cree (+156.4%); Littelfuse (+17.2%); Acuity (+10.9%); and Emerson Electric (+5.8%). As a point of comparison, two of the hottest tech stocks (not counting the most recent two-day market slide this week) have really taken off during since the Oct. 9, 2007 high — Netflix is up approximately 347.5 percent and Apple is up 58.7 percent.

Stock Performance of Publicly Owned Electrical Companies

STOCKS 10/9/2007 3/6/2009 5/3/2010 % Change From Market Low % Change From Market High MANUFACTURERS Acuity 41.54 20.4 46.08 125.9 10.9 Baldor 40.75 10.55 39.49 274.3 -3.1 Coleman Cable 14.22 1.44 5.75 299.3 -59.6 Cooper Industries 53.37 18.83 51.44 173.2 -3.6 Cree 29.46 18.83 75.55 301.2 156.4 Eaton 92.71 29.98 78.46 161.7 -15.4 Emerson Electric 50.67 24.33 53.62 120.4 5.8 Encore Wire 26.1 16.99 22.43 32.0 -14.1 GE 37.39 6.87 19.26 180.3 -48.5 General Cable 71.03 13.65 29.36 115.1 -58.7 Hubbell 52.3 22.67 48.73 115.0 -6.8 Littelfuse 36.48 9.54 42.74 348.0 17.2 Rockwell Automation 67.46 17.88 62.62 250.2 -7.2 Siemens 127.31 47.61 97.07 103.9 -23.8 Thomas & Betts 60.54 20.34 43.06 111.7 -28.9 Manufacturer Average 174.1 -5.4 DISTRIBUTORS Anixter 83.49 25.9 53.68 107.3 -35.7 Avnet 43.57 16.12 32.42 101.1 -25.6 Fastenal 46.87 25.87 56.48 118.3 20.5 Grainger 90.31 60.23 112.27 86.4 24.3 HWC 19.98 4.93 13.83 180.5 -30.8 WESCO 46.81 14.27 41.53 191.0 -11.3 Distributor Average 130.8 -9.8 CONTRACTORS EMCOR 30.64 14.31 28.32 97.9 -7.6 Quanta 30.23 17.92 20.12 12.3 -33.4 MARKET INDICATORS DJ Industrial Average 14164.53 6626.94 11151.83 68.3 -21.3 NASDAQ 2803.91 1293.85 2498.74 93.1 -10.9 S&P 500 Index 1565.15 683.38 1202.26 75.9 -23.2