Lots of money.
A handful of stocks and mutual funds have beaten the odds by generating outstanding returns on investment since the tragedy that added fuel to a recession that has depleted the savings of millions of Americans.
It can be painful to look in the rearview mirror, but Small Business Times asked the research staff at Robert W. Baird & Co., Milwaukee, to compile a list of the 20 best-performing US stocks and the 20 best-performing mutual funds over the past year.
Curiously, six of the top performing stocks were retail
companies, even though the overall retail industry has been
hammered in 2002.
The remainder of the best stocks included an eclectic collection of companies in the manufacturing, real estate investment, consumer products, media, health products, drugs, health services, financial services, education and security sectors.
In other words, they were across the board, but they were often lone rangers in their sectors.
Amazingly, the top US stock since 9-11-01 is — Jo-Ann Stores, Inc. That’s right, the company that owns 850 of those Jo-Ann Fabrics and Crafts stores, including 22 in Wisconsin.
On Sept. 11 of last year, Jo-Ann stock was selling for $5.70 per share, but has since skyrocketed to $29.97 per share, a whopping return of 425.8%. That means anyone having the foresight – or the luck – to buy $1,000 in shares of Jo-Ann stock last year would now have holdings of more than $425,000.
The success of the Jo-Ann retail chain in the aftermath of 9-11 may be best explained by the "comfort factor," with people staying at home more, creating a larger demand for fabrics and crafts, said J. David Cumberland, senior consumer and research analyst at Baird.
"Consumer spending has held better than most feared it would since 9-11," Cumberland said. "Certain niche players can do quite well, like smaller retailers, when the expectations are very low."
Rosalind Thompson, executive vice president of Hudson, Ohio-based Jo-Ann Stores, said the turmoil caused by the terrorist attacks has indeed fed the demand for her company’s wares.
"We certainly believe there is some cocooning, staying at home and being with family," Thompson said. "We’re certainly seeing some of that in our business."
The other retailers on the national "best" chart are Jos. A. Bank Clothiers, Tractor Supply Co., Mothers Work, A.C. Moore Arts & Crafts and Loehmann’s Holdings.
Another entrant on the chart of the best stocks is Racing Champions Ertl Corp., a Glen Ellyn, Ill.-based manufacturer and marketer of miniature die-cast replicas. Its products are sold to more than 20,000 retail outlets throughout the United States, Europe and the Asia-Pacific.
Racing Champions Ertl’s growth has coincided with the rising popularity of NASCAR, as the company creates licensed replicas for the racing circuit.
The company appears poised for continued growth. Racing Champions Ertl has signed a multi-year licensing agreement with Milwaukee-based Harley-Davidson to produce and market Harley toys and collectibles.
The items will be sold at Harley dealerships and specialty, toy, collector, hobby and non-discount chain stores.
"They’ve done an effective job of securing licenses like Harley-Davidson that have a proven connection with their target market, which is men and boys," Cumberland said.
As for mutual funds, if you haven’t had your portfolio allocated to include substantial proportions of investments in gold, you likely have lost money over the past year.
Of the 20 best-performing mutual funds over the past year, 17 have a gold objective, either in direct gold investment or investments in gold mining equities.
Gold has fascinated mankind for countless centuries, and its role as an investment has been equally mysterious. It has long been considered a counter investment, and its recent history supports that theory.
Gold prices peaked at $850 per ounce in 1980, during the recession of the Reagan era, according to Jeffrey Christian, managing director of the CPM Group, a New York company specializing in precious metals and commodities research, consulting and merchant banking.
True to its counter investment role, gold prices plummeted as the economy grew in the 1990s, eventually bottoming out at $250 per ounce in March 2001. It has since climbed back to about $320 per ounce, fueling the rise in share prices for mutual funds with a gold objective.
Christian remains bearish on gold, as he maintains a target of $340 to $360 per ounce over the next year.
"I think, for many people, gold is a religion, but I think it is a very good investment. Gold is an alternative asset," Christian said. "More often than not, the investors who buy gold buy it as an insurance."
That’s an insurance policy most of us haven’t taken out.
Sept. 27, 2002 Small Business Times, Milwaukee
