After a dismal ending to 2018, the U.S. stock market made a strong rebound during the first half of 2019. The Dow Jones Industrial Average, Nasdaq and S&P 500 indexes all reached new highs recently.
The market suffered a big pull-back in November and December as investors were concerned about potential interest rate hikes, said Katherine Schoen, manager of private wealth management equity and fixed income research for Milwaukee-based Robert W. Baird & Co. Inc. The market only recently has eclipsed levels it was at in September, she said.
Stock prices have been on the rise as investors have become more optimistic because the Fed now appears more likely to cut interest rates than to raise them, Schoen said.
Local stocks joined the broader market rise during the first half of 2019. Of the 35 publicly-held companies tracked by BizTimes Milwaukee that are based or have significant operations in southeastern Wisconsin, 28 saw their stock prices rise during the first half of the year, while only seven suffered stock price declines.
Milwaukee-based specialty vehicle manufacturer REV Group Inc. was the biggest local gainer, with its stock price rising 92% to $14.41 during the first half of the year. REV Group has regained some ground after it was the area’s biggest stock price loser in 2018, suffering a 77% decline last year, which included a company restructuring, a supplier fire and class action lawsuits related to its 2017 IPO.
The second biggest local gainer during the first half of the year was Milwaukee-based manufacturer Gardner Denver Holdings Inc., with a 69% stock price increase to $34.60 a share. In June, Gardner Denver announced that it would be combined with the industrial segment of Ingersoll Rand. The headquarters for the combined company will be in Davidson, North Carolina.
Milwaukee-based Jason Inc., the parent company of several manufacturers in the finishing, components, seating and automotive acoustics sectors, had the biggest local stock decline during the first half of 2019. Its stock price fell 53% to just 65 cents a share. The Nasdaq exchange recently notified the company that its market value of less than $35 million does not meet the requirement for continued listing. The company has until the end of the year to regain compliance, or will face delisting.
For the first quarter of the year, Jason Inc. reported a net loss of $5.3 million, and an adjusted net loss of $3.1 million. Its net sales were down 15.1% for the quarter, year-over-year.
The second biggest local stock price loser for the first half of the year was Sussex-based Quad/Graphics Inc. Its stock price fell 36% to $7.91 during the first half of 2019.
In late October, Quad announced that it planned to acquire Chicago-based LSC Communications for $1.4 billion.
The planned combination of Quad and LSC would create a company with around $8 billion in annual revenue, but if the two printers continued on their own, they both face sales declines of 17 to 21% by 2022, according to Quad estimates. The estimates included a more than $1.5 billion drop in the combined annual revenue of the two companies, but the projections are also based on current industry trends continuing and the companies not taking additional actions to stem the declines.
The U.S. Department of Justice recently filed a lawsuit to block Quad’s acquisition of LSC, arguing the deal would end aggressive competition between the two and harm customers in the magazine, catalog and book markets.
Schoen said she anticipates continued slow growth of the stock market, with additional volatility. Trade conflicts between the U.S. and China, and other countries, remain a headwind, she said. The Fed’s interest rate policy remains a wild card.
“We are now in the longest bull market in U.S. history,” Schoen said. “We don’t think that’s necessarily going to end, but we are realistic that we could see a turn.”
Another possible concern is that many investors appear to be overallocated in stocks with their portfolio mix, because the market has done so well for the past 10 years, Schoen said. If the stock market turns downward, those investors could be overexposed, she said.
BizTimes Stock Index
2019 mid-year performance
REV Group Inc.
Gardner Denver Holdings Inc.
Generac Holdings Inc.
Johnson Controls International plc
Modine Manufacturing Co.
Sensient Technologies Corp.
Johnson Outdoors Inc.
MGIC Investment Corp.
Artisan Partners Asset Management Inc.
Westbury Bancorp Inc.
Badger Meter Inc.
Manitowoc Co. Inc.
WEC Energy Group Inc.
Douglas Dynamics Inc.
A. O. Smith Corp.
Rockwell Automation Inc.
Physicians Realty Trust
Twin Disc Inc.
Waterstone Financial Inc.
Weyco Group Inc.
Strattec Security Corp.
Briggs & Stratton Corp.
Jason Industries Inc.
All data taken from Factset Research Systems. This information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy.
Research compiled by Robert W. Baird & Co. Inc.