Outlook for '99 is optimistic
By Staff -- Industrial Distribution, 1/1/1999
From 1993 through early 1998, the ID/Baird Industrial Distributor Average cumulatively outperformed several broad equity market indices. We believe this performance was driven by prolonged domestic economic growth and secular changes occurring within the distribution industry. Generally speaking, larger, publicly-held distributors, with greater access to lower-cost capital, have been actively consolidating this fragmented industry and building national distribution networks and expanding their product offerings. This has allowed selected distributors to capitalize on outsourcing opportunities with customers and vendors.
In mid-1998, distribution stocks began to underperform broad equity market indices, as investors became concerned that global economic and political events would trigger slower growth in the U.S. Consequently, many investors shifted their focus to less cyclical, large cap stocks. In fact, our economy has exhibited slower growth in the later part of 1998, which has been reflected in more modest internal growth rates for many distributors.
Our outlook for 1999-2000 is optimistic, based on four factors. First, Asian/Pacific Rim stock markets have rebounded sharply from their summer lows. Second, gold and commodities futures prices have held above their lows, contradicting fears that the world economies are in a free fall. Third, unemployment claims in the U.S. remain near 10-year lows. Fourth, global monetary policy has eased, as evidenced by short-term interest rate cuts by the Federal Reserve and other nations.
Each month, Jeffrey Germanotta, senior vice president of the equity research department at R.W. Baird & Co., will provide market analysis for the distribution sector.
DISTRIBUTORS
Company name 11/30 $ Yr. % chng. 52 wk. High/Low
Applied Industrial APZ 14.00 -50.4 29.44 12.00
Airgas ARG 10.13 -27.7 18.81 9.06
Barnes Group B 30.94 18.4 34.00 21.25
DXP Enterprises DXPE 7.63 -33.0 13.00 6.75
Fastenal Co. FAST 41.25 -22.2 56.88 20.50
Grainger (WW) GWW 42.25 -9.7 54.72 36.44
Hughes Supply HUG 27.63 -15.6 39.81 25.13
Industrial Distr. Group IDG 6.94 -64.3 21.31 4.75
Pentacon JIT 4.25 NA 14.69 3.13
JLK Direct Distr. JLK 10.94 -61.5 39.50 9.31
Kaman Corp. KAMNA 16.25 -12.2 20.38 13.00
Lawson Products LAWS 23.00 -24.0 31.88 20.25
MSC Industrial Direct MSM 23.81 22.5 33.50 12.25
Noland Co. NOLD 22.38 -3.8 29.25 20.00
Premier Farnell PFP 5.94 -56.0 14.44 4.75
Sunsource SDP 20.88 -13.2 29.69 13.63
Strategic Distr. STRD 2.81 -42.3 7.50 1.81
Vallen Corp. VALN 19.63 -5.4 22.75 17.00
White Cap Industries WHCP 13.25 -30.9 25.25 6.38
Questron Technology QUST 5.19 -43.5 9.88 3.50
Genuine Parts Co. GPC 32.94 2.9 38.25 28.25
DISTRIBUTION TECHNOLOGY
Company name 11/30 $ Yr. % chng. 52 wk. High/Low
Prophet 21 PXXI 11.56 -0.5 20.25 9.00
Datastream Systems DSTM 10.13 -36.2 27.50 9.25
Sterling Commerce SE 36.25 4.3 50.25 20.13
Edwards JD JDEC 34.75 1.5 49.50 24.00
Harbinger HRBC 8.63 -56.9 27.58 3.50
MANUFACTURERS
Company name 11/30 $ Yr. % chng. 52 wk. High/Low
Aeroquip-Vickers ANV 36.38 -28.8 72.25 22.0
Black & Decker BDK 54.19 47.4 65.50 37.69
Baldor Electric BEZ 19.94 -14.1 27.19 19.06
Columbus McKinnon CMCO 18.19 -22.2 31.00 13.75
Cooper Industries CBE 49.13 -4.8 70.38 36.88
Danaher DHR 45.63 55.3 48.50 28.00
Dana DCN 39.00 -16.6 61.50 31.31
Emerson Electric EMR 65.00 18.2 67.44 54.50
Federal-Mogul FMO 56.75 38.0 72.00 33.00
Ingersoll-Rand Co. IR 46.88 14.7 54.00 34.00
Kennametal KMT 21.38 -59.4 54.75 15.63
Makita MKTAY 11.19 -2.7 13.25 7.25
Illinois Tool Works ITW 63.56 16.0 73.19 45.19
3M MMM 80.50 -17.4 97.88 65.63
Parker-Hannifin PH 34.75 -21.9 52.63 25.56
Pentair Inc. PNR 37.69 -0.2 46.25 26.75
Kaynar Technologies KTIC 20.50 -23.0 34.50 7.38
Starrett (L.S.) Co. SCX 30.63 -20.5 41.13 30.38
Timken Co. TKR 19.25 -45.7 41.94 13.63
Textron TXT 77.69 31.4 80.94 52.06
Stock charts courtesy of R.W. Baird & Co.
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