by Jeff Hankins
Posted 12/5/2011 12:00 am
Updated 11 months ago
A couple of publicly traded companies in Arkansas really stand out to me as star performers that survived some key recession-driven challenges and have rewarded investors who stayed with them.
Deltic Timber Corp. had reached $62 a share in September 2008 just before the financial meltdown, and it tumbled to $29 in March 2009. High-end residential real estate and timber aren't industries that one would expect to perform well in a recession.
The El Dorado firm's stock last week was trading in the $63 range, which is a remarkable recovery considering we still haven't seen a comeback in housing. The Motley Fool noted in September that Deltic had successfully managed its inventory to match small revenue gains.
In October, Motley Fool followed up and challenged Deltic's cash conversion cycle, or how quickly a company turns cash outflows into cash inflows, and compared it with companies like International Paper and Temple-Inland, which are substantially larger firms. That key word is "quickly," which is the Wall Street mentality for investments. Deltic's roots are in Murphy Oil Corp. and the Charles Murphy family, and the track record is one of dependable, steady growth and value gains over time.
Deltic seems certain to benefit from the shutdowns of small competitors in the timber industry. The company and investors will have to be patient with the real estate holdings in Little Rock's Chenal Valley because the inventory for high-dollar homes remains high and the recession halted speculative building.
Dillard's Inc. has traded as high as $61 this year and last week settled back into the upper $40s. So why am I impressed?
Shares had bottomed out at $3.35 in November 2008 when the meltdown dramatically impacted not only retail spending but property values for the Little Rock retailer. Most investors wrote off Dillard's, and the company endured major sales declines as did every other retailer in the country.
Dozens of retail chains were highly leveraged and didn't survive. Dillard's began aggressively closing underperforming stores, and as a leaner chain strengthened itself with higher margins. The focus on increasing sales at existing stores and pushing its own brands of clothing has paid off. The run-up to $61 was probably too aggressive, and investors took sizable profits and ran.
Others like J.B. Hunt Transport Services Inc., which as a trucking firm is closely tied to economic cycles, and Bank of the Ozarks Inc., which outperformed just about every bank of comparable size in the country, took their stock hits and have steadily grown strong during the past three years. Home Bancshares Inc. of Conway and Simmons First National Corp. of Pine Bluff haven't had gangbuster stock performances, but look really good up against bigger players like Regions Financial Corp. and Bank of America Corp.
And Tyson Foods Inc. of Springdale, which along with other meat companies is battling some of its most challenging times with high grain costs and low chicken prices, has performed admirably, hitting $20 a share last week.
Certainly no Arkansas firm is delivering the routine 2-for-1 stock splits like Wal-Mart Stores Inc. did back in its hyper-growth days. Wal-Mart itself isn't. (In fact, Bank of the Ozarks' stock split back in August was the first by an Arkansas company since 2005.) But we should be encouraged by the way these executives guided their companies through extremely difficult times.
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My wife and I have discovered a new weekend getaway location: Eureka Springs. I can't believe we had not tried this unique tourist experience in Arkansas.
The end of October timing was excellent for crisp fall temperatures and colorful foliage.
The weather was perfect for strolling around downtown and the historic 1886 Crescent Hotel & Spa, where we stayed. The Crescent has the unique, historic feel one would expect but excellent modern amenities, plus the New Moon Spa and top-notch dining.
My best restaurant recommendation is DeVito's Restaurant downtown, but we also enjoyed Ermilio's Italian Home Cooking in a cool little house. The mix of tourists and shops is clearly unique to Eureka Springs. We even caught a short parade that included what had to be lost Occupy Wall Street demonstrators.
(Arkansas Business Publisher Jeff Hankins can be reached via email at JHankins@ABPG.com, followed on Twitter @JeffHankins and connected with at Facebook.com/Jeff.Hankins and Linkedin.com/in/JeffHankins.)