Top 75 public companies: how long will it take stocks to recover from this year's spring fling?

• Author: Maley, Frank
• Position: FEATURE

Gradually, it seemed, prosperity was taking hold. After hitting bottom in March 2009, major stock indices rose in their herky-jerky way throughout last year and into this one. In April, the S&P 500 cleared 1,200--closer to the happy days before the financial meltdown of late 2008 than the despair it had brought the following spring. At least one pundit predicted the index would reach 3,000 by 2020.

Then fortune's grip slipped. Investors grew cautious as the sovereign debt crisis in Europe worsened, fears of unsustainable government borrowing in the U.S. and other developed markets grew, and expectations of economic growth shrank. Tax credits for home buyers and other government stimuli had either ended or were running out.

The S&P 500 fell more than 15% in less than 10 weeks, giving back about six months' worth of gains. Many Tar Heel stocks followed suit, climbing, climbing, then tumbling just as 2010 neared its halfway mark--the point at which BUSINESS NORTH CAROLINA annually ranks the state's 75 largest public companies by their market capitalization. This year, the list was compiled by Anthony Amoruso, assistant professor of accounting, and Neeraj Gupta, assistant professor of finance, at Elon University's Martha and Spencer Love School of Business.

Shares of Bank of America Corp. fell 25% between April 15 and the closing bell on June 30, but it still dwarfed all other public companies in the state. Its market cap of $144 billion was nearly five times that of second-place Lowe's Cos. Shares of the hardware retailer had lost more than a quarter of their value in little more than two months. That's consistent with nationwide trends, Gupta says. "Some of the biggest losers have been financial stocks--due to increased expectations of default--and housing-related firms and retail stocks."

Despite the June swoon, most Tar Heel public companies still gained value in the 12 months that ended June 30. BofA's market cap rose 70.6%, while Lowe's grew 2%. Altogether, 51 of the companies on BUSINESS NORTH CAROLINA'S Top 75 gained value--none more spectacularly than Targacept Inc., which saw its market cap grow nearly ninefold. "The stock skyrocketed last summer on favorable results from a clinical trial testing the efficacy of an antidepressant, followed by a licensing agreement with AstraZeneca, which provided a major infusion of cash and the promise of significantly more based on future milestones," Amoruso says. But Targacept, too, struggled to hold on to its gains. Its share price reached $20 on Sept. 28, peaked at $25 on May 13 and ended the first half of 2010 below $20.

As stocks limped through June, some observers feared a replay of early 1930, with shares rallying from the crash of the previous year, only to peak and fall for two more years. That's unlikely, says Mark Vitner, senior economist at Wells Fargo & Co. in Charlotte. The economy is in better shape, and government policy is more sophisticated. He expected most companies to report solid second-quarter earnings but slow growth afterward. Market caps might not rise until November or December. "I would think that the stock prices would be lower on Oct. 1 than they were on May 1, and then we probably rally after the election."

COMING & GOING Newcomers 2010 rank Dropouts 2009 rank Talecris Biotherapeutics 18 Aviat Networks 38 Dex One 32 ECB Bancorp 67 Flanders 62 Xerium Technologies 68 Oxygen Biotherapeutics 66 FairPoint 69 Communications Citizens South Banking 67 Nexxus Lighting 71 NewBridge Bancorp 68 Bank of Granite 72 Charles & Colvard 72 Southern Community 73 Financial Measuring Up Net margin (latest fiscal year) 1 Trimeris 147.5% 2 Hatteras Financial 61.6 3 BioDelivery Sciences International 52.6 4 First Bancorp 33.9 5 Lorillard 25.7 6 Tanger Factory Outlet Centers 21.5 7 Triangle Capital 14.5 8 Highwoods Properties 12.5 9 First South Bancorp 11.7 10 Red Hat 11.7 Total one-year return 1 Targacept 689.0% 2 Charles & Colvard 447.1 3 Salix Pharmaceuticals 295.4 4 Unifi 169.0 5 Polymer Group 146.8 6 Culp 119.2 7 PowerSecure International 113.4 8 Polypore International 104.5 9 Cree 104.2 10 NewBridge Bancorp 69.6 Total five-year return 1 PowerSecure International 218.9% 2 Culp 149.1 3 Cree 135.7 4 Salix Pharmaceuticals 121.0 5 Red Hat 120.6 6 Insteel Industries 102.7 7 Nucor 102.3 8 Old Dominion Freight Lines 96.5 9 Tanger Factory Outlet Centers 87.2 10 Reynolds American 79.7 TOP 75 MEDIAN: 3.1% Earnings per share (trailing 12 months) 1 First Citizens Bancshares $20.63 2 Dex One 17.10 3 Lorillard 6.18 4 Laboratory Corp. of America 5.01 5 Hatteras Financial 4.95 6 VF 4.69 7 Goodrich 4.29 8 Reynolds American 3.55 9 First Bancorp 3.38 10 Coca-Cola Consolidated 3.04 TOP 75 MEDIAN: 12.0% Net income growth (latest fiscal year) 1 Coca-Cola Consolidated 319.5% 2 Polymer Group 240.1 3 First Bancorp 173.8 4 Carlisle 159.1 5 Talecris Biotherapeutics 133.9 6 Hatteras Financial 120.4 7 Tanger Factory Outlet Centers 107.0 8 Lance 102.2 9 The Pantry 85.8 10 Highwoods Properties 82.8 TOP 75 MEDIAN: (3.7)% Price/earnings ratio (6/30/10 price to trailing 12 months) 1 Insteel Industries 461.1 2 Krispy Kreme Doughnut 93.6 3 SPX 89.3 4 Cogdell Spencer 69.5 5 Red Hat 64.3 6 Martin Marietta Materials 57.0 7 Cree 54.9 8 Tanger Factory Outlet Centers 52.6 9 Polymer Group 44.3 10 Highwoods Properties 40.6 TOP 75 MEDIAN: $0.62 Return on capital (latest fiscal year) 1 Lorillard 131.7% 2 Trimeris 44.3 3 Culp 19.7 4 Family Dollar Stores 18.2 5 Laboratory Corp. of America 17.1 6 Cato 16.5 7 First Bancorp 16.3 8 Goodrich 14.2 9 Talecris Biotherapeutics 14.0 10 Hatteras Financial 13.6 TOP 75 MEDIAN: (11.7)% Return on equity (latest fiscal year) 1 Lorillard 264.1% 2 Talecris Biotherapeutics 75.9 3 Trimeris 44.3 4 Coca-Cola Consolidated 39.6 5 Laboratory Corp. of America 28.6 6 Goodrich 23.8 7 Culp 23.7 8 Alliance One International 22.1 9 Family Dollar Stores 21.6 10 First Bancorp 21.4 TOP 75 MEDIAN: 16.1 Return on assets (latest fiscal year) 1 BioDelivery Sciences Intl. 124.7% 2 Lorillard 38.7 3 Trimeris 23.5 4 Culp 12.7 5 Laboratory Corp. of America 11.4 6 Talecris Biotherapeutics 11.2 7 Family Dollar Stores 10.6 8 Cato 10.0 9 PPD 8.4 10 Cornerstone Therapeutics 7.5 TOP 75 MEDIAN: 3.2% Dividend yield (expected 12-month dividend to 6/30/10 price) 1 Hatteras Financial 17.3% 2 Triangle Capital 11.5 3 First South Bancorp 7.5 4 Reynolds American 6.9 5 Progress Energy 6.3 6 Highwoods Properties 6.1 7 Duke Energy 6.0 8 Cogdell Spencer 5.9 9 Lorillard 5.6 10 Horizon Lines 4.7 TOP 75 MEDIAN: 0.0% TOP 75 MEDIAN: 6.6% Total equity (latest fiscal year; millions) 1 Bank of America $231,444.0 2 Duke Energy 21,750.0 3 Lowe's 19,069.0 4 BB&T 16,191.0 5 Progress Energy 9,542.0 6 Nucor 7,390.5 7 Reynolds American 6,498.0 8 VF 3,815.2 9 Goodrich 2,921.0 10 Laboratory Corp. of America 2,106.1 TOP 75 MEDIAN: $311.6 TOP 75 MEDIAN: 2.0% Cash from operations (trailing 12 months; millions) 1 Bank of America $98,810.0 2 BB&T 9,415.0 3 Lowe's 4,445.0 4 Duke Energy 4,394.0 5 Progress Energy 2,462.0 6 Reynolds American 1,431.0 7 Lorillard 1,231.0 8 VF 1,193.0 9 Nucor 1,165.1 10 Laboratory Corp. of America 885.5 TOP 75 MEDIAN: $88.1 TOP 75 PUBLIC COMPANIES MARKET VALUE '10 RANKED BY Industry 6/30/10 value Change from 6/30/10 (millions) 6/30/09 '09 MARKET VALUE 1 Bank of America Financial $144,173.4 70.6% services 1 (N-BAC) Charlotte 2 Lowe's Hardware 29,184.3 2.0 stores 2 (N-LOW) Mooresville 3 Duke Energy Energy 21,010.2 12.1 3 (N-DUK) Charlotte 4 BB&T Financial 18,209.2 47.8 services 5 (N-BBT) Winston-Salem 5 Reynolds Cigarettes 15,190.5 35.0 American 7 (N-RAI) Winston-Salem 6 Nucor Steel 12,063.0 (13.6) 4 (N-NUE) Charlotte 7 Progress Energy Energy 11,262.9 6.7 8 (N-PGN) Raleigh 8 Lorillard Cigarettes 11,002.5 (3.4) 6 (N-LO) Greensboro 9 Goodrich Aerospace and 8,293.1 34.0 defense equipment 10 (N-GR) Charlotte 10 VF Apparel 7,837.3 28.4 11 (N-VFC) Greensboro 11 Laboratory Corp. Medical 7,836.4 6.7 of America testing 9 (N-LH) Burlington 12 Cree Semiconductors 6,452.4 147.3 16 (Q-CREE) Durham 13 Red Hat Software 5,459.4 42.7 13 (N-RHT) Raleigh 14 Family Dollar Discount 5,090.9 28.4 Stores stores 12 (N-FDO) Matthews 15 Martin Marietta Construction 3,853.3 9.7 Materials materials 14 (N-MLM) Raleigh 16 PPD Drug research 3,011.6 10.0 15 (Q-PPDI) Wilmington 17 SPX Industrial 2,634.9 9.9 equipment 17 (N-SPW) Charlotte 18 Talecris Drugs 2,592.7 na Biotherapeutics (1) -- (Q-TLCR) Research Triangle Park 19 Hanesbrands Apparel 2,300.0 61.8 22 (N-HBI) Winston-Salem 20 CommScope Communication 2,245.1 17.8 equipment 18 (N-CTV) Hickory 21 Salix Drugs 2,222.4 367.6 Pharmaceuticals 35 (Q-SLXP) Morrisville 22 Carlisle Rubber and 2,198.9 49.3 plastics 20 (N-CSL) Charlotte 23 First Citizens Financial 2,006.9 43.9 Bancshares services 23 (Q-FCNCA) Raleigh 24 Highwoods Real estate 1,987.4 39.3 Properties 21 (N-HIW) Raleigh 25 Piedmont Natural Energy 1,820.0 3.5 Gas 19 (N-PNY) Charlotte 26 Tanger Factory Shopping $1,674.7 61.9% Outlet Centers centers 27 (N-SKT) Greensboro 27 Ruddick Grocery stores, 1,511.8 33.0 textiles 25 (N-RDK) Charlotte 28 Old Dominion Trucking 1,310.2 4.7 Freight Lines 24 (Q-ODFL) Thomasville 29 RF Micro Semiconductors 1,059.7 6.7 Devices 29 (Q-RFMD) Greensboro 30 Hatteras Real estate 1,014.6 2.0 Financial 28 (N-HTS) Winston-Salem 31 Polypore Filters 1,012.0 105.1 International 34 (N-PPO) Charlotte 32 Dex One (2) Print and 950.3 na online publishing -- (N-DEXO) Cary 33 Tekelec Communication 904.5 (19.2) equipment 26 (Q-TKLC) Morrisville 34 Cato Clothing 649.0 26.0 stores 32 (N-CATO) Charlotte 35 EnPro Industrial 578.8 60.9 Industries equipment 41 (N-NPO) Charlotte 36 Speedway Racetracks 570.4 (3.2) Motorsports 31 (N-TRK) Concord 37 Targacept Drugs 550.6 799.7 65 (Q-TRGT) Winston-Salem 38 Lance Snacks 531.0 (28.1) 30 (Q-LNCE) Charlotte 39 Sonic Car 450.3 10.4 Automotive dealerships 36 (N-SAH) Charlotte 40 Coca-Cola Soft drinks 440.2 (12.9) Bottling Consolidated 33 (Q-COKE) Charlotte 41 Polymer Group...