Go with the gut: Salix proves the way to an investor's heart is through his stomach.

Author:Mildenberg, David

There has been nothing irritable about holding Salix Pharmaceuticals Ltd. shares the last decade. The Raleigh-based drug developer's stock has soared 11-fold during that time because of increased profits and sales of its treatments for gastrointestinal illnesses and other maladies. Salix continued its run last year, gaining 86% on news of promising clinical trials, and now ranks 12th --up from 16th in 2013--on Business North Carolina's annual ranking of the 75 largest public companies based in the state.

Though Salix's rise was extraordinary, investors owning other North Carolina-based stocks also benefited as the Federal Reserve kept interest rates low and consumer confidence improved. Reaching 22%, the Top 75's median change in market value topped 20% for the third time in four years. Standard & Poor's 500 Index has more than doubled since June 2009, but stocks don't appear overvalued, says Don Olmstead, managing director of Novare Capital Management LLC, the Charlotte company that compiled this year's list, which is based on the final trading day in June. "The S&P 500 is trading at about 16 times earnings, which is the historical average over the last 50 years. We had been undervalued for many years."

The Top 75 includes a dose of biotech and pharma concerns, but investors haven't had to bet on drug discoveries to win big. Shares of seven of the 10 largest companies more than doubled the past five years, led by a 564% gain by Winston-Salem-based Hanesbrands Inc. BB&T just missed at 96%. Laggards among the large caps include Charlotte-based giants Nucor Corp., and Bank of America Corp., which were up 27% and 18%, respectively, during that span. Greensboro-based Lorillard Inc., No. 7 this year, won't appear next year because of its pending sale to Reynolds American Inc. of Winston-Salem.

Seven newly public companies made this year's list, following six in 2013, reflecting investors' renewed enthusiasm for stocks, says James Harlow, a Novare research analyst who assembled the list with Senior Portfolio Manager Brian Rudisill. "Consumer confidence numbers aren't back to historic high levels, but they've rebounded a ton since 2008," says Olmstead, whose company manages $740 million. "Many consumers have deleveraged, they aren't taking out mortgages, and they have more discretionary income so they are feeling pretty good."

Salix will not be on the list next year. It agreed in July to buy drug patents from Italy-based Cosmo Pharmaceuticals SpA for $2.7 billion in stock, enabling it to move its headquarters to Ireland and cut its tax bill when the deal closes later this year. Salix shareholders will own about 80% of the combined company. Carolyn Logan, who had shares valued at more than $120 million, will remain CEO.

ON AND OFF THE TOP 75 Newcomers 2014 rank Extended Stay America 20 CommScope 21 Curtiss-Wright 25 Premier 37 BioCryst Pharmaceuticals 38 Stock Building Supply 49 Square 1 Financial 53 TransEnterix 62 Capitala Finance 69 Argos Therapeutics 75 Departures 2013 rank Harris Teeter Supermarkets 26 Revolution Lighting Technologies 51 Cornerstone Therapeutics 59 Investors Title 65 Chelsea Therapeutics 67 Swisher Hygiene 70 Targacept 71 Baxano Surgical 72 LipoScience 73 ASB Bancorp 75 TOP 75 PUBLIC COMPANIES THE WEIGH-IN Net margin (latest fiscal year) 1 NewBridge Bancorp 130.7% 2 Park Sterling 101.5 3 First Bancorp 88.1 4 Triangle Capital 80.4 5 Yadkin Financial 73.5 6 First Citizens BancShares 63.6 7 Tanger Factory Outlet Centers 27.9 8 Square 1 Financial 21.9 9 Reynolds American 20.9 10 BB&T 17.6 TOP 75 MEDIAN: 4.5% Earnings per share (trailing 12 months) 1 First Citizens BancShares $13.98 2 Laboratory Corp. of America 6.72 3 SPX 4.57 4 Duke Energy 4.50 5 Hanesbrands 4.16 6 Carlisle 3.80 7 Salix Pharmaceuticals 3.76 8 Family Dollar Stores 3.44 9 Coca-Cola Bottling Consolidated 3.29 10 Reynolds American 3.19 TOP 75 MEDIAN: $1.25 Net income growth (latest fiscal year) 1 Insteel Industries 548.7% 2 CommScope 262.3 3 Park Sterling 252.4 4 Pike 232.6 5 Bank of America 172.9 6 Salix Pharmaceuticals 122.6 7 Tanger Factory Outlet Centers 102.1 8 FlomeTrust Bancshares 100.0 9 Cree 95.7 10 VantageSouth Bancshares 66.0 TOP 75 MEDIAN: 21.6% Dividend yield (expected 12-month dividend to 6/30/14 price) 1 Hatteras Financial 10.1% 2 Capitala Finance 10.0 3 Campus Crest Communities 7.6 4 Triangle Capital 7.6 5 Reynolds American 4.4 6 Duke Energy 4.2 7 Highwoods Properties 4.1 8 Lorillard 4.0 9 Cato 3.9 10 Piedmont Natural Gas 3.4 TOP 75 MEDIAN: 1.9% Total one-year return 1 BioCryst Pharmaceuticals 722.6% 2 Furiex Pharmaceuticals 211.7 3 BioDelivery Sciences International 197.3 4 TransEnterix 180.0 5 Hanesbrands 93.4 6 Salix Pharmaceuticals 86.5 7 RF Micro Devices 79.6 8 Curtiss-Wright 77.9 9 Tree.com 70.0 10...

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