Bank investors, whacked in the aftermath of the 2007-09 recession, just enjoyed a year that dreams are made of, according to our annual list of the biggest public companies based in North Carolina. The 19 financial-services companies, representing a quarter of the list, posted an average 42% gain in market value during the 12-month period that ended June 30. Promises of less stringent regulation under the Trump administration and a host of mergers buoyed the banks: Six institutions on the current list have agreed to sales likely to close later this year. Among the remaining independents, Southern Pines-based First Bancorp leaped 17 spots with 120% growth, while small-business lender Live Oak Bancshares and Newton-based Peoples Bancorp each jumped 14 spots.
Bank of America also benefited, gaining 77.1% in market value. It has rebounded sixfold since the dark days of 2008-09 when fears of a collapse pushed shares under $4-=BofA is now worth more than twice as much as No. 2 Reynolds American, which will exit the list pending completion of its $54-5 billion sale to British American Tobacco, expected to close by Aug. 1.
"Bank of America is not the 800-pound gorilla--it's more like the 1,600-pound gorilla," says Hal Eddins, an investment adviser with Capital Investment Cos. The Raleigh-based broker-dealer and Rocky Mount-based The Nottingham Co. compiled the list. Bank stocks rallied in late spring, and the Federal Reserve's efforts to nudge interest rates higher promises to boost profits as customers pay higher loan rates. "Banks are one of the most important sectors," Eddins says. "If banks are not healthy, the rest of the economy is not healthy."
A temporary market slump in June 2016 in reaction to Britain's vote to leave the European Union gave this year's results "a little bit of a tailwind," he says. Still, the combined value of the Top 75 exceeds $722 billion, up 25% compared with last year. Ten years ago, prior to the pre-recession stock-market peak in October 2007, the combined market value of the list was $567 billion.
While it's great to have "rocket-ship performance" from certain companies, Eddins says North Carolina's diverse economy is an asset. Though banks and life-sciences firms represent about a third of the list, the remaining companies reflect a wide array of industries. "It's nice to see all the different sectors pulling their weight," he says, noting solid performances from stalwarts such as Raleigh aggregates supplier Martin Marietta Materials.
The S&P 500 Index, regarded as a reliable gauge of large-cap stock performance, increased 17.8% during the one-year period, including dividends. More than half of the Top 75 posted equal or better results.
Pharmaceutical stocks, which can swing to soaring highs and rock-bottom lows following FDA rulings and drug-trial results, were again a mixed bag: Embattled Chapel Hill drugmaker Cempra (page 78) tumbled 17 spots. Durham's BioCryst Pharmaceuticals, which makes treatments for rare diseases, climbed 12 places.
While retail and apparel stocks had a tough year, Eddins believes shareholder reaction is overblown. "Everyone thinks that Amazon is going to take over the world. But when I see the valuation of retail stocks, they are at a level where they could see a rebound."
The U.S. steel industry could benefit if President Donald Trump follows through with a proposal to place restrictions on foreign steelmakers. Nucor, the largest U.S. steelmaker, asked Trump to restrict steel imports to a 15% market share, down from more than 25% now. The company said in June it expected to have its strongest second-quarter performance since 2008.
The building-materials company said in June it was buying Bluegrass Materials, an aggregates company based in Jacksonville, Fla., for more than $1.6 billion, marking the company's biggest acquisition since its $3 billion purchase of Texas Industries in 2014. Longtime executive and CFO for 12 years Anne Lloyd plans to retire this month; James A.J. Nickolas, a former Caterpillar executive, will replace her.
One of North Carolina's newest...