Positives continue: Indiana stocks beat the bear in 2002.

• Author: Patton, Mark
• Position: Indiana Public 100

The good trend continues in Indiana stocks. As the broad market persisted in a bear trend through the second half of 2002 and into the first quarter of 2003, the Indiana Stock Index ventured into positive territory. This has been somewhat remarkable given the depths experienced by the overall market, with the average stock being cut in half from its highs of early 2000.

As is the case with any sizeable group of stocks, there is strength and weakness throughout. The driving force behind the Indiana Stock Index has been its diversification across several smaller companies. Where indexes such as the Dow Jones Industrials and S&P 500 are dominated by the stocks of extremely large companies, the Indiana Stock Index is diversified across mostly small companies. It's been this segment in the overall market that has weathered the bear market the best and it's this segment that has been fueling the Indiana Stock Index.

There are several examples smaller Indiana stocks doing well, but one in particular stands out as the clear leader: Goshen-based Starcraft. This is a company that many know for its custom van products. What few people know is that during the past few years management has reinvented the company because of the dramatic drop in business for custom vans.

Starcraft is now an automotive original-equipment manufacturer and is benefiting from the tremendous success of the truck and SUV market, including such vehicles as the Indiana-made Hummer H2. Starcraft's sales are now growing rapidly, earnings are flowing to the bottom line and the stock has been among the best performers for multiple years, resulting in a cumulative 15-fold increase since May 2001.

The list of stocks making up the Indiana Stock Index is not without its disappointments. The entire market has been plagued with tremendous declines in the technology and communications sectors.

Because the Indiana Stock Index has very few such stocks, the impact has been muted, but still felt. During 2002 the shares of Brightpoint, an Indianapolis distributor of communications equipment, fell 64 percent. Close runners-up were Indianapolis-based software creator Interactive Intelligence and Elkhart-based electronic-component maker CTS Corp. Still, dramatic drops in all three stocks in 2002 have been followed by sharp rallies in 2003, again characteristic of the overall market.

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