Idaho shares in stock market slide

Stocks of companies with Idaho ties aren’t immune to the market downturn seen over the past 18 months, multiple analyses show. For example, Idaho shared the pain seen in consumer and building products segments.

“The romance for local stocks went away to some degree when Albertsons was sold (2006) and when Micron fell out of favor,” said Bob Rathbone of Rathbone McReynolds & Daly Investment Consulting, Boise. “The level of excitement in the community for local stocks really has fallen away over the last 10 years.”

But the last 10 years also have seen the Standard & Poor’s 500 stock index produce the worst return for any 10-year period measured, he said. “For stocks in general, it has been a very difficult decade.”

For 2009 to date, “it has really mattered where you were in the market,” Rathbone said, referring to sector. “That’s why we diversify very carefully.”

Strongest year-to-date returns this year came in information technology, (25.18 percent as of June 9, according to S&P data); materials, 21.73; and consumer discretionary, 12.77. Declines materialized in sectors including telecom services, minus 9.05 percent; utilities, minus 8.67; and health care, minus 5.04. Financials dropped by 0.76 percent year-to-date. Idaho’s banking sector includes a number of small-capitalization stocks.

Sector losses for the one-year period ended June 2 included consumer discretionary, minus 24.72 percent – matched exactly by Sandpoint-based women’s clothing retailer Coldwater Creek – consumer staples, minus 48.08; financials, minus 41.64; health care, minus 19.8; industrials, minus 37.35; information technology, minus 30.54; materials, minus 50.76; and utilities, minus 16, information from Rathbone McReynolds indicates.

Other Idaho stock performance for the most recent one-year period included Micron Technology at minus 38.17 percent, Building Materials Holding Corp. at minus 87.55 percent, Albertsons grocery operator Supervalu at minus 48.08 percent and Home Federal Bancorp at minus 14.83 percent. (See chart.)

A study by Idaho Business Review parent Dolan Media Co. using Bloomberg analysis tools looked at percentage loss, and total returns including dividends, for companies of Idaho interest from Dec. 31 2007 though March 31, 2009. Results were measured against the S&P 500 (percentage loss 45.66 percent, total return minus 43.94 percent); the Dow Jones Industrial Average (minus 42.64 and minus 40.42, respectively) and the Nasdaq Stock Market (minus 42.37 and minus 41.66).

For example, Micron posted a minus-44 percent return, and Supervalu’s return was minus 60.19 percent, nearly 2 percent better than its stock-value decline thanks to dividend income. Hecla Mining and Coeur d’Alene Mines dropped by 80.97 percent and 78.61 percent in value, respectively. Coldwater Creek dropped by 62.48 percent, Boise Inc. by more than 93 percent and Cascade, Banner and Sterling banks by percentages in the high 80s. URS Corp. dropped by 25.62 percent for the period.

Home Federal, and Mountain West Bank parent Glacier Bancorp, beat sector averages handily. Home Fed fell by 13.05 percent but reported a minus-10.71 percent total return thanks to dividend income. Glacier fell by 16.7 percent in value but reported a minus-13.06 percent total return.

Other companies that improved total returns through dividend income included Potlatch, which last year spun off its pulp, paper and timber manufacturing operations. Potlatch fell by 37.12 percent in value but reported a total return of minus-31.93 percent.

Scott Arnone, an Edward Jones financial advisor in Lewiston, said clients have inquired about stock in Potlatch and in its Clearwater Paper spin-off that operates in Lewiston.

Potlatch now has a substantial dividend yield, and some people view the company’s timber holdings as under-valued, he said.

Clearwater Paper is fairly quickly expected to repay money it owes Potlatch – partly because Clearwater is receiving “black-liquor” tax credits and partly because Clearwater makes generic and private-label beverage cartons, tissues and paper towels that sell well in economic downturns, Arnone said. Black liquor is a by-product of the chemical process that produces pulp. Under an alternative-fuel tax credit program set to expire at year’s end, black liquor is used in a mixture with diesel to produce energy.

Building Materials Holding (which on June 16 filed for Chapter 11 bankruptcy protection) is hard-hit by the construction downturn, and Coldwater Creek and Supervalu are struggling as consumers cut back, said Dave Petso of Petso Financial, Boise.

Micron has improved its position but continues to fight a down cycle for computer memory chips, he said. Hewlett-Packard is well-positioned but will continue to make cuts, and Idaho Power parent Idacorp is fairly stable but offers limited potential for growth. MWI Veterinary Supply is promising, but “like all high-growth areas, it is very, very competitive.”

Paper and forest product companies “are dependent on a very strong economy, which may be a long way away,” he said. Mining companies are starting to see global demand increase, he said. Banks seem to have survived the credit-market meltdown – and could fare well if there is no double-dip recession – but some community and small regional banks remain questionable, he said.

“Idaho has certainly learned that we are not insulated from global problems,” Petso said.