Word on the Street: Be Careful: Index of L.A.-based securities, after declining for two successive years, may rise a bit in 2002, but substantial gains are unlikely. (Economic Outlook 2002 - Starting Over).AFTER two forgettable for·get·ta·ble adj. Fit or apt to be forgotten: a movie with very forgettable characters. Adj. 1. forgettable - easily forgotten unforgettable - impossible to forget years, will stock markets return in 2002 to their winning ways of prior years? Perhaps, but few expect a reprise re·prise n. 1. Music a. A repetition of a phrase or verse. b. A return to an original theme. 2. A recurrence or resumption of an action. tr.v. of the go-go days of the late 1990s, when the Standard & Poor's 500 index routinely posted annual gains of 20 percent or more. With the economy still in the doldrums doldrums (dŏl`drəmz) or equatorial belt of calms, area around the earth centered slightly north of the equator between the two belts of trade winds. , many investors would be happy with a modest rise in stock prices next year. "It's not going to be a 1990s-style market where you throw a dart at a page and it goes up. It's going to require more careful selection," said Chris Orndorff, director of equity strategy at money management firm Payden & Rygel in downtown L.A. Indeed, fallout fallout, minute particles of radioactive material produced by nuclear explosions (see atomic bomb; hydrogen bomb; Chernobyl) or by discharge from nuclear-power or atomic installations and scattered throughout the earth's atmosphere by winds and convection currents. from Enron Corp.'s collapse is expected to temper any resurgence re·sur·gence n. 1. A continuing after interruption; a renewal. 2. A restoration to use, acceptance, activity, or vigor; a revival. in stock prices next year, as investors become more cautious about company-generated claims. Nevertheless, local professionals see plenty of opportunities among local companies and stocks in general. "I think equity markets are very likely to be positive next year," said Gary Lisenbee, president of Newport Beach-based Metropolitan West Capital Management LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , specializing in value-oriented equities. "Over the next couple of years, we believe that equity returns are very likely to revert re·vert v. 1. To return to a former condition, practice, subject, or belief. 2. To undergo genetic reversion. to more normal historical returns in the low teens, between 10 to 12 percent a year." Through Dec. 26, local stocks measured by the LABJ LABJ Los Angeles Business Journal 200 Stock Index were on track to lose 10 percent of their value in 2001, compared with a loss of 13 percent in 2000. The LABJ 200, whose makeup makeup In the performing arts, material used by actors for cosmetic purposes and to help create the characters they play. Not needed in Greek and Roman theatre because of the use of masks, makeup was used in the religious plays of medieval Europe, in which the angels' faces reflects the area's diverse base of small-to-medium sized companies, has outperformed the Nasdaq composite index Nasdaq Composite Index An index that indicates price movements of securities in the over-the-counter market. It includes all domestic common stocks in the Nasdaq System (approximately 5,000 stocks) and is weighted according to the market value of each listed (down 20.6 percent this year) and the broader S&P 500 (down 13 percent), while trailing the Dow Jones Industrial Average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. of 30 major U.S. companies, which lost 6.5 percent. (Walt Disney Noun 1. Walt Disney - United States film maker who pioneered animated cartoons and created such characters as Mickey Mouse and Donald Duck; founded Disneyland (1901-1966) Disney, Walter Elias Disney Co. is the only LABJ 200 member that is in the DJIA DJIA See Dow Jones Industrial Averager (DJIA). .) Lisenbee expects stocks to begin looking past the prospectively transitional 2002 to a healthy 2003, once companies begin to report increasing demand and firmer earnings forecasts. "All the market needs is some visibility that a rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective is on the horizon," he said. Computer software leading Among local companies, some of last year's biggest winners are on investors' short list for continued gains next year. Computer software was the LABJ's best-performing sector in 2001, with a rise of 110.1 percent through Dec. 26. The group was led by videogame software companies Activision Inc., up 166 percent, and THQ THQ Toy Headquarters THQ Territorial Headquarters THQ Tehsil Headquarters (Pakistan) THQ The Holy Quran THQ Theater Headquarters Inc., up 115 percent. While the run-ups have made these stocks expensive, some believe they still have legs. "There's a lot of upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside for all these guys, and we think it's a 25 percent growth industry for the next five years," said Michael Pachter, head of research for Wedbush Morgan Securities. The video-game industry, reveling in the introduction of new hardware this holiday season, is a $12 billion industry, and projected to grow to $20 billion next year, Pachter said. This growth, along with increasingly realistic effects, makes video games See video game console. an important new market for Hollywood talent. One local sector that's done surprisingly well this year has been the Internet (up 19 percent year-to-date), where big gains from Overture overture, instrumental musical composition written as an introduction to an opera, ballet, oratorio, musical, or play. The earliest Italian opera overtures were simply pieces of orchestral music and were called sinfonie. Services Inc. (formerly Goto.com) have made up for flame-outs such as Digital Lava Inc., Styleclick Inc., Homestore.com Inc. and L90 Inc. Overture, L.A.'s top-gaining stock in 2001, has seen its shares nearly quintuple quin·tu·ple adj. 1. Consisting of five parts or members. 2. Five times as much in size, strength, number, or amount. n. A fivefold amount or number. tr. & intr.v. this year. Overture has positioned itself as a middleman mid·dle·man n. 1. A trader who buys from producers and sells to retailers or consumers. 2. An intermediary; a go-between. providing new revenue streams for Internet advertisers with well-targeted placement and search engines. Overture's stock, which started the year at $7.31 a share, was trading at $35.32 as of Dec. 26. Providing a stark flip side Flip side In the context of general equities, opposite side to a proposition or position (buy, if sell is the proposition and vice versa). to Overture is Homestore.com, whose stock has imploded im·plode v. im·plod·ed, im·plod·ing, im·plodes v.intr. To collapse inward violently. v.tr. 1. To cause to collapse inward violently. 2. this year, falling from $20.13 at the end of last year to $3.60 before trading was halted Dec. 21 amid a Securities and Exchange Commission accounting inquiry. Homestore, the heavily-hyped real-estate portal that drew antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. scrutiny for its purported pur·port·ed adj. Assumed to be such; supposed: the purported author of the story. pur·port  ed·ly adv. dominance of online real-estate listings, could become L.A.'s
poster child for post-Enron accounting do's and don't's.The message: Internet stocks Internet stock The equity security of a company engaged primarily in a business associated with the Internet. Also called dot-com. can be a bargain, but look before you leap Before You Leap is the autobiography and self-help guide written by Muppet Kermit the Frog. It was released in September 2006. External links
Telecom woes Another area investors are steering clear of is telecom. Sector-wide, it's down 50 percent year-to-date, and that includes 214 percent gainer OSI Systems OSI Systems, Inc. (NASDAQ: OSIS) is a worldwide company based in California that develops and markets security and inspection systems such as airport security X-ray machines and metal detectors, medical monitoring and anesthesia systems, and optoelectronic devices. , the security systems company that surged after Sept. 11. In a shaky economy, telecom firms are expected to see continued difficulties. "Companies that rely heavily on capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. are going to have a difficult time," Omdorff said. Among the L.A. area's biggest losers in 2001 were optical-networking oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. companies like Optical Communication Products Inc., MRV Communications  OverviewMRV NASDAQ: MRVC is a company that designs, manufactures, sells, distributes, integrates and supports communication equipment and services, and optical components. Inc. and its sister-company spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. , Luminent Inc., each losing between 60 percent and 70 percent of their value. On the other hand, certain pockets of the L.A. economy continue to generate excitement. The continuing exodus of large companies from the region has been a boon Boon A general term that refers to a benefit or improvement for investors. This can include such things as increased dividends, a stock market rally and stock buybacks. Notes: to locally based financial institutions, Wedhush said. Orndorff likes ethnic Asian banks such as Cathay Bancorp Inc. "They have a loyal client base, they generally give good service and have low loan losses, they're well capitalized and they fill a market niche that is growing in affluence," he said. He's also sweet on biotech bi·o·tech n. Informal Biotechnology. biotech Noun short for biotechnology Noun 1. companies such as Amgen Inc. and Acacia acacia (əkā`shə), any plant of the large leguminous genus Acacia, often thorny shrubs and trees of the family Leguminosae (pulse family). Research Corp., as large pharmaceutical firms increasingly turn to partnerships with smaller companies that can inexpensively carry out new-drug discovery. Among Lisenbee's favorites for the new year are Disney and Unocal Corp. "If you're a contrarian, (Disney) is one that's clearly been impacted by the slow economy, they're being hit by less vacation travel," he said. "It's not a stock that we own, but it's an interesting situation that one could look at as a long-term contrarian play that you could buy at a low price." Unocal has been too vulnerable to low natural gas prices, but it's refocusing Noun 1. refocusing - focusing again focalisation, focalization, focusing - the act of bringing into focus on more stable areas of production, he said. Even lowly low·ly adj. low·li·er, low·li·est 1. Having or suited for a low rank or position. 2. Humble or meek in manner. 3. Plain or prosaic in nature. adv. 1. Capstone Turbine Capstone Turbine Corporation NASDAQ: CPST, incorporated in 1988, is a California based gas turbine manufacturer that specializes in microturbine power and heat cogeneration systems. Capstone has sold and shipped more than 3,000 of these one-moving-part systems worldwide. Corp., the area's biggest loser (jargon) loser - An unexpectedly bad situation, program, programmer, or person. Someone who habitually loses. (Even winners can lose occasionally). Someone who knows not and knows not that he knows not. of any significance this year (it's down to $4.17 recently, from near $100 a share a year-and-a-half ago), has its fans, including Wedbush. He considers the stock a "pretty decent speculation for 2002" -- notwithstanding the "hold" recommendation issued by his own firm. Capstone controller Wade Welch Welch , William Henry 1850-1934. American pathologist and bacteriologist who discovered the bacteria that causes gas gangrene. said he expects rising electricity rates to make his company's microturbines more attractive to customers in California. "The crisis as defined by blackouts and brownouts may be behind us, but that's translated into a crisis in the economics of electricity."
Biggest Winners and Losers of the Year
Local public companies whose stock prices rose or fell the most in 2001,
as well as after Sept. 11 attacks.
Top 25 Year-to-Date Gainers
12/29/00
Company Name Industry Group Ticker Price
Overture Services Inc. Internet OVER $7.31
Primedex Health Systems Inc. Health care PMDX 0.31
PC Mall Inc. Misc. Services MALL 1.13
j2 Global Communications Inc. Internet JCOM 1.13
OSI Systems Inc. Communications OSIS 6.13
First Consulting Group Inc. Health care FCGI 4.75
Keystone Automotive Automotive/Plastics/ KEYS 7.00
Industries Inc. Metals
Activision Inc. Software ATVI 10.08
Fremont General Corp. Insurance FMT 2.81
Artistdirect Inc. Internet ARTD 5.00
Schuler Homes Inc. Real Estate SHLR 9.00
99 Cents Only Stores Restaurants/Retail/ NDN 18.25
Grocery Stores
Jakks Pacific Inc. Misc. Manufacturing JAKK 9.125
THQ Inc. Software THQI 24.38
HOT Topic Inc. Apparel HOTT 16.44
MSC.Software Corp. Software MNS 7.85
HI Shear Technology Corp. Aerospace/Defense HSR 1.00
Ticketmaster Internet TMCS 8.38
Bank Plus Corp. Financial Services BPLS 3.81
Herbalife International Inc. Biomedical & HERBA 7.63
Pharmaceutical
Ameron International Corp. Construction/ AMN 37.25
Engineering
Sport Chalet Inc. Restaurants/Retail/ SPCH 5.25
Grocery Stores
Ryland Group Inc. Construction/ RYL 40.75
Engineering
International Remote Biomedical & IRI 1.31
Imaging Systems Pharmaceutical
Natrol Inc. Biomedical & NTOL 1.50
Pharmaceutical
12/26/01 %
Company Name Price Change
Overture Services Inc. $35.32 383.0%
Primedex Health Systems Inc. 1.28 312.9%
PC Mall Inc. 4.00 255.6%
j2 Global Communications Inc. 3.90 246.7%
OSI Systems Inc. 19.20 213.5%
First Consulting Group Inc. 14.70 209.5%
Keystone Automotive 19.12 173.1%
Industries Inc.
Activision Inc. 26.84 166.2%
Fremont General Corp. 7.31 159.9%
Artistdirect Inc. 12.25 145.0%
Schuler Homes Inc. 20.40 126.7%
99 Cents Only Stores 39.80 118.1%
Jakks Pacific Inc. 19.80 117.0%
THQ Inc. 52.50 115.4%
HOT Topic Inc. 33.21 102.0%
MSC.Software Corp. 15.15 93.0%
HI Shear Technology Corp. 1.92 92.0%
Ticketmaster 15.99 90.9%
Bank Plus Corp. 7.23 89.6%
Herbalife International Inc. 14.19 86.1%
Ameron International Corp. 68.60 84.2%
Sport Chalet Inc. 9.65 83.8%
Ryland Group Inc. 73.96 81.5%
International Remote 2.25 71.4%
Imaging Systems
Natrol Inc. 2.55 70.0%
Top 25 Year-to-Date Losers
12/29/00
Company Name Industry Group Ticker Price
Digital Lava Inc. Software DGLV 3.44
Amwest Insurance Group Inc. Insurance AMWT 1.38
Team Communications Media/Leisure/ TMTV 2.81
Group Inc. Entertainment
Styleclick Inc. Internet IBUY 2.06
United Leisure Corp. Internet UTDL 2.13
Capstone Turbine Corp. Energy/Utilities CPST 28.00
Accelerated Networks Inc. Communications ACCL 2.78
Homestore.com Inc. Internet HOMS 20.13
Vertel Corp. Software VRTL 2.34
Staar Surgical Co. Biomedical & STAA 12.56
Pharmaceutical
International Aircraft Misc. Services IAIS 5.44
Investors
Sonicport Inc. Internet SPO 1.00
Coastcast Corp. Misc. Manufacturing PAR 17.50
Optical Communication Communications OCPI 11.25
Products Inc.
Luminent Inc. Communications LMNE 6.02
MRV Communications Inc. Communications MRVC 13.38
Point.360 Media/Leisure/ PTSX 3.78
Entertainment
L90 Inc. Internet LNTY 4.31
National Technical Misc. Services NTSC 2.84
Systems Inc.
National Golf Real Estate TEE 20.56
Properties Inc.
Alpha Technologies Group Computers/Peripherals/ ATGI 8.88
Electronics
Pinnacle Entertainment Inc. Media/Leisure/ PNK 13.50
Entertainment
Careside Inc. Biomedical & CSA 1.81
Pharmaceutical
Infonet Services Corp. Internet IN 5.00
Korn/Ferry International Misc. Services KFY 21.25
12/26/01 %
Company Name Price Change
Digital Lava Inc. 0.03 -99.1%
Amwest Insurance Group Inc. 0.02 -98.5%
Team Communications 0.22 -92.2%
Group Inc.
Styleclick Inc. 0.19 -90.7%
United Leisure Corp. 0.30 -85.9%
Capstone Turbine Corp. 4.17 -85.1%
Accelerated Networks Inc. 0.45 -83.8%
Homestore.com Inc. 3.60 -82.1%
Vertel Corp. 0.50 -78.7%
Staar Surgical Co. 3.10 -75.3%
International Aircraft 1.38 -74.6%
Investors
Sonicport Inc. 0.27 -73.0%
Coastcast Corp. 5.25 -70.0%
Optical Communication 3.48 -69.1%
Products Inc.
Luminent Inc. 1.92 -68.1%
MRV Communications Inc. 4.50 -66.4%
Point.360 1.28 -66.1%
L90 Inc. 1.58 -63.4%
National Technical 1.21 -57.5%
Systems Inc.
National Golf 8.82 -57.1%
Properties Inc.
Alpha Technologies Group 3.90 -56.1%
Pinnacle Entertainment Inc. 6.05 -55.2%
Careside Inc. 0.84 -53.7%
Infonet Services Corp. 2.46 -50.8%
Korn/Ferry International 10.75 -49.4%
Top 10 Gainers Since Sept. 10, 2001
12/29/00
Company Name Industry Group Ticker Price
OSI Systems Inc. Communications OSIS 4.07
Accelerated Networks Inc. Communications ACCL 0.19
Overture Services Inc. Internet OVER 15.30
Seebeyond Technology Corp. Software SBYN 4.22
Artistdirect Inc. Internet ARTD 6.00
United Online Inc. Internet UNTD 2.25
Primedex Health Systems Inc. Health Care PMDX 0.75
First Consulting Group Inc. Health Care FCGI 8.80
Stamps.com Inc. Internet STMP 2.31
PC Mall Inc. Misc. Services MALL 2.57
12/26/01 %
Company Name Price Change
OSI Systems Inc. 19.20 371.7%
Accelerated Networks Inc. 0.45 136.8%
Overture Services Inc. 35.32 130.8%
Seebeyond Technology Corp. 9.15 116.8%
Artistdirect Inc. 12.25 104.2%
United Online Inc. 4.10 82.2%
Primedex Health Systems Inc. 1.28 70.7%
First Consulting Group Inc. 14.7 67.0%
Stamps.com Inc. 3.74 61.9%
PC Mall Inc. 4.00 55.6%
Top 10 Losers Since Sept. 10, 2001
12/29/00
Company Name Industry Group Ticker Price
Digital Lava Inc. Software DGLV 0.16
Styleclick Inc. Internet IBUY 0.87
Homestore.com Inc. Internet HOMS 15.99
International Aircraft Misc. Services IAIS 5.20
Investors
Careside Inc. Biomedical & CSA 2.58
Pharmaceutical
GenesisIntermedia Inc. Internet GENI 17.03
National Golf Real Estate TEE 19.50
Properties Inc.
Vertel Corp. Software VRTL 0.95
Laser-Pacific Media Media/Leisure/ LPAC 4.39
Corp. Entertainment
Calprop Corp. Construction/ CLPO 1.35
Engineering
12/26/01 %
Company Name Price Change
Digital Lava Inc. 0.03 -81.3%
Styleclick Inc. 0.19 -78.0%
Homestore.com Inc. 3.60 -77.5%
International Aircraft 1.38 -73.5%
Investors
Careside Inc. 0.84 -67.4%
GenesisIntermedia Inc. 5.90 -65.4%
National Golf 8.82 -54.8%
Properties Inc.
Vertel Corp. 0.50 -47.4%
Laser-Pacific Media 2.50 -43.1%
Corp.
Calprop Corp. 0.80 -40.7%
Note: Tables only include LABJ 200 companies that had a price of at
least $1 as of Dec. 29, 2000 or Dec. 26, 2001.
Source: Duff & Phelps LLC
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