Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 3, 1993 TAG: 9301010034
SECTION: BUSINESS PAGE: E1 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
REGIONAL ISSUES MIRRORED NATION
Stocks of regional companies kept an even pace last year with gains in the national markets.John C. Parrott II of Wheat First Securities in Roanoke described 1992 as "a little bit of a dull year" for the index of 20 regional stocks that he tracks for the Roanoke Times & World-News.
He said the regional companies in that portfolio gained 7 percent to 8 percent last year, which is roughly in line with Standard & Poor's index for the overall market.
Banking shares contributed the only excitement to the index in 1992, Parrott said. Bank stocks were volatile but rose sharply overall.
Parrott attributed the upward trend in local bank stocks to two factors.
First, he said, rumors about takeovers sparked speculation that drove up prices.
In the case of Dominion Bankshares Corp., rumors turned into reality when a merger agreement with First Union Corp. was announced in September. The Charlotte, N.C.-based company expects to acquire Dominion at the end of March.
But street talk still buzzes about North Carolina's Wachovia Corp.'s possibly setting its sights on either Crestar Financial Corp. or Signet Banking Corp., both of Richmond, while NationsBank Corp. also is considered to be an acquirer.
A second factor, Parrott said, was the improvement in bank industry earnings over the year, largely because they paid lower interest rates on deposits.
Consumer industries began to pick up during the year as well, according to Parrott.
Prospects, for instance, seemed to brighten for furniture manufacturers such as LADD Furniture Inc. and Bassett Furniture Industries, he said.
Utilities gained, too, he said, largely because of heavy demand by investors seeking safety with a higher return. Utility stocks, Parrott observed, have become "almost a CD substitute" in today's low-interest-rate environment.
It was a mixed year for big industries, such as ITT Corp. and General Electric Co. The stock of those two companies rose, Parrott said, but Cooper Industries finished the year down. Cooper is in the process of closing its Gardner-Denver construction division in Roanoke.
Parrott said stocks performed well last year because dividend yields generally rose. People came to see stock as "an alternative for fixed-income investments."
Buying stock, he said, "takes out the interest rate risk" from investing.
Yet there is also risk in the markets, which seemed skittish.
Parrott said any piece of bad news about a company caused an "overcorrection," driving the stock downward at least temporarily. Investors "reacted to bad news in fairly strong fashion."
For regional stocks, he said, the first three quarters were "very dull." Excluding fairly strong performances in January and February, he said, the gain was about 3 percent for the nine months.
But the fourth quarter was strong, according to Parrott.
The Christmas rally could indicate continued good results in January and February, he said.
Smaller regional companies, like many of those listed on the index for this area, are popular with large investors now, Parrott reported. He said institutional investors are looking at these companies for possible purchase in 1993.
Keywords:
YEAR 1992