Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, September 11, 1994 TAG: 9409140014
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: Mag Poff
DATELINE: LENGTH: Medium
The southeastern United States is an excellent part of the country for doing business - or for investing, according to John Clarke of Catawba Capital Management in Roanoke.
Clarke, vice president of the investment advisory firm, said the Southeast offers business good labor, climate, transportation and water.
His company recently did a model of the fiscally strongest companies in Virginia. Although these companies are exceptionally sound financially, Clarke said, his company made no recommendation on whether their stocks are promising investments.
No.1, Clarke said, was Eskimo Pie Corp. of Richmond, a maker of ice cream bars and other frozen novelties.
Next in order were American Filtrona Corp. of Richmond, a manufacturer of fiber, filtration and plastic products; Bassett Furniture Industries of Henry County, a furniture manufacturer; and Bowl America of Alexandria, an operator of bowling centers.
The Robinson-Humphrey Co. Inc. of Atlanta also recently issued a bulletin on investing in the Southeast.
Of the 72 companies on its list of recommended stocks, however, only two were in Virginia.
They were Heilig-Meyers Co. of Richmond, a home furnishings retailer, and Richfood Holdings Inc. of Richmond, a food wholesaler.
Of its recommended stocks, in fact, 21 were in Georgia. Only Mississippi and South Carolina, with one each, had fewer than Virginia.
The dozen recommended companies in North Carolina included two of the few banks on the list: NationsBank Corp. of Charlotte, and Wachovia Corp. of Winston-Salem.
In the Robinson-Humphrey report, regional analyst Gary Tapp cited six reasons for investing in the Southeast:
Job growth in the 12-state Southeast has outpaced the country's in every year since 1980.
In 1993, Tapp said, the narrower seven-state definition of the Southeast created nearly 40 percent of U.S. jobs. And it created about 25 percent this year, despite having only 17 percent of the population.
Tapp recalled that, until the 1960s, the Southeast essentially was an underdeveloped region whose economy still was largely agrarian. Like other emerging economies around the world, the Southeast has enjoyed the benefits of building virtually from scratch.
"The driving forces behind the Southeast's surging economy continue to be a low cost of living, lower taxes, aggressively pro-business state and local governments that constantly work to attract businesses, and a pleasant climate that draws a steady stream of new residents and retirees," Tapp said.
The Southeast's population is growing much faster than the nation's.
The U.S. Census Bureau projects that the region's population will increase about 11 percent from 1990 to 2000, compared with 7 percent growth nationally.
Florida is expected to grow by 20 percent in that period, Georgia by 19 percent, North Carolina and Virginia by 12 percent, and South Carolina by 10 percent.
Tapp said that kind of population growth fuels demand for new housing, furniture, retail stores, financial services, communications and other business services.
If the Southeast were a separate country, it would boast a gross domestic product of $1 trillion, which would rank it just behind Germany and ahead of the United Kingdom.
Its public companies would have a total market value of about $700 billion, ranking it among the world's largest equity markets, about equal to the United Kingdom's and about double the size of Germany's, Tapp said.
Southern stocks have reflected the region's strong economy.
Since 1987, Tapp said, his company's list of recommended stocks has achieved a compounded annual growth rate of about 34 percent. About 70 percent of the stocks that his company researched are based in the Southeast.
Since 1977, he said, his company's list of 125 representative (but not necessarily recommended) stocks based in the Southeast has shown more than twice the performance of the Dow Jones Composite Index.
Currently, the region's economy continues to perform well.
For 1993, Tapp said, the region's gross domestic product was up 4.5 percent, far ahead of the 3 percent advance for the United States.
He said regional economists expect the region's blistering growth to ease somewhat, but it still should exceed the national pace this year and next.
He predicted that the strongest states in 1994 will be Georgia, Mississippi, North Carolina, Tennessee and Florida.
The region's powerful economic momentum continually spawns emerging growth companies and fuels rapid expansion of established companies.
He said these include retailers, distributors, manufacturers, textile and carpet makers, housing-related companies, restaurants, infrastructure-based companies, health care providers, technology companies and banking and financial service companies.
by CNB