The vast majority of Oklahoma stocks ended the third quarter with higher prices than when the three-month period began, and a handful grabbed substantial gains.
Like the broader market, stocks of most state-based companies locked in gains despite a choppy end to the quarter, which closed Friday. Among Oklahoma stocks, more than five rose in price for each one that declined in the period.
All of the major indexes — the Dow, S&P 500 and Nasdaq — were up more than 4 percent in the July through September period. The Dow, up about 10 percent in 2012, has regained levels it achieved just before the economic and market collapses of 2008.
“As bad the start of the year was, the third quarter made up for it,” Tulsa money manager Jake Dollarhide said Friday. “There was a lot less noise out of Europe, a lot less negative sentiment about the U.S. economy. With less noise, the profits and the big opportunities, especially for our local companies, got heard. Investors were able to digest some of the potential.”
Despite losses over the past few trading days, “we had a heck of a good quarter and month for stocks, beyond what anyone thought,” said Stuart Hoffman, chief economist at PNC Financial Services Group.
The biggest local gainer of the quarter was Gulfport Energy Corp., which rose more than 50 percent. The stock closed Friday at $31.26, a $10.63 increase over the price at the end of the second quarter.
As many Oklahoma energy companies seek to reduce their production of low-priced natural gas in favor of oil and natural gas liquids, Gulfport has been oil- and liquids heavy for some time.
In an investor presentation earlier this month, Gulfport's initial point of information was that 94 percent of its production last year was oil and natural gas liquids.
“Gulfport Energy differentiates themselves from better-known energy stocks like Devon and Williams because oil's been the play,” said Dollarhide, CEO of Longbow Asset Management. “They were in the sweet spot with the heavy concentration of oil. They're in the right footprint.”
After Gulfport issued a promising production report from the Utica Shale a few weeks ago, Global Hunter Securities upgraded the shares to “buy” from “accumulate” and raised its target price to $43 from $30. The stock price jumped 10 percent in a single day after that report.
However, the reasons aren't quite as clear for the strong quarterly performance of shares of LSB Industries Inc., an Oklahoma City company that produces chemicals and climate control devices. CEO Jack Golsen concedes traders probably weren't buying the stock based on fundamentals.
“It's our potential,” Golsen said. “It's certainly isn't our performance this year, because we had an explosion at one of our plants and that's caused a dip in our earnings. People look at what our potential is and what our plans are. They understand where we're going.”
Investors in LSB shares saw their stake grow 41.9 percent in the quarter, with shares closing Friday at $43.87 after setting a 52-week high earlier last week. The stock ended the previous quarter at $30.91.
Throughout the quarter, LSB provided several updates on repairs to its damaged chemical plant in El Dorado, Ark. The firm estimated the explosion cost it about $7 million in operating income in the second quarter. While the news briefly hurt the stock price, the shares kept bouncing back.
“I think before people understood it, it (the stock) took a dip, but it seemed to recover,” Golsen said.
Investors now appear to be optimistic about LSB's prospects, particularly on the chemical production side, Golsen said.
“I think that they're looking at that potential business for 2013,” he said. “The market looks very strong.”
Dollarhide said his firm recently boosted its investment in chemical companies, a sector he is bullish on.
Meanwhile, Golsen said, the climate control business remains fairly flat, reflecting a sluggish level of construction spending.
Another strong Oklahoma performer has been a publicly traded concern for little more than a year. Compressco Partners LP, an Oklahoma City company that manufacturers and sells compressors designed to enhance production from natural gas and oil wells, went public in mid-2011.
After registering a 28 percent decline in the second quarter, Compressco shares bounced back to post a 35.7 percent gain over the past three months. In early August, Compressco reported a $3.6 million second-quarter profit — six times the earnings of the same period a year earlier — and the stock bounced.
The earnings report also prompted Raymond James to upgrade the shares and place an $18 price target on the stock. The stock closed Friday at $16.83.
Dollarhide said the upcoming election season could have a significant impact on equities, particularly for Oklahoma energy companies that produce natural gas.
“There's some important legislation that could really change the game for natural gas,” Dollarhide said. “The energy component has underperformed so far this year. I'm optimistic that the energy component could potentially have a really big 2013.”
At a glance
Top three companies