The long-running bull market for U.S. stocks continued in 2017, and the shares of many Charlotte companies went along for the ride.
Among 25 locally based companies, 17 had positive results in 2017 through Wednesday’s close, according to an Observer review. Of those, 12 fared better than the nearly 20 percent return of the Standard & Poor’s 500 index, a benchmark that tracks a diverse group of major stocks.
LendingTree shares performed the best of all these companies, rising more than 232 percent in 2017. The company, which matches borrowers with lenders, has benefited from improved revenue and diversification beyond mortgage-related services.
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Other top stocks were door and window maker Jeld-Wen Holding (+71.2 percent), chemical maker Albemarle (+49.2 percent) and industrial conglomerate SPX Flow (+47 percent).
Snack maker Snyder’s-Lance surged at year end after the company announced a $4.9 billion sale this month to Campbell Soup, boosting its shares more than 30 percent for the year.
The low-performers were Babcock & Wilcox Enterprises (-65 percent), retailer Cato (-46.7 percent) and chicken-and-biscuits chain Bojangles’ (-36.7 percent). Babcock & Wilcox, the Charlotte-based energy and technology company, has been buffeted by losses in its renewable energy business and faces investor pressure to pursue a sale or make other changes.
Of the 25 companies, two made their stock market debut in 2017. Jeld-Wen went public in January, while insurer Brighthouse Financial officially split off from insurance giant MetLife in August.
Overall, the stock market has surged this year, benefiting from President Donald Trump’s push to reduce regulations and lower corporate taxes. Positive corporate earnings and economic growth have also boosted markets.
The bull market in the S&P 500 would become the longest ever on Aug. 22, 2018, according to a year-ahead report published this month by Bank of America Merrill Lynch. The bank’s research arm expects the S&P to reach 2,800 by the end of 2018 (up from about 2,680 as of Tuesday), as earnings rise 6 percent for the year.
“We have entered the later stage of a long bull market, a phase of positive and improving economic growth that favors strong momentum and growth but also higher risk,” said Candace Browning, head of BofA Merrill Lynch Global Research, in a statement.
Financials, industrials performed well
Financial stocks were among this year’s stand-outs, said Don Olmstead, managing director at Charlotte investment firm Novare Capital Management. So it wasn’t surprising to see LendingTree and Bank of America at the top of the list for Charlotte stocks.
Just a few years ago, Bank of America, the nation’s No. 2 bank by assets, was still struggling with huge losses in its mortgage portfolio in the wake of the financial crisis. But this year, the bank’s stock soared 34.5 percent as it posted improved profitability and raised its dividend.
“Less regulations helped them, as did loan growth,” Olmstead said of the bank.
Other companies that performed well were in the industrial sector, which benefited from economic growth in the United States and worldwide, said James Harlow, an analyst with Novare.
Albemarle, the specialty chemical company, benefited in particular in the eyes of investors because of its lithium products, which are used in the battery industry, he said.
“We have seen industrials do quite well this year amid the theme of global synchronized growth that we are seeing,” Harlow said. “Most of the major countries outside the U.S. and the U.S. as well are all growing at the same time for the first time since 2007.”
Amid tough times for retailers, another area company that turned in a solid performance was Mooresville-based home improvement giant Lowe’s Cos., which saw its shares climb nearly 30 percent in a year in which the company took steps to cut costs and restructure.
The home-improvement business has been buoyed by a strong housing sector that is expected to chug along as millennials eventually move from apartments to homes, Olmstead said. “I think we will have a longer up-cycle with the housing market,” he said, noting Lowe’s has shown improvement in online sales and trades at a discount to rival Home Depot.
As for 2018, Jud Gee, managing partner at Charlotte-based financial planning firm JHG Financial Advisors, said investors could be in for another good year but need to be wary of potential risks after a long bull market for stocks. Investors have been able to notch gains in recent years partly because stocks were still coming back from the downturn in the market.
“The comparisons will be a lot tougher,” Gee said. “Investors will need to be nimble.”
Olmstead, of Novare, said Wall Street is expecting corporate earnings growth in 2018 between 6 to 12 percent, which should lead to positive returns for stocks. But potential risks include “geopolitical hiccups,” the potential impact from Federal Reserve interest rate increases and the potential for higher inflation, he said.
“We’re fairly positive,” Olmstead said, “but we do see increased risk in the market.”