The Market In 1991 -- Record Year For Stocks -- Northwest Stocks Do Well In Strange Year-End Rally
When stock analysts look back at 1991, there's a good chance they'll say, "huh?"
1991 was the year the nation's economic problems worsened, and the nation's stock and bond markets flourished. In their perverse way, stocks and bonds built a mountain of success on bad news.
Some said that since bonds rise as times become more perilous, then bonds rose. Some said stocks rose because they were delighted by lower interest rates and investors' switching from fixed income to stocks.
The fact is that 1991, propelled by an outstanding year-end rally, was a dynamite year for those invested in stocks and bonds.
The Dow Jones industrial average, the common proxy for stock performance, streaked 535.17 points, or 20.3 percent, ahead to close at 3,168.83. The year ended on four straight record closes, giving the Dow 11 records highs in 1991.
The 1991 percentage gain is not a record - it has ended with better gains in three of the previous six years.
But for a year in which the recession never lifted, despite persistent pronouncements otherwise, it was remarkable.
Northwest stocks as a group outdistanced the Dow. A 115-stock group monitored by The Times gained a composite 35 percent. The Murphey Favre Northwest 50, 50 stocks weighted by their regional economic impact, added 715.84 points, or 45 percent, to close at 2,302.93. Another regional index, the Dain Bosworth, jumped 104 points, or 38 percent, to 379.38.
Among five professionals who select five stocks apiece as the Times Board of Selectors, Bill Whitlow repeated as champion with average appreciation of 65 percent. But a group of 10 stocks selected a year ago by Times readers vaulted 67 percent, and 10 stocks selected at random by the Times staff jumped 69 percent.
It looked like a tough year not to make money in stocks. Bonds were almost as glamorous. The 30-year Treasury bond closed with a yield of 7.39 percent, the lowest in nearly five years. Low yields in the bond world mean higher prices. Bond gains totaled as much as 18 percent in 1991.
Rapidly falling interesting rates at year's end enhanced market gains.
Not surprisingly, in a year in which small-capitalization stocks had a heyday, a tiny stock, NeoRx, had the biggest year. (Capitaliza tion is a stock's total market value, derived by multiplying a stock's price times the number of shares outstanding.)
NeoRx, a biotechnology company, got a $10 million boost from a New York investor, and the stock zoomed from a near bankrupt 56.25 cents a year ago to $3.56 this year, a 533 percent gain.
But bigger stocks were not shunted aside. Such issues as Costco Wholesale, Washington Mutual Savings Bank and Microsoft all held sway in the Northwest top 10.
Washington Mutual, the state's largest mortgage lender, rapidly multiplied its gains in the past three weeks. Up 120 percent in the year's first 49 weeks, Washington Mutual accelerated the final 15 trading days to close at $33.75 a share, up $21.625, or a whopping 178 percent.
The third best stock was overlooked much of 1991. Esterline Technologies gained $8.50 a share, or 155 percent, to $15.625. The company, involved in products for aerospace and automation equipment, struggled to stay even with the sinking economy. But it got high marks for holding down expenses. As a depressed stock with rebound potential, it shot up at year's end from No. 18 to No. 3 in three weeks.
Big names such as Costco and Microsoft more than doubled in value in 1991. Costco's four-year appreciation of 1,272 percent tops all Northwest stocks. Microsoft's four-year gain of 518 percent trails only QFC (+706 percent) and Nike (+645 percent).
One takeover target made the top 10: No. 8 Bohemia was acquired by Willamette Industries for $24 a share.
Besides Washington Mutual, five financial institutions wound up in the top 20. They were: Western Bank, Metropolitan Federal, Washington Federal Savings Bank of Hillsboro, Ore. (acquired by West One), GNW Financial (being acquired by Washington Mutual) and Olympic Savings Bank (selling its assets to Puget Sound Bancorp.).
Like the national markets, the regional market featured big gains by biotechnology companies. Besides NeoRx, the best were: Epitope, up 135 percent; ProCyte, up 114 percent; Immunex, up 66 percent; Imre, up 57 percent; Icos, up 44 percent, and CellPro, up 41 percent.
The year-ago's top stock, Receptech, a biotech offspring of Immunex, advanced 36 percent in 1991. The 1990 second-best stock, Oregon Steel Mills, a 95 percent riser, slumped 11 percent in 1991 to finish in the bottom quarter.
A number of big-name companies failed to match the regional averages. Weyerhaeuser, the forest-products giant busily shedding its non-core enterprises, rose 26 percent. At year's end, securities analysts were still expecting bigger things from the tree company.
Many thought 1991 would bring economic recovery. Airlines often lead such a rebound, so many banked on Alaska Air Group. The stock was only 8 percent ahead in early December, but it wound up 24 percent ahead for the year.
Albertson's, a grocery king, failed to excite the imagination of stockholders. Its gain was a modest 8 percent.
Boeing in 1991 lost its market-capitalization leadership in the Northwest to the furious climb by Microsoft. Concerns about the absence of airplane riders led some analysts to fear that orders for Boeing jets would subside. The stock added only 5 percent in 1991.
At the south end of the table lies Tacoma Boatbuilding. Forced because of declining value off the New York Stock Exchange, the stock nearly fell off the earth, down 91 percent and trading at year's end at 1 cent asked, 5 cents bid. The company has been battling to generate new business.
Sprouse-Rietz Stores, an institution in smaller towns in the Northwest, nearly struck a deal earlier in the year at $16 a share. But it fell through, and so did the company after a reorganization-for-bankruptcy filing helped send the stock down 78 percent.
Some relatively well known companies struggled. Ackerley Communications, owner of the Seattle SuperSonics basketball team and lots of billboards and airport advertising, joined many other media companies in recession. It finally worked out a deal with its bankers for breathing room, but the stock still lost 36 percent.
Eldec resorted to extensive layoffs to help cut expenses as it wrestled with a faulty part from a supplier and weak demand for spare parts in the airline industry. The stock tumbled 19 percent.
Takeovers in 1991 claimed, among others, Intermec, U S West NewVector and Portland-based Fabricland.
Interwest Savings Bank on Whidbey Island and Spokane's Sterling Savings Association moved up to over-the-counter status by selling more shares to the public. Selling shares to the public for the first time were Icos, Nendels, BMC West and CellPro.