COVID-19 driving stock gains for Conn. employers entering 2021
For investors, there is no better feel-good story than buying a stock on fumes in advance of a corporate turnaround that boost its value. But in the pandemic year of
2020, investors found other corners of the market to boost their returns — including a company in the southwestern corner of Connecticut producing feel-good stories for weary Americans.
Greenwich-based Chicken Soup for the Soul Entertainment was among the handful of publicly traded Connecticut companies to see its stock double or more in 2020. It was a feat not even Amazon achieved, with its shares closing out
2020 up 76 percent to $3,257 as “stay-at-home” orders and store closures last spring pushed more people to buy online, pushing Amazon to staff up distribution and fulfillment centers nationally including several in Connecticut.
Entertainment, fulfillment, technology, drugs, and alternative energy — guns too — were among the sectors to push stock indexes higher in 2020, with more than half of publicly traded companies in Connecticut seeing their stocks gain on the year. The techheavy Nasdaq led the way with a 44 percent increase on the year, versus an 18 percent gain for the Russell
2000 and a 7 percent bump for the Dow Jones Industrial Average.
FuelCell Energy was tops among larger Connecticutbased employers, with CEO Jason Few having re-energized the Danbury-based manufacturer’s outlook in his first full year on the job. Bottoming out at 18 cents in June 2019 months before Few took charge with the goal of revitalizing power plant sales including in Connecticut, FuelCell’s share entered 2020 trading just above $2 and closed out December above $11.
“When you talk about job creation and growth, ... you make investments (and) you build out new technology,” Few said last month in a Zoom interview. “We’ve got
260 megawatts of our (fuel cells) running today. You build a path and you march toward profitability. ... As the energy transition unfolds, we have an amazing opportunity (and) Connecticut as a state has an amazing opportunity.”
Only ReneSola topped FuelCell for stock gains last year, and only after a late surge for the solar farm developer that established its main office in Stamford in 2019. Exiting October with shares just above $3, within two months ReneSola shares would trade at quadruple that level to close out 2020 with a 700 percent leap on the year.
New Haven pharmaceutical developers Arvinas and BioXcel Therapeutics saw their shares double and triple respectively, while Alexion Pharmaceuticals got a $39 billion buyout offer from AstraZeneca.
In addition to Chicken Soup for the Soul, another Connecticut company padded a sizable cushion while pandering to home comforts: Lovesac, which was able to counter mall closures with online sales for its lounge-around-thehouse couches and chairs.
“It’s a dynamic environment to say the least, and I think that in many cases — particularly in the home category obviously — Lovesac and (similar) companies have been recognized as perhaps COVID-19 beneficiaries, with people working from home and spending money on their home,” said CEO Shawn Nelson, speaking last month on a conference call with investors. “During the disruption of brick-and-mortar, we clearly became a preferred choice among people who didn't have as many choices as they did before. ... Educating from home is becoming a new trend as well, as well as working from home — and I think home buying obviously for the next couple of years is probably going to be at an elevated level.”
Several more companies saw shares escalate between 50 percent and 100 percent last year, including Greenwich-based XPO Logistics which runs a big network of trucking assets; Pitney Bowes in Stamford, which saw its best quarterly revenue growth in a decade as package deliveries swelled during the pandemic; and Sturm Ruger, the Fairfield firearms manufacturer which raced to keep up with demand as gun background checks boomed, at a level CEO Chris Killoy described as “staggering” in a late October conference call.
“The surge in consumer
demand likely continues to be driven by the call by some for the reduction in funding and authority of law enforcement organizations; protests, demonstrations, and civil unrest in many cities throughout the United States; and concerns about personal protection and home defense stemming from the continuing
COVID-19 pandemic,” Killoy said at the time. “Approximately five million Americans entered the firearms market for the first time in 2020.”
With indoor entertainment dominated by the small screen, shares of Charter Communications and Altice USA rose more than 35 percent, with Walt Disney up 25 percent and NBC parent Comcast nearly
20 percent. Norwalk-based Frontier Communications did not benefit after declaring bankruptcy last April and having its shares delisted.
The company plans to create a new stock this year after emerging from bankruptcy under a new CEO.
As Disney+ enters its second year of streaming, new CEO Bob Chapek was quick to highlight the subscriber gains for the streaming service of ESPN (of which Hearst Corp. owns a minority share), even as the company cut jobs at ESPN as sports calendars were shuffled during the pandemic. Disney also owns ABC and the animation movie house Blue Sky Studios in Greenwich.
“When you look across our full suite of streaming service, we have exceeded
120 million paid subscriptions worldwide with impressive subscriber gains for ESPN+ and Hulu,” Chapek said in a November conference call. “While many of our productions were shut down beginning in March due to COVID, our animation teams were able to work remotely and have continued production uninterrupted during the pandemic. ... We now have more than 100 live-action, scripted and unscripted projects in active production, with dozens more in various stages of pre- or post-production.”
If the coronavirus era helped some companies, it is dragging back others — most notably in Connecticut’s banking sector. In addition to expected losses on some problem loans on the books, banks are looking ahead to an extended stretch of low interest rates as set by the Federal Reserve, limiting the revenue they can glean from interest charged on new loans.
While shares were flat in
2020 for the Stamfordbased retail credit giant Synchrony Financial, stock prices dropped by doubledigit percentages for Connecticut’s two largest homegrown banks People’s United Financial and Webster Financial, and for Bank of America which is the largest depositor in the state.
As foreclosure prevention measures elapse and consumers reassess their finances, household spending will be key in determining the pace of the U.S. recovery.
“We’re still in the middle of COVID,” said JPMorgan Chase CEO Jamie Dimon, speaking last month as part of a financial industry forum sponsored by Goldman Sachs Group. “How bad the winter is going to be — and thank God there’s a vaccine — it’s just going to be a little spotty for a while, I just think it’s unavoidable. ... There’s always a case where we’ll have some kind of double-dip (recession) and return to something worse.”
“We’re still in the middle of COVID. How bad the winter is going to be — and thank God there’s a vaccine — it’s just going to be a little spotty for a while, I just think it’s unavoidable. ... There’s always a case where we’ll have some kind of double-dip (recession) and return to something worse.”
JPMorgan Chase CEO Jamie Dimon