Taking a look at stocks
A look at Oklahoma stocks’ performance in the just-ended first quarter.
A highly volatile market led to both sharp gains and sharp losses for Oklahoma companies in the first quarter.
Oklahoma City-based Mammoth Energy Services Inc. stomped past the rest, boasting a 63 percent gain as the firm that began as an oil-field services company continued to ratchet up its electric utility offerings, securing a $945 million contract to restore power to Puerto Rico.
Mammoth stock surged another 7.7 percent on the final trading day of the quarter to close at $32.05 a share, up 114 percent from its initial public offering price of $15 in October 2016. Since then, the company has rapidly expanded in the oil-field services business and even more significantly in the utility repair sector.
The company secured an initial 90-day, $200 million contract for Puerto Rico in October after CEO Arty Straehla hired a helicopter to survey the island to help form a bid and repair strategy. The contract was expanded to $500 million in January and nearly doubled again to $945 million earlier this month.
“This is a longer-term contract than a lot of people recognized, and it shows how more diversified they are than a lot of people give them credit for,” said Jake Dollarhide, CEO of Longbow Asset Management Co. in Tulsa. “I wouldn’t be surprised if Mammoth received even more good news out of Puerto Rico before it’s good and done.”
Mammoth and its utility company Cobra Acquisitions now have more than 900 employees and contractors working on the island.
“It really speaks to the severity of the storm and how bad it was,” Straehla said in an interview earlier this month.
Mammoth’s steady rise was somewhat rare in a quarter that featured multiple volatile price swings. The broader stock market soared almost 6 percent in January only to plunge 11 percent in the first week of February.
A second nearly 10 percent dip occurred earlier this month, only to have the market finish the quarter down a modest 2 percent.
“If you had said at the beginning of the year that the market would be down 2 percent after a strong two years in a row, the average person would not have been surprised, but how we got there is very surprising,” Dollarhide said.
Other winners
Oklahoma City-based payroll technology company Paycom continued its steady rise in the first quarter, closing at $107.39 a share, up more than $27 and nearly 34 percent in the period.
“While many of the
tech darlings cooled off mightily in the quarter, Paycom keeps rolling,” Dollarhide said. “They are providing a necessary service to hundreds of thousands of companies in the U.S.”
Tech giants Facebook, Amazon, Netflix, Google and Apple all posted big losses in the quarter, but Paycom stock continued to rise.
Tulsa-based bookseller Educational Development Corp. rounded out the state’s top three stocks of the first quarter, posting a gain of $6.20, or 33 percent, to $25.15 a share.
“In this day and age of things going digital and magazine services under pressure, they have a solid niche in their industry,” Dollarhide said. “The fact that they spurned Amazon and set up their own sales and distribution system might seem like a risky venture, but it has been prudent and has paid off handsomely for Educational Development shareholders.”
On the down side
While there were several standouts, more than two-thirds of Oklahoma’s publicly traded stocks finished the quarter lower than where they started, including 18 that posted double-digit losses.
Pryor-based Orchids Paper Products reprised its now-familiar role as the worst-performing stock in the quarter, giving back $4.65, or 36 percent, to close at $8.15 a share. The stock is down 77 percent from June 2016.
“Commodities continued to struggle. Aluminum, paper, metals, the materials sector has done terribly,” Dollarhide said. “It’s a tough market, and Orchids has had a tough go.”
Oklahoma City-based SandRidge Energy Inc. shed $6.56, or 31 percent, to close at $14.51 as directors and management continued to struggle with activist investors over the company’s direction.
“SandRidge is the victim of activism,” Dollarhide said. “We hear how activism can be good for companies and is therapeutic for the market, but in this case, it hasn’t bode well for SandRidge shareholders. It’s unfortunate how this has played out.”
SandRidge directors in the last week of 2017 agreed to activist shareholder demands and canceled the company’s planned purchase of Colorado-based Bonanza Creek Energy. Directors later fired the company’s CEO and chief financial officer,
laid off 80 Oklahoma City employees and have solicited sales, merger and partnership offers.
Oklahoma City-based chemicals company LSB Industries dropped $2.63, or 30 percent, to close at $6.13.
Chemicals companies struggled throughout the country in the first quarter, Dollarhide said.
“When the sector leaders struggle, the smaller players, the niche players, the specialized players are going to struggle as well,” he said.
The first-quarter volatility followed two years of unusually consistent growth, other than the oil and natural gas sector. The rest of 2018, however, is likely to follow the pattern set in the first quarter, Dollarhide said.
“I think we will see a lot more volatility this year because of the threat of higher interest rates and the market finally is reacting to Washington, D.C.,” he said.
Despite increased volatility, Dollarhide said he expects modest overall gains.
“I think we’ll have a single-digit rise, maybe 6 to 8 percent, but it’s going to be a wild ride between here and there,” he said. “If you’re a stock investor, buckle up. It’s going to be bumpy.”