Louisiana investors who are looking for stocks of solid, well-managed companies need search no farther than their own back yard, according to students at Tulane University’s A.B. Freeman School of Business. The graduate and undergraduate business students participate in a course called the Burkenroad Program, in which they earn credits for performing investment analyses of publicly traded companies in Louisiana and along the Gulf Coast.
The students receive training in equity analysis and meet with top management of the companies they study in order to gain an understanding of the industries and the competitive pressures the companies face. They complete their study by writing investment analyses that are compiled into the Burkenroad Reports.
Stocks in the Burkenroad Reports are among the holdings of the Hancock Horizon Burkenroad Small-Cap Mutual Fund (symbol: HYBUX), which is managed by Hancock Bank and has about $850 million in assets.
In their latest reports, the Burkenroad analysts concluded that an improving economy and well-advised growth strategies are helping many of Louisiana’s public companies grow revenues and boost their bottom line. Here’s a look at five of the companies analyzed during the past year by the Burkenroad team.
Cleco Corp.
Pineville
Industry: Electric utility
Top executive: Bruce A. Williamson,
CEO and president
Website: cleco.com
Market capitalization: $3.4 billion
Stock symbol/exchange: CNL/NYSE
Stock details as of July 14, 2014:
• Closing price: $56.71
• 52-week range: $43.69 – 59.21
• Dividend/yield: $1.60/2.8 percent
Business:
Through its power company subsidiary, Cleco Corp., engages in the generation, transmission, distribution and sale of electricity to some 284,000 retail customers in Louisiana and supplies wholesale power in Louisiana and Mississippi. The company was founded in 1935.
Analysis:
The Burkenroad analysts see management strength and good strategic planning in this regional banking company, which seized on the national economic recession as an opportunity to cheaply acquire failing banks in other states. Florida was a major target for acquisitions.
More recently, IberiaBank set its sights on stable banks with good prospects. Recent acquisitions included the Memphis operations of Trust One Bank; Franklin, La.-based Teche Holding Co.; and First Private Holdings Inc. in Dallas. These purchases brought IberiaBank’s total assets to $13.6 billion.
“The Company continues to steadily grow its legacy portfolio by focusing on conservative client selection,” the analysts wrote in a March 2014 report.
Analysts at Burkenroad and several investment advisory firms look for IberiaBank’s stock could be headed for $70 or more per share.
Conrad Industries Inc.
Morgan City
Industry: Ship fabrication and repair
Top executive: John P. Conrad Jr.,
CEO and president
Website: conradindustries.com
Market capitalization: $230.7 million
Stock symbol/exchange: CNRD/OTC
Stock details as of July 14, 2014:
• Closing price: $38.15
• 52-week range: $28.50 – 42.90
• Dividend/yield: NA/NA
Business:
Providing construction and repair services to customers in maritime transportation and oil and gas production, the company operates four shipyards, including one in Morgan City, two in Amelia and one in Orange, Texas. It serves offshore support companies, rig fabricators and drilling contractors; barge and support vessel operators; the U.S. Army, U.S. Army Corps of Engineers, U.S. Coast Guard and state and local governmental agencies. The company was founded in 1948.
Analysis:
The Burkenroad analysts who examined Conrad Industries late last year gave the company high marks for “strong management and solid financials,” and noted that vigorous commercial demand for the company’s services and a diverse product mix have reduced its dependence on government contracts.
Total revenues grew by 75 percent in the past three years and the trend will likely continue, the analysts said, noting the company’s purchase of 50 acres of expansion space for a new deepwater facility. They set a price target of $47 a share for the stock, but some other analysts believe that may be low.
A stock blogger at Seeking Alpha noted in April that Conrad Industries has grown its customer base and expanded its backlog by almost 30 percent, suggesting that “plenty of growth potential remains.” Assuming a 10 percent growth rate this year, blogger Justin Kuepper speculated, shares in Conrad Industries could climb well above $50 by year-end.
IberiaBank Corp.
Lafayette
Industry: Regional banking
Top executive: Daryl G. Byrd,
CEO and president
Website: iberiabank.com
Market capitalization: $2.0 billion
Stock symbol/exchange: IBKC/Nasdaq
Stock details as of July 14, 2014:
• Closing price: $66.70
• 52-week range: $51.54 – 72.41
• Dividend/yield: $1.36/2.0 percent
Business:
The holding company for IBERIABANK provides commercial and retail banking products and services from more than 280 offices, including 186 bank branches and three loan production offices in Louisiana, Arkansas, Tennessee, Alabama, Texas and Florida; 22 title insurance offices; and mortgage representatives in 11 states. IberiaBank Corp. was founded in 1887.
Analysis:
The Burkenroad analysts see management strength and good strategic planning in this regional banking company, which seized on the national economic recession as an opportunity to cheaply acquire failing banks in other states. Florida was a major target for acquisitions.
More recently, IberiaBank set its sights on stable banks with good prospects. Recent acquisitions included the Memphis operations of Trust One Bank; Franklin, La.-based Teche Holding Co.; and First Private Holdings Inc. in Dallas. These purchases brought IberiaBank’s total assets to $13.6 billion.
“The Company continues to steadily grow its legacy portfolio by focusing on conservative client selection,” the analysts wrote in a March 2014 report.
Analysts at Burkenroad and several investment advisory firms look for IberiaBank’s stock could be headed for $70 or more per share.
Pool Corp.
Covington
Industry: Swimming pool supplies
Top executive: Manuel J. Perez de la Mesa, CEO and president
Website: poolcorp.com
Market capitalization: $2.48 billion
Stock symbol/exchange: POOL/Nasdaq
Stock details as of July 14, 2014:
• Closing price: $55.60
• 52-week price range: $50.58 – 62.84
• Dividend/yield: $0.88/1.5 percent
Business:
Supplying “everything but the water” to swimming pool service businesses in North America and Europe, this company sells some 160,000 products to wholesale customers, including pool remodelers, builders and repair companies; specialty retailers; landscape and maintenance contractors; and others. The company was founded in 1993.
Analysis:
Continued economic recovery will bring benefits to shareholders of Pool Corp, the Burkenroad student analysts predict. Praising management for paying down debt and expanding through acquisition of smaller companies, they note that the company, with 220 U.S. sales centers, now has the largest market share in the pool distribution industry. “Pool Corp. will be able to keep its favorable market position because of its competitive advantage,” the analysts wrote.
New Orleans investment advisor George Young, a partner at Villere & Co., recently predicted that Pool Corp will enjoy “an annuity stream” because the average swimming pool in the United States is 10 years old and most need to be resurfaced every seven years.
“What’s really important about Pool Corp is, they’re larger than the next 40 competitors combined,” Young told TheStreet.com in late May. “On top of that if you need a pump for your 1970s-installed pool, they’ve got that part and can get it to you in a timely manner.”
Gulf Island Fabrication Inc.
Houma and Houston
Industry: Fabrication services for offshore drilling/production
Top executive: Kirk J. Meche,
CEO and president
Website: gulfisland.com
Market capitalization: $287.5 million
Stock symbol/exchange: GIFI/Nasdaq
Stock details as of July 14, 2014:
• Closing price: $20.51
• 52-week range: $18.06 – 26.82
• Dividend/yield: $0.40/1.9 percent
Business:
Through several subsidiary operations, the company fabricates offshore drilling and production platforms, living quarters, process vessels, barges and lift boats used in the development and production of oil and gas reserves. The company was founded in 1985 by Alden J. “Doc” Laborde, who died earlier this year in New Orleans at the age of 98.
Analysis:
This independent oilfield services company has a history of stability and has built a strong backlog of work that includes two major deepwater projects, the Burkenroad analysts note. With no long-term debt, Gulf Island’s balance sheet is healthy, leaving the company in a good position for growth, they say. A downturn in the Gulf of Mexico took a toll on profits for a while, with the company posting net losses for two years before moving into the black in 2013.
“The offshore platform market is extremely competitive,” the student analysts wrote. But despite uncertainties that continually plague the offshore oil and gas industry, the analysts believe Gulf Island Fabrication will perform well in the near term. In their March 2014 report on the company, they set a 12-month price target of $24 for the stock.
