Parkites know companies with best and worst stock
Almost two weeks ago, MarketWatch reporter Kate Gibson published a list of what she thought were the 10 best and 10 worst-performing stocks of 2009. Like most stock stories, her picks were names largely unrecognizable to average Americans. Two made her lists, however, that are familiar to Park City consumers.
Whole Foods Market
At No. 10 on her list of best performing stocks was Whole Foods Market, which has a location in Redstone at Kimball Junction.
She said the stock was up 194 percent.
"The country’s largest organic grocer has narrowed its declines in same-store sales the last three quarters, with the company among the year’s best potential turnaround stories," it read.
Libba Letton, spokesperson for Whole Foods, said the company did a few things last year that helped its profitability.
One was to focus on value items good buys and products on sale. The stores had always had them, she said, but they were never an important part of their marketing strategy.
Coupons, weekly special offers and a new service called "value tours" an associate taking a shopper around pointing out the good buys all helped the store draw in more shoppers and get those people to spend more, she explained.
"People who used to buy $50 bottles of wine are now buying in the $10 or $15 range," she added.
recommending and educating the consumer about the top 10 wines in that price range for consumers, they were able to sell more of them.
Another action taken to educate consumers was an emphasis on the company’s monthly newsletter to shoppers called Whole Deal. The newsletter includes suggestions for inexpensive dinners with recipes and shopping lists for those meals.
Letton also said the entire company "really took stock and cut back on spending." They worked on keeping more cash on hand, both at each store and at corporate headquarters.
"Everyone had a plan on how to do the same amount of work for less," she said. "Be more frugal in running the business and rein things in. We were successful with that too."
On a big scale, the company implemented that strategy by cutting down the number of new stores it opened in 2009 by half. And some of those 15 stores that still got built were designed to be smaller with better space economy, she said.
At No. 5 on Gibson’s worst-performing stock list was local banking giant Zions with two locations in Park City. She said its stock was off 48 percent and added, "The Salt Lake City-based bank has been hit by troubled loans and worries about its securities investments and accounting practices."
James Abbott, director of investor relations for Zions Bancorporation, said Gibson likely got her information from a recent Wall Street Journal opinion piece that he felt was skewed.
"It was not a journalistic piece," he said. "And that piece left out elements of fairness."
Abbott said there are basically two indications that Zions’ stock is a good investment. The first is that the company’s own management has purchased huge amounts of it in the past three or four months. One executive recently bought $2 million worth of shares for himself.
The second sign is that the Federal Deposit Insurance Corporation (FDIC) approved Zions Bank to acquire failing banks across the West on multiple occasions.
"The FDIC doesn’t take that responsibility lightly… they don’t give that opportunity to banks in trouble," he said. "It’s a testament that people who really understand banking have considered Zions a safe haven."
He said there’s an easy explanation for the bad press. If you look at a particular stock over a short time frame, say six months, it’s probably going to look extremely volatile, especially in the current unstable credit environment.
Another reason is that some investment analysts would like the company to raise more capital so on paper it would appear the company had a lower credit risk. Without that additional capital, the bank appears to be a risky investment.
Contributing to that apparent risk are the locations of the banks. Zions does business in California, Nevada and Arizona some of the states hit hardest by the mortgage crisis and recession.
Statistically, other banks in these areas are also considered risky investments.
But abstract formulas and geography aside, Abbott said his company has a much higher Tier 1 capital ratio, a way regulators measure a bank’s financial strength, than what the federal government considers "strong."
"The difference is over $1 billion," he said of what regulators want to see versus what Zions has.
"We’re in the top third of all regional banks in the country," he said. "And have one of the best reserves for that debt in the country We feel like everything is strong compared to our peers and industry benchmarks."
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Councilor Glenn Wright estimated that the ability to provide renewable energy sources for county power will cost the average Summit County resident $0.70 per year above current costs.