While a handful of tech stocks have powered the S&P 500 soaring in the past few months, Louisiana-based companies have lagged behind.
The 19 Louisiana publicly traded companies in The Times-Picayune |The Advocate's Pelican State portfolio lost 7.77% in the second quarter of 2024. The index gained 1.92% from the second quarter of 2023.
By comparison, the S&P 500, which tracks the 500 largest companies, rose 3.85% for the quarter and 27.70% for the 12 months ending June 30. The Dow Jones Industrial Average, an index of the 30 largest companies, fell 1.73% for the quarter and was up 13.69% for the past 12 months. The Russell 2000, which tracks small-cap stocks with an average market capitalization of $1.3 billion, fell 3.68% for the quarter and was up 8.42% for the past 12 months.
Much of Wall Street's recent rally can be attributed to the so-called “Magnificent Seven” stocks: Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta Platforms and Tesla. These companies now account for more than 30% of the value of the S&P 500 index.
“When you go to a party or a crawfish boil, these are the stocks people are talking about,” said Peter Ricchiuti, a finance professor at Tulane University, who tracks regional stocks across the South through the university's Berkenroad Report.
In contrast, most Louisiana-based stocks are smaller banks that have not been able to ride the bull market.
“Louisiana stocks, especially bank stocks, are very much ignored at the moment,” Ricchiuti said.
First Guaranty Bancshares Inc. of Hammond and Business First Bank of Baton Rouge both fell nearly 12% in the second quarter. First Guaranty underwent a management shakeup during the quarter, with longtime CEO Alton Lewis stepping down and being replaced by Michael Miner.
Some Louisiana-based banks also saw gains in the quarter. Lafayette-based Home Bancorp saw its shares rise nearly 8 percent in the quarter, while Origin Bank's shares rose 5 percent.
Ricchiuti said he has heard people use the word “uninvestable” to describe bank stocks — meaning there's no reason to own them — but that the prospect of the Federal Reserve cutting interest rates in September should spur activity.
“This will get things moving again,” he said. “Banks will no longer have to pay as much for deposits.”
Health care stocks took a hit during the quarter. Shares of VieMed, a Lafayette-based home health care company that specializes in treating patients with respiratory diseases, fell more than 30 percent. That's partly due to low trading volume for VieMed shares, but Ricchiuti said it also signals a shift toward tech stocks. “It's interesting because health care uses a lot of technology,” he said.
Amedisys was roughly flat through the quarter, but its home health business picked up steam at the end of the quarter after it announced it had signed agreements to sell several centers. Vital Caring Group, which has restored confidence the company can complete its $3.29 billion merger with UnitedHealth Group.
UnitedHealth has agreed to acquire Amedisys for $101 a share in June 2023. The transaction is expected to close later this year.
One of the few winners was Lamar Advertising Co., a Baton Rouge-based billboard company whose stock price rose nearly 3 percent during the quarter. Lamar's strong stock performance is a sign of a healthy economy, because advertising spending is an indicator of future economic trends, Mr. Ricciuti said.
Despite the recent underperformance of domestic stocks, it's still a good idea to buy shares in strong but under-the-radar companies, as these often generate higher returns and offer a better balance of risk and reward.
“There are too many fake stocks in the market,” Ricchiuti said. “Many of the big tech stocks are not profitable.”
