Economists use the phrase “guns or butter” to weigh the resources a society devotes to military or domestic priorities.
In the continuing economic turmoil of 2011, investors in local companies did best by a pair of businesses hawking guns and butter ”“ Hawkeye bolt-action rifles and chocolate peanut butter buckeyes, anyway.
Shares of the Fairfield-based gun-maker Sturm Ruger & Co. Inc. were on track to have more than doubled in 2011, with the Greenwich-based home-goods purveyor Blyth Inc. the next best performer with a two-thirds gain as the new year approached.
Of about 55 stocks of local companies tracked in 2011 by the Fairfield County Business Journal, just 20 finished the year in positive territory and the number of companies suffering a double-digit decline in their share values easily outpaced those moving up by that much.
Big names are sprinkled among the biggest losers, including Royal Bank of Scotland plc, Terex Corp., UBS AG and Xerox Corp. For Xerox”™s ballyhooed CEO Ursula Burns, it marks an inauspicious start after succeeding Anne Mulcahy in July 2009 with the stock having nowhere to go but up. While some competitors like Hewlett Packard have similarly muddled along, others have performed strongly ”“ notably Armonk, N.Y.-based IBM Corp., which has a large number of workers who live in Fairfield County.
As of mid-December, more than a half-dozen companies flirted with finishing the year as penny stocks ”“ including WebMediaBrands Inc., which at the mid-year point led all local gainers ”“ as a banner first-half for many issues hit the skids amid the debt crisis and other macroeconomic factors.
General Electric Co., whose shares are closely tracked both by financial managers and a large number of local workers and retirees, at deadline still needed a rally to finish the year in positive territory. GE shares did so two straight years in 2009 and 2010, but today are still well off the adjusted prices they commanded in the years leading up the market collapse of 2008.
United Technologies Corp., the largest employer in Connecticut and Fairfield County via its Sikorsky Aircraft Corp. division in Stratford, was poised to likewise see shares decline in the mid-single digits near year-end.
“The biggest item that really popped up on the radar screen in the back half of the year was the actions we”™ve taken at Sikorsky, as we”™ve positioned the business for what is a slow-growth defense environment,” said Greg Hayes, CFO of Hartford-based UTC, in a December conference call. “(President Jeff Pino) has taken some very, very tough actions down at Sikorsky, both in (Stratford) but really around the global footprint.”
If Sikorsky has been overhauling its operations under its “winged S” logo, so has Ruger under its own red eagle logo. Under CEO Michael Fifer, Ruger has set up “mini-foundries” at its plants in Newport, N.H., and Prescott, Ariz. In the first three quarters of 2011, Ruger earned $29.5 million on revenue of $236 million, up 23 percent from the same stretch in 2010.
“We”™ve been buying an awful lot of equipment,” Fifer said, in a November conference call with investment analysts. “Generally with each new major platform product, we are starting from scratch and creating new production cells. So we free it up, we fill it, we free up some more and then we fill that.
“We”™ve hired some more folks this summer as we”™ve tried to really ramp up our foundry production,” Fifer added. “On the firearms side, we”™ve done a pretty good job of managing headcounts. I”™m actually pleased to report that the overall headcount hasn”™t changed a whole lot since I started five years, but we”™ve more than doubled sales.”
