The “Army sends Oshkosh to the front - Milwaukee Journal Sentinel” |
| Army sends Oshkosh to the front - Milwaukee Journal Sentinel Posted: 10 Jan 2010 04:07 PM PST
In 2009, the stock of Oshkosh Corp. had the perfect recipe for a selloff and a rebound, all in one year. The key ingredients? Fear, reality and a healthy dose of good news. Fear: The stock was shed excessively as investors stampeded out of the market early in the year amid worry that a crumbling world economy would punish companies that make things such as heavy vehicles and equipment for the construction industry. Reality: Although the recession has taken a toll, fears about the collapse of the global economy have turned out to be overblown Good news: At midyear, Oshkosh's defense division started receiving big orders from the U.S. government for military vehicles. The day after the company announced a $1 billion initial contract to build thousands of armored vehicles for U.S. forces in Afghanistan, shares of Oshkosh rose 27%. "They were getting oversold and recovered nicely as the year went on," said John Collopy, director of research for Brigg-Ficks Securities LLC in Milwaukee. In the end, Oshkosh's down-and-up year made its stock the biggest gainer in the 2009 Wisconsin Ticker, a Bloomberg News program that tracks the hypothetical investment of $1,000 in the shares of Wisconsin companies over various periods of time. An investment of $1,000 in Oshkosh at the beginning of 2009 would have been worth $4,210.17 when the market closed Dec. 31. Except for purchases by the U.S. Department of Defense, most other big gainers in the Wisconsin Ticker shared some of that same recipe for success last year. "The analysis is really fairly simple," said Chas Janisch, director of research for Wisco Research LLC in Madison, who reviewed the top five gainers. "The best performers were all industrials, for the most part, that were hard hit when the market tanked and analyst estimates went from being too positive to way too negative. They have all seen their stock prices overreact to the downside, only to regain that and then some when it became clear that the worst-case scenarios - that they were then priced at - were not about to occur." Joining Oshkosh among the top five yearly gainers were South Milwaukee-based Bucyrus International, the world's largest manufacturer of mining equipment, and Joy Global Inc. of Milwaukee, which also makes mining equipment and competes head-to-head with Bucyrus in electric mining shovels and draglines. Also contributing to the stock price increase for those two companies is the anticipation of an economic recovery that will need raw materials from mining, such as coal and copper, Collopy said. Modine also oversoldModine Manufacturing Co., a Racine company that makes heating and cooling equipment for cars, trucks, construction equipment and buildings, was oversold during the market downturn, Collopy said. "The auto-related stocks came back fairly nicely, and they took some fairly drastic steps from a personnel standpoint," Collopy said. "They did some cost-cutting and plant rearrangements to meet the slackening demand from Detroit and the truck manufacturers. People believe that's really going to pay off." A management change has helped turn around West Allis' Merge Healthcare Inc., which develops medical imaging and information software, Janisch said. "Merge Healthcare, unlike the industrials which simply were getting back some of the extreme losses due to overly pessimistic analyst expectations, is actually a legitimate fundamental story," Janisch said. "They are in a hot market with explosive growth potential, have overcome some temporary difficulties, and their products are being well-received by the industry." Topping the list of Wisconsin Ticker losers for 2009 was Madison's Anchor BanCorp Wisconsin Inc., the parent company of AnchorBank. It was the second consecutive year Anchor had the worst showing. A $1,000 investment at the beginning of 2009 would have been worth $228.26 before the start of trading this year, according to Bloomberg News. Anchor, the fourth-largest bank based in Wisconsin, has been hammered by losses on loans that soured in the housing slump and recession. Anchor is seeking approval for a plan that would recapitalize it. Nine of the 10 biggest losers among Wisconsin stocks in 2009 were bank stocks. Some banks have been posting quarterly losses, and Janisch said people will be leery of becoming aggressive bank-stock investors until they start to show to the ability to be profitable again.
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