A handful of tech-focused stocks have caused the S&P 500 to surge for the past few months, but Louisiana-based businesses have lagged behind.
The 19 publicly traded Louisiana companies in The Times-Picayune | The Advocate’s Pelican State Portfolio were down 7.77% for the second quarter of 2024. The index was up 1.92% from the second quarter of 2023.
In comparison, the S&P 500, which tracks 500 large companies, was up 3.85% for the quarter and 27.70% for the 12-month period ending June 30. The Dow Jones Industrial Average, an index of 30 top businesses, was down 1.73% for the quarter and up 13.69% for the preceding 12 months. The Russell 2000, which follows small-cap stocks with an average market capitalization of $1.3 billion, dropped 3.68% for the quarter and up 8.42% for the 12-month period.
Much of Wall Street’s recent gains have come from what have been dubbed the “Magnificent 7” stocks — Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta Platforms and Tesla. Those companies now account for more than 30% of the value of the S&P 500.
“If you go to a party or crawfish boil, those 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 Burkenroad Reports.
In contrast, most of the Louisiana-based stocks are small banks, which haven’t been able to catch a ride in the bull market.
“Louisiana stocks — particularly the banks — are, at this time, are very neglected stocks,” Ricchiuti said.
First Guaranty Bancshares of Hammond and Business First Bank of Baton Rouge both dropped nearly 12% during the second quarter. First Guaranty had a leadership change during the quarter, when longtime CEO Alton Lewis stepped down and was replaced by Michael Mineer.
Some Louisiana-based banks were winners in the quarter. Lafayette-based Home Bancorp was up nearly 8% for the quarter, while Origin Bank saw its shares go up by 5%.
While Ricchiuti said he has heard people use the term “uninvestable” to describe bank stocks — in other words, there’s no reason to own them — the prospect of the Federal Reserve cutting interest rates in September should gin up activity.
“That will waken things up again,” he said. “Banks won’t be having to pay as much for deposits.”
Health care stocks took a hit during the quarter. VieMed, a Lafayette-home health company focuses on treating patients with breathing issues, saw its shares drop by more than 30%. Some of that is due to the small trading volume of VieMed shares, but Ricchiuti said that also shows the shift toward tech stocks. “Which is funny, because health care uses a lot of technology,” he said.
Amedisys was nearly flat for the quarter, but the home health care business got a boost at the end, when it announced it had reached a deal to divest some centers to VitalCaring Group. That restored confidence the firm would close its $3.29 billion merger with UnitedHealth Group.
UnitedHealth agreed to buy Amedisys for $101 a share in June 2023. The deal is now set to close later this year.
One of the few winners was Lamar Advertising. The Baton Rouge-based billboard company saw its shares increase by nearly 3% during the quarter. The fact that Lamar stock is doing well is a sign that the economy is healthy, because advertising spending is an indicator of where things are going, Ricchiuti said.
Despite the weak recent performance of local stocks, buying shares of strong, but neglected companies is still a good idea. They often produce better returns and offer a better risk/reward trade-off.
“There are so many head fakes in the market,” Ricchiuti said. “A lot of the big tech company stocks, they don’t have any earnings.”