Amidst the recent stock market swoon, we’ve decided to do a special edition of the IL local stock focus, seeing how some local and Louisville-related firms have fared amidst the red sea of falling stocks over the past week. As widely noted, the Dow Jones Industrial Average dropped 1,000 points upon the opening of markets Monday, though they went on to rally quite a bit. Markets are contending with a few factors at once: the devaluation of China’s currency, the ongoing travails of the Chinese stock market on top of that, and the fact that the current bull market has had an extremely long run and may be tired.
All three have combined for a week of bad news for most investors. Last week was the worst week for investors in the past four years, according to NBC News.
It’s also worth noting that even a 1,000-point drop, as dramatic as it can seem, is a comparatively small dent in the markets as compared to prior one-day corrections. On the famed Black Monday of October 1987, the Dow fell close to 22.5 percent in one day. As of the time of this writing, it’s down 2.8 percent.
Still, the past week has been a rough one for most investors, with the index down 8.5 percent, so let’s see how some local firms have fared.
1. Yum! Brands (ticker: YUM): Yum! has long cast its lot with China, with that market being the major global driver for the firm. This has proven a double-edged sword. First came the issue of the tainted meat scandal that dinged Yum’s stock hard last year, and now the multiple problems facing the over-heated Chinese economy have spilled over to Yum’s stock. Yum! was down 2.8 percent Monday, and over the past five trading days it’s down 7.4 percent.
The smart suits at Yum! probably realize the need to diversify back into more mature markets, which might explain the firm’s ongoing campaigns to make KFC cool again, with a series of rotating actors standing in for founder Col. Harland Sanders.
2. CafePress (ticker: PRSS): Over the past five trading days, Louisville bespoke design firm CafePress is down 12 percent. It was down 4.5 percent Monday. It’s not surprising PRSS is volatile, it’s a small company, which tend to have wild upswings and downswings. As noted, the firm’s most recent quarter revealed it’s still not profitable, though it’s slimmed itself down considerably.
3. Brown-Forman (ticker: BF.A, and BF.B): The recent sell-off has had a strange impact on the stock of Louisville’s Brown-Forman. The two classes of shares, the “A” and “B” shares, have sold off at wildly differing rates, showing there are different sensibilities at play when it comes to those who own each class of share. The A shares are mostly owned by B-F insiders, such as the Brown family. The B shares are generally owned by the public at large. As you can see from the accompanying graphic, the A shares have gone down 6.9 percent over the past five trading days, far less than the B shares, which are down 8.4 percent. Clearly the A shares are being held by people with a bit more faith in the company, and steadier hands. Several months ago, we wrote about how the two shares have historically traded close to one another, and pointed at any gap as a change to arbitrage the difference. Well, that gap hasn’t closed yet.
4. Ford (ticker: F): OK, we all know Ford isn’t headquartered in Louisville, but it’s a global company and a huge Louisville-area employer. And it’s stock has taken a pretty big beating over the past five trading days. It’s down 10.5 percent in that time, with investors no doubt spooked by China’s devaluation moves, which would make it harder for those consumers to buy a shiny new car. It also was down 4.6 percent Monday. The good news is that Ford’s price-to-earnings ratio is low, at 14.3.
5. Republic Bancorp (ticker: RBCAA): Let us take a moment to have a polite golf clap for the stock of Louisville’s Republic Bank. Even amidst the generally bad news in the stock market, it’s up slightly over the past five trading days. This makes RBCAA a rare bird, as almost every other area stock has taken a dive. What can you say about RBCAA? It is rock steady, and up 10.5 percent over the past year. It also pays a 3.14 percent annual dividend, making it a safe play when things get tough.