Louisiana stocks outperform market

Thanks to a strong comeback from Globalstar, the Covington satellite phone company, the Pelican State Portfolio, a group of Louisiana stocks tracked by The Advocate, far outperformed the stock market during the first three months of 2014.

The 24 stocks in the Pelican State Portfolio rose 9.6 percent in the first quarter and nearly 58 percent for the 12-month period ending March 31.

In contrast, the Dow Jones Industrial Average, an index of 30 top businesses, was down 0.15 percent in the first quarter and up nearly 16 percent over the previous year. The S&P 500, which tracks 500 large companies, was up 1.8 percent for the first quarter and nearly 22 percent for the 12 months ending March 31.

Peter Ricchiuti, a finance professor at Tulane University who tracks regional stocks across the South through the university’s Burkenroad Reports, said the local portfolio was bolstered by Globalstar’s performance.

The company closed the quarter at $2.65 a share. That was an increase of more than 51 percent for the quarter and more than 700 percent for the previous 12 months. Last week, Globalstar announced that it would be listed on the New York Stock Exchange beginning April 21. The company had been dropped from the Nasdaq exchange in December 2012 after the stock fell below $1 a share.

“That’s really been the best comeback since Lazarus,” Ricchiuti said. The satellite telecommunications company had accumulated heavy debt obligations during the 2½ years it took to launch a new satellite network. During that time, Globalstar had unreliable service because its first generation of satellites had deteriorated because of constant exposure to the radiation belt around Earth.

“It’s almost like a utility company,” Ricchiuti said. “It costs a fortune to put those satellites up there. But once they are there, it’s like an annuity.”

Over the past year, the company has fully placed in service its new satellite network and cleaned up “a lot of uncertainty on the balance sheet front” through two debt restructurings, said Tim Taylor, Globalstar’s vice president of finance, business and strategy.

“It’s been a long road, but we restored the network and subscribers are coming back,” Taylor said. “Uncertainty has been removed, and the business is growing again.”

The company has added 22,000 subscribers from the end of 2012 to the end of 2013, the most recent period for which Globalstar has numbers. That brings the total number of customers up to 583,000. Most of the growth came at the end of the year. Taylor notes the number of subscribers jumped by 14,000 from the third quarter of 2013 to the end of the year.

Along with adding subscribers, Globalstar has asked the Federal Communications Commission to allow it to vastly expand its services. The FCC is accepting comments on a request by Globalstar to open up its spectrum and offer wireless Internet service in American cities.

By tapping the spectrum set aside for Globalstar in areas where satellite phone service isn’t needed, the company has said it could increase Wi-Fi capacity in the U.S. by one-third immediately.

The deadline for receiving comments is the first week of June. If all goes well, Globalstar could get the go-ahead from the FCC to offer wireless service by the end of the year, a move that could be a massive windfall for the company. Telecom, Media and Finance Associates Inc., a consulting and research firm in Menlo Park, Calif., said in a blog posting last year that Globalstar’s spectrum could be worth at least $2 billion.

The second-biggest quarterly gainer was Teche Holding Co. of New Iberia, the holding company for Teche Federal Bank. Teche jumped 59 percent in the quarter, to close at $79 a share. The company’s gains have been driven by the recent announcement that IberiaBank Corp., of Lafayette, plans to buy the nearby competitor. “Since it’s a stock deal, the Teche buyout price has been moving up with IberiaBank’s stock price,” Ricchiuti said.

H&E Equipment, of Baton Rouge, saw its stock price jump nearly 37 percent in the first quarter to close at $40.45.

The company, which leases and sells heavy equipment and cranes, has benefited from the improving national economy, Ricchiuti said.

“Of all the stocks on the list, they’re the most economically sensitive and how they do is a good bellwether,” he said.

The other major gainers were oil exploration and production companies, such as Petroquest Energy, which was up nearly 32 percent for the quarter, and Stone Energy, which was trading 21 percent higher at the end of the first quarter.

Ricchiuti said those two Lafayette companies did “very, very well” in the first quarter because they own land in Louisiana and Texas.

“The whole first quarter was wicked cold, and the price of natural gas went from $3.50 for 1,000 cubic feet to $4.50 per 1,000 cubic feet,” he said. “So on the production side, they just started getting a dollar more.”

Petroquest and Stone also carved out niches for themselves, Ricchiuti said. Petroquest has been a player in the Eagle Ford Shale in south Texas, a hot area for oil and gas production. Stone has been active in deepwater drilling in the Gulf of Mexico.

In contrast, the big losers during the quarter were all offshore service companies. There has been a shift away from deepwater drilling to fracking and drilling on land.

Tidewater, a New Orleans company that provides service vessels to the offshore industry, was down nearly 18 percent for the quarter.

Hornbeck Offshore of Covington, another vessel company, was down 15 percent for the quarter. And Gulf Island Fabrication, a Houma company that manufactures offshore rigs and drilling platforms, was down more than 6 percent.

Unlike Petroquest and Stone, none of those companies has any onshore business, so they have been hurt by the shift of exploration from offshore to land, Ricchiuti said.

“There’s nothing dreadful going on, but all of the offshore projects that were scheduled for 2014 have been pushed back to 2015,” he said. “That’s spooking companies.”