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57% of Stocks Fall in Quarter, Reversing Trend in Earlier Rally

July 14, 1987|JAMES F. PELTZ | Times Staff Writer

Stocks of most San Fernando Valley-based companies fell in the second quarter, losing much of the strong gains they posted during an early 1987 rally.

The stocks thus continued to shadow the broader stock market, which had mixed results in the second quarter after surging ahead in the first three months of the year.

In the latest quarter, 40 of the 70 Valley-area stocks, or 57%, fell from their levels at the end of the first quarter, while 24 advanced and six were unchanged. One in five of the stocks suffered a loss of 10% or more.

By contrast, 82.5% of the stocks rose in the first quarter, during which the NASDAQ composite index for the over-the-counter market--where most Valley-area issues are traded--jumped 23.3%.

The over-the-counter composite index slipped 1.3%, to 424.67, in the second quarter. The Dow Jones average of 30 industrial stocks rose 5% in the period, to 2,418.53, and Standard & Poor's 500-stock composite index gained 4.2%, to 304.00.

The Valley-area stocks are tracked for The Times by the research firm MPACT Securities of Austin, Tex., and include issues of companies with headquarters from Camarillo to Burbank.

The second-quarter losers were led by ZZZZ Best Co., the once high-flying carpet-cleaning concern based in Reseda that last week sought bankruptcy court protection amid police allegations that the company's founder, Barry J. Minkow, 21, was linked to a drug-money laundering scheme.

Bankruptcy, Civil Filings

Minkow's lawyer, Arthur H. Barens, denied any wrongdoing by his client, who resigned as ZZZZ Best's chairman shortly before the company filed under Chapter 11 of the U.S. Bankruptcy Code to protect itself from creditors' lawsuits. Minkow also was sued for fraud by ZZZZ Best itself, and Barens said that suit was without merit.

ZZZZ Best's problems began in the second quarter amid reports of phony credit-card billings by the company, and its stock fell 61.7%, to $5.125 a share, during the period.

The stock, which hit a high of $18.375 early this year, collapsed last week as the scandal intensified, and ZZZZ Best closed Monday at 62.5 cents a share.

Other big losers during the three months ended June 30 included Verit Industries, the Sun Valley-based maker of stereo speakers, whose stock skidded 40.4%, to $6.625 a share.

Olson Industries' stock lost 32.7% of its value, to $17.50 a share. During the quarter, Sherman Oaks-based Olson announced a $2.88-million loss for the first three months of 1987, mainly because of the sale of its egg business. But the company also complained of slender profit margins in its remaining business, packaging.

Olson was one of the two Valley-area issues that were among the top losers, in percentage terms, in both the first and second quarters of 1987.

The other was Dick Clark Productions, the television and film concern based in Burbank that went public in January and closed at $6.875 a share on its first trading day. The stock dropped 5.5% during the rest of that quarter and skidded another 23%, to $5 a share, in the second quarter.

The company, which is controlled by entertainment personality Dick Clark, reported in June that its third-quarter profit dropped 63% from a year earlier.

Another stock suffering a sharp decline in the April-June quarter was Datametrics, the Chatsworth-based maker of computer peripherals, whose stock fell 31.3%, to $2.75 a share. In June, the company posted a 54% drop in second-quarter earnings.

On the upside was Bishop Graphics, the Westlake Village maker of drafting supplies for printed circuit boards, whose stock jumped form $2 to $3 a share or 50%, in the quarter. The gain came despite Bishop's announcement in May of a $38,000 loss for its second quarter ended March 31. But the stock remains well below its 52-week high of $7 a share. Also advancing was California Amplifier, a Camarillo maker of components for satellite dish antennas. The stock climbed 38%, to $2.25 a share.

American Ecology's stock rose 32.4% in the quarter, to $22.50 a share. In early May the company, a nuclear waste-disposal concern based in Agoura Hills, filed a lawsuit seeking to have its insurance carrier pay the full cost of cleaning up two contaminated dump sites. The insurance carrier contended its coverage was limited.

Other stocks with 20%-plus gains were National Technical Systems, a Calabasas-based testing and engineering services company; United Education & Software, a career schools operator based in Encino, and SFE Technologies, an electronics concern headquartered in San Fernando. American Cytogenetics, a North Hollywood-based operator of medical laboratories, gained 25% in the second quarter, to $2.50 a share, after climbing 77% in the first quarter.

VALLEY AREA STOCKS 2nd Quarter Winners

Stock Closing Price Percent June 30, 1987 Change Bishop Graphics $3.00 50.0 California Amplifier 2.25 38.0 American Ecology 22.50 32.4 National Technical 2.25 28.6 United Education 9.25 35.3 American Cytogenics 2.50 25.0 SFE Technologies 5.25 23.5 Networks Electronic 4.25 21.4

2nd Quarter Losers

Closing Price Percent Stock June 30, 1987 Change ZZZZ Best $5.13 -61.7 Verit Industries 6.63 -40.4 Olson Industries 17.50 -32.7 Datametrics 2.75 -31.3 Tekelec 5.75 -28.1 Discovery Associates 3.88 -27.9 Diodes 2.75 -26.7 Perceptronics 5.75 -25.8

Source: MPACT Securities, Austin, Tex.

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