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INVESTMENTS- June 2003 by Claude Hammond
Periods of economic doldrums, slow economic growth and shaken investor confidence are nothing new. These times come and go. Likewise, the ways to combat these challenges are time-tested and proven: An efficient, solid business organization, combined with old-fashioned hustle, sales skills and a big dose of innovation always seem to be the solid foundation stones upon which profitable companies are built. Sizing up the market for one’s products and services can be tricky, but at times, is not difficult. Humana investors can rest assured that America’s aging Baby Boomers are going to heighten the demand for healthcare and health insurance. Notably, Humana was a real leader among Kentucky’s publicly held companies when it came to its earnings growth rate. Its robust 16.4 percent rate of earnings growth is indicative of its organizational strengths and solid, competitive service in its chosen markets. Likewise, those who have invested in Ventas, a Louisville firm that owns and leases buildings and real estate to healthcare providers, can be confident that the company’s customers are probably not going to pack up and move away any time soon. This company’s 91.8 percent earnings growth rate, greater than any other publicly held company in Kentucky, is very impressive indeed. New leadership and a continued realignment of services and products also helped the state’s trademark energy-related company, Ashland, Inc., gain a 51.4 percent earnings growth rate. With its earnings having moved into the positive percentage numbers over the last 12 months, those who bought or held onto Ashland stock throughout the past year or so now have the right to feel a bit smug, as the company faced some difficult challenges. The market for fast food and consumer trends toward “multi-branding” and “quick service” restaurants, as well as heightened competition among pizza companies, continue to pose challenges to Louisville-based Papa John’s Pizza and corporate giant YUM! Brands, parent company of Pizza Hut, Long John Silver’s, Taco Bell and other restaurants. With more than $8.1 billion in market capitalization, YUM!’s figures certainly justify the exclamation point at the end of its corporate name. Though they remain the bane of the advocates of common sense, the short-term investors have been paying particular attention to Kentucky’s small bank holding companies that aggressively take on the regional and national financial companies. These Davids have been voracious in gaining the customers of the banking Goliaths. Continuing its charge westward from the Kentucky mountains, Community Trust Bancorp’s stock has seen a big 34.4 percent jump in its one-year return. Now the largest Kentucky-based bank holding company, Community Trust is showing solid long-term strength and growth potential. Two smaller bankers, Bank of Kentucky Financial in Florence and Elizabethtown’s First Federal Financial of Kentucky, showed robust 54.3 and 45.7 percent one-year returns, respectively. Taken all together, one can see where some of the fastest-growing economic regions of the state are located: Central Kentucky (the target of Community Trust’s expansion), suburban Louisville and the Northern Kentucky-Greater Cincinnati areas where economic expansion is still the norm. In terms of market capitalization, Lexmark leads other Kentucky companies with a figure-topping over $9 billion. YUM! brands placed second in the category. Of Kentucky’s top 10 publicly held companies, four (Humana, Omnicare, Ventas and National Processing) can be considered part of the healthcare field. While healthcare related businesses play a vital role in Kentucky’s economy, the banking industry also figures huge in the state’s top 25 publicly held companies. Five bank holding companies have made it into the top 25 in terms of market capitalization. These include Community Trust Bancorp, SY Bancorp, Farmers Capital Bank Corp., and First Federal Financial Corp. While the tech sector has been down, its wisely managed corporations have definitely not been out. Lexmark’s prominence has already been noted, but Sypris Solutions, Pomeroy Computer Resources and Paducah’s CSI continue to make positive economic contributions to the Commonwealth in no uncertain terms. According to state
economic development officials, the diversity of Kentucky’s publicly
held companies continues to insulate the Commonwealth from drastic downturns
in its economy. Let’s hope that these companies continue to build
upon their strengths, so that the entire state will benefit.
With sales in more than 140
countries, Covington-based Ashland is a market leader in chemical and
thermoplastic distribution, specialty chemicals, motor oil and car-care
products, and highway construction. The company also has an equity interest
in petroleum refining and marketing. It also produces automotive products
and owns the APAC highway construction firm. Brown-Forman manufactures,
markets and distributes alcoholic beverages, including Jack Daniel’s,
Woodford Reserve, Canadian Mist and Southern Comfort liquors. The company
also produces Lenox, Dansk and Gorham tableware and giftware and Hartman
luggage. Churchill Downs Inc. is one
of the world’s leading horse racing companies. Its flagship operation,
Churchill Downs, has hosted the Kentucky Derby for more than 125 years.
Commonwealth Industries,
Inc. is one of North America’s leading producers of aluminum sheet.
Nearly 90 percent of the company’s product is sold to the construction
industry for use in siding, windows, and gutters. The company also produces
metallic and non-metallic flexible electrical conduit and prewired armored
cable. Community Trust Bancorp,
Inc., the largest Kentucky-based bank, is a holding company headquartered
in Pikeville. The company has more than 70 banking locations across
eastern and central Kentucky and in West Virginia. Farmers Capital is a multi-bank
holding company headquartered in Frankfort. The company also operates
a data processing center, a corporate leasing company and an insurance
corporation. First Federal Financial Corporation
of Kentucky is a financial services holding company and is the corporate
parent of First Federal Savings Bank of Elizabethtown. General Cable Corporation
designs, develops, manufactures, markets and distributes copper, aluminum
and fiber optic wire and cable. The company’s Communications Group
makes and sells wire and cable products for voice, data and video transmission
as well as cable for computer and telephone use. The Genlyte Group produces
commercial, industrial and residential lighting products distributed
across the United States and Canada through Genlyte Thomas Group LLC,
a joint venture with Thomas Industries in which Genlyte holds a 68 percent
interest. Humana Inc. offers a wide
range of healthcare and health insurance products. The company is one
of America’s largest publicly traded managed healthcare corporations. Formerly known as Vencor,
Kindred operates more than 60 long-term acute hospitals and approximately
285 skilled nursing facilities across the U.S. Lexmark develops, manufactures
and supplies laser, inkjet and dot matrix printers worldwide. The company
also produces a variety of imaging products and components for home
and commercial use printers. National Processing, Inc.
provides low-cost, high-volume transaction processing services and customized
processing solutions, including card transactions, check transactions
and administrative and financial functions for corporations seeking
to reduce overhead costs. NS Group manufactures steel
tubing, wire and adhesive products for energy products, special bar
quality (SBQ) products and industrial adhesives. The company’s
energy products segment makes specialized tubular steel used in the
energy industry – primarily for oil and natural gas drilling and
production. Serving facilities in 47
states, Omnicare is the nation’s largest provider of pharmacy services
to long-term care hospitals. Omnicare is also one of the world’s
largest clinical research organizations, providing drug development
services to pharmaceutical, biotechnology and medical device companies
in 29 countries . Papa John’s International
is the third largest pizza company in the U.S., with nearly 2,800 restaurants
in 49 states and 11 international markets. The company also franchises
142 Perfect Pizza restaurants in the United Kingdom. Pomeroy resells and services
computers, networking equipment and software to mid-size and large healthcare,
finance and educational organizations. The company also provides services
such as e-business application development, networking infrastructure
design, desktop management and support services. Regent owns more than 70
radio stations in small and midsized markets, offering a variety of
formats, including talk, news, sports and music. Republic Bancorp, Inc. is
the holding company for Republic Bank & Trust Company. The bank
operates in north central and central Kentucky. Steel Technologies Inc. processes
flat-rolled steel to specified close tolerances for industrial customers
who require steel of precise precise dimensions for manufacturing purposes.
S.Y. Bancorp, Inc. is
a holding company for Stock Yards Bank & Trust Company, which has
banking centers in Kentucky and Southern Indiana. Sypris Solutions, Inc.’s
products include integrated data acquisition, storage and analysis systems,
magnetic instruments, current sensors and high pressure closures. Sypris’
technical services include engineering, manufacturing, testing and calibration
capabilities. Thomas Industries, Inc. manufactures
spraying machines, blowers and air compressors as well as other tools,
hardware and specialty products. Ventas, Inc. is a real estate
company that owns or leases 45 hospitals (comprised of two acute care
hospitals and 43 long-term acute care hospitals), 220 nursing facilities
and nine personal care facilities in 37 states. YUM! Brands is one of the
world’s largest fast-food franchisers, with 33,000 quick service
restaurants in 100 countries. The company’s restaurants include
Pizza Hut, KFC ,Taco Bell, A&W and Long John Silver’s.
Claude Hammond is a
staff writer for The Lane Report. |
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Copyright 1996-2003, by Kentucky Business Online. All rights reserved. Editorial content
is copyright 2003, Lane Communications Group The Lane Report is a trademark of Lane Communications Group. All other trademarks are the property of their respective owners. |
Though
Kentucky is primarily a rural state with a relatively small population,
its diverse economy has somewhat insulated it from some of the more
dramatic economic problems experienced in the U.S. Despite a continued
downturn in the tech stocks, which just five short years ago were seen
as being the cutting edge for the nation’s economy, some of the
Commonwealth’s more traditional industries that have demonstrated
their possession of hidden strength.
Ashland
Inc. 
Brown-Forman
Corp. 
Churchill
Downs Inc.
Commonwealth
Industries
Community
Trust Bancorp 
Farmers
Capital Bank 
First
Federal Financial of Kentucky
General
Cable Corp. 
The
Genlyte Group 
Humana
Inc. 
Kindred
Healthcare, Inc.
Lexmark
International Group 
National
Processing Inc. 
NS
Group Inc. 
Omnicare
Papa
John’s International, Inc. 
Pomeroy
Computer Resources Inc.
Regent
Communications, Inc.
Republic
Bancorp, Inc. 
Steel
Technologies, Inc. 
SY
Bancorp 
Sypris
Solutions 
Thomas
Industries 
Ventas,
Inc. 
YUM!
Brands 
