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Wall Street rebounding after tumultuous two weeks

Now that Wall Street has had a couple of weeks to adjust, stocks are rebounding and many of Mississippi’s publicly traded companies are faring well.

“The economic outlook in Mississippi looks a little brighter than some other places because of Nissan coming and utility companies building power plants,” said Ryan Medo, bank analyst with Sterne Agee & Leach Inc. “We’re positive on Mississippi as a whole.”

At the close of trading Sept. 10, the day before the terrorist attacks, Tupelo-based BancorpSouth (NYSE: BXS) and Jackson-based Trustmark (Nasdaq: TRMK) were trading at $15.70 and $21.50 a share, respectively. At the close of the first day of trading after the attacks, both stocks were down — BXS ended at $14.50 and TRMK ended at $21.20. On Sept. 28, two weeks after trading resumed, BXS and TRMK were trading at $15.40 and $22.38, respectively.

“Mississippi bank stocks are holding their own fairly well,” said Nancy L. Anderson, CFP, president of New Perspectives Inc. in Clinton.

Bank stocks mirror the economy in which they operate, Medo said.

“That includes the local and the national economy,” he said. “The next two or three years should be good ones for the economy in Mississippi with Nissan and the tertiary investments that come with them.”

Brad Sipes, senior vice president of Sterne Agee, said the market had a substantial rally the beginning of the second week and was able to maintain gains and provide stability. “It’s operated almost flawlessly and that’s what we want,” Sipes said. “Stability is coming back and that’s a good sign for the long term.”

Darrin M. Webb, Ph.D., economist for the Mississippi Institutions of Higher Learning Center for Policy Research and Planning, said, “While it is clear that the events surrounding Sept. 11 will have a negative impact on the economy, it is not clear the extent of that impact. Fed Chairman Alan Greenspan has indicated the recent events will have short-term not long-term impacts on the U.S. economy. His argument in essence is that the fundamentals of the economy prior to Sept. 11 were positive, and it is on these fundamentals that the long-term economy will depend.”

Some analysts say that even after posting big losses, many stocks are still overvalued.

“Relatively speaking, you could make a case for that because some P.E.s may be a little high, but there are sectors that look very attractive and are good buys and you should look at the fundamentals,” Sipes said.

Ram Kasargod, CFA, a senior analyst with Morgan Keegan in Memphis, said telecommunications stock will probably rise and travel-related stocks will likely drop.

“There was a big spike in telecommunications usage when it happened and that is going to be positive,” he said. “There’s also a lot of consolidation going on in the telecom market. Many of the start-up companies that got funded a few years ago are going broke, so the level of competition in the industry is going down. Part of it is the economy and part is that investors are not putting a lot of money into the sector right now.”

Clinton-based WorldCom Inc. (Nasdaq: WCOM) is one of few stocks that did better in the stock market after the terrorist attacks. WCOM closed at $12.92 a share on Sept. 10, dropped to $12.18 a share on Sept. 17 and rallied to $15.04 on Sept. 28.

“WorldCom is actually benefiting,” said Anderson. “Telecom, in general, is seeing a resurgence. Today (Sept. 26), an analyst issued a ‘strong buy’ on WorldCom. The thought is that we’ll do more teleconferencing and less traveling in days to come. Also, this catastrophe pointed out the importance of the Internet and wireless. The boost is much needed.”

Companies that survived the telecom meltdown last year are emerging stronger, Kasargod said.

“In WorldCom’s case, earlier this year they did a huge bond financing to raise capital,” he said. “Now they’re in a position to acquire telecom assets that are in bankruptcy so they can increase their network at a much lower price. At the same time, customers of the companies going bankrupt are going to look for more stable companies with whom to do business. I believe that is the perception of investors right now and that’s positively impacting WorldCom.”

WorldCom has already taken advantage of bankruptcy bargains. Last month, the U.S. Bankruptcy Court gave the mega telecom firm approval to acquire the assets of Key Rhythms, a DSL service provider.

Nationally, shares of companies with security-based operations, such as eye imprint and voice recognition, have shot up in the stock market.

“Investors are investing in those and security companies that provide measures for airports and other facilities,” Kasargod said.

Stock in Jackson-based EastGroup Properties Inc. (NYSE: EGP) and Parkway Properties (NYSE:PKY), both real estate investment trusts (REITs) headed by Leland Speed, have increased in value, primarily because the dividend yield is more than 8% and the companies are generally unaffected by overseas events.

EGP closed at $21.75 per share Sept. 10, slipped to $20.75 Sept. 17, and closed at $21.90 on Sept. 28. PKY closed at $32.18 per share Sept. 10, dropped to $30.55 Sept. 17 and climbed to $32.50 on Sept. 28.

Hancock Holding Co. (Nasdaq: HBHC) of Tupelo closed at $41 on Sept. 10, dropped to $40.45 on Sept. 17, and settled at $40.58 on Sept. 28.

Scott-based Delta and Pine Land Co. (NYSE: DLP) hasn’t fared as well. DLP closed at $19.50 on Sept. 10, $19.25 on Sept. 17 and closed at $16.98 on Sept. 28.

Contact MBJ contributing writer Lynne Wilbanks Jeter at lwjeter@yahoo.com or (601) 853-3967.


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