From mining to microchips, these Arizona companies soared on stock markets in 2021 - AZCentral.com
One of the key reasons the rich-poor gap has widened in recent years reflects the ability and willingness of affluent Americans to invest in the stock market. It turns out that 2021 was another strong year for stocks, and anyone who invested in a cross-sampling of larger Arizona companies likely got wealthier because of it.
During a year when the Dow Jones Industrial Average climbed 18.7% and the Standard Poors' 500 index added 26.9%, many prominent Arizona-based companies sizzled.
Of 35 larger Arizona corporations that ended 2021 worth at least $1 billion and had full-year stock-trading results, 27 gained ground in 2021. Fifteen of those jumped at least 40%, and 10 vaulted more than 60%.
The overall strong results crossed many industry groups, including real estate, semiconductors, mining and manufacturing. Several notable Arizona-based corporations listed their shares in the stock market for the first time during 2021, though the results for these newcomers were mixed.
It was a year when a rising tide — reflecting a general economic rebound, higher profits and declining unemployment — lifted most boats. For all of 2021, the FT Wilshire 5000, the most broadly based U.S. stock index, finished the year up 22.8%.
The stock market overall added $9.5 trillion in value, its biggest year of wealth creation ever, according to Wilshire, an index provider and market researcher.
Bigger Arizona stocks stand out
Among the strong yearly results, Freeport-McMoRan vaulted 61% during 2021, according to performance data compiled by researcher Morningstar Direct. The copper-mining giant ranked as the most valuable Arizona-based corporation with a year-end stock-market capitalization, or worth, of $61 billion.
"The outlook for the copper market is extraordinarily positive," said Richard Adkerson, Freeport's chairman and CEO, in discussing the company's most recent quarterly results. Bolstered by rising copper prices, Freeport's revenue through the first nine months of 2021 was up 72% as operating income for the period swelled more than 700%. Adkerson noted the pivotal role of copper wiring in electric vehicles and other clean-energy uses.
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Freeport's rising stock price helped keep it ahead of Align Technology, a maker of orthodontics fittings that ranks as the second most valuable Arizona corporation. Align, along with the state's other largest companies — especially Microchip Technology in semiconductors and trash hauler Republic Services — also logged double-digit gains in 2021. So did On Semiconductors, which enjoyed a stock-market surge of 108%.
The Arizona Republic's analysis didn't track the performance of the roughly 150 smaller public companies in the state, the vast majority of which are penny stocks, many of them perennial money losers, some with little or no viable operations.
Gains across industries
However, one previously obscure firm appreciated enough to vault into the ranks of larger Arizona corporations — Cerberus Cyber Sentinel. Shares of the two-year-old Scottsdale cybersecurity testing, remediation and protection entity rose a blistering 851% in 2021, according to Morningstar. Cerberus Cyber's revenue improved significantly, with management citing more demand for cyber security services than there are qualified businesses able to satisfy it.
Among other larger Arizona companies, notable stock-market results for 2021 included returns exceeding 70% for Rogers Corp., Western Alliance Bancorp and Willscot Mobile Mini. Rogers supplies various engineered materials and components to industrial users. Western Alliance is the parent of Alliance Bank of Arizona and other financial companies, and Willscot Mobile Mini rents portable offices and storage containers.
The advent of these and other prominent Arizona corporations in a variety of industries attests to Arizona's economic diversification away from real estate in general and homebuilding in particular.
Low rates help housing
That said, Arizona homebuilders enjoyed a solid year too, helped by low mortgage interest rates and high demand for housing. Public companies Taylor Morrison Home and Meritage Homes had stock-price jumps of 36% and 47%, respectively, in 2021.
Meritage, for instance, logged its highest-ever quarterly gross profit margin during the year despite supply chain disruptions and escalating prices for building materials.
“The continuing demand stemmed from market conditions related to historically low interest rates and limited housing supply," said Phillippe Lord, the company's CEO. "It also resulted from homebuying activity from millennials and baby boomers, the largest groups fueling demand over the last few quarters."
Meritage expects these trends to continue in the near future, though the potential for higher interest rates could make for a "bumpy" ride, Lord said.
Housing demand also extended to manufactured homes, helping Phoenix-based Cavco Industries log record quarterly net income and revenue, with a rising backlog of orders. Cavco's stock jumped 81% in 2021.
High demand for semiconductors
Another prominent trend involved strong and rising demand for semiconductors during a year when shipments of the tiny electronic brains, found in everything from cars to appliances, were curtailed by COVID-19 global supply chain disruptions.
In addition to the doubling of ON Semiconductor shares, Microchip Technology's stock jumped 27% and Amkor Technology, which provides semiconductor packaging and testing services, was up 66%.
When the final results are in, global semiconductor sales are projected to jump 26% in 2021, plus another 9% or so in 2022. Metro Phoenix during the past year cemented its status as a leading chip-manufacturing hub, underscored by the planned $20 billion expansion in Chandler by Silicon Valley-based Intel Corp. That would represent Arizona's largest private-sector investment ever.
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Other big Arizona stock-market gainers for the year included grocery chain Sprouts Farmers Market (up 48%) and Knight-Swift Transportation (up 47%) in trucking. Meanwhile, Amerco and Carlisle Cos. each advanced 60%. Amerco is the parent of truck renter U-Haul International, while Carlisle is a diversified manufacturer of roofing materials, wiring, cables, industrial liquids, brakes and more.
Cozying up with blank-check suitors
Another notable, if controversial, theme of 2021 involved the activities of special purpose acquisition companies. SPACs raise capital from stock-market investors and use the money to buy an operating company. This enables the latter to go public, critics say, without as much effort and without the scrutiny that comes from issuing shares through an IPO or initial public offering.
Several Arizona companies that debuted in this manner over the past couple years haven't fared so well.
The list includes Opendoor Technologies, an online home seller; SmartRent, which provides software for use by property managers and renters; and truck manufacturer Nikola Corp. SmartRent's stock-market debut in August was the result of a merger with a blank-check company. Opendoor went public in a similar fashion in December 2020, as did Nikola, a maker of zero-emissions heavy trucks, earlier in 2020.
Opendoor and Nikola logged the two worst 2021 stock performances among larger Arizona public companies, tumbling 36% and 35%, respectively. SmartRent shares finished the year down roughly 20% from their August debut.
Nikola was dogged by controversy, including an investigation by the U.S. Securities and Exchange Commission that the company settled in December 2021 for $125 million. On the other hand, Nikola also delivered its first commercial trucks that month. The settlement with the SEC involved allegedly fraudulent statements made by Nikola's founder and former CEO, purportedly to push up the company's share price.
Corporate comings and goings
A few other Arizona corporations also became public companies during the year, after selling shares for the first time, merging with SPACs or being spun off.
The list includes LifeStance Health Group, which provides mental-health services, and Mister Car Wash, a chain of car-wash outlets. Both had IPOs in June 2021.
Mister Car Wash, notably, is one of the few larger Tucson-based public corporations. Nearly all of the state's other big companies are headquartered in metro Phoenix.
Realty Income, a giant REIT or real estate investment company headquartered in San Diego, completed two transactions that altered Arizona's stock market lineup. First, it acquired Vereit, a Phoenix-based REIT, removing the latter from the public-company ranks as of Nov. 1. Two weeks later, Realty Income spun off most of its office buildings into a new Phoenix company, Orion Office REIT.
Meanwhile, Align Technologies came to Arizona in a different way, by moving its headquarters from San Jose, California to Tempe, at the start of 2021. As noted, the maker of dental aligners now ranks as one of Arizona's most valuable corporations, with a year-end stock-market worth of around $52 billion.
Arizona's hottest stocks
Of larger Arizona-based companies with a stock market capitalization or worth of at least $1 billion, shares of these 10 companies had the biggest investment returns in 2021.
- Cerberus Cyber Sentinel, +851%
- On Semiconductor, +108%
- Western Alliance Bancorp, +82%
- Cavco Industries, + 81%
- Willscot Mobile Mini, +76%
- Rogers Corp., +76%
- Amkor Technology, +66%
- Freeport-McMoRan, +61%
- Amerco, +60%
- Carlisle Cos., +60%
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