2018 Stock Market Turbulence Shakes Up Many Electrical Stocks

Savvy stock market investors buckled in for the long haul occasionally must endure some wild gyrations in share prices.  But the howls of pain over the carnage on Wall Street after Mr. Market’s worst performance in the month of December since 1931 and its worst annual performance in a decade were the loudest in quite some time and could be clearly heard in the electrical market.

Many analysts attribute the drop in share prices throughout the stock market to an investment cycle nearing the end of a historic bull run and an out-of-phase overreaction to tariffs and rising interest rates. Few electrical stocks enjoyed year-over-year increases that topped the grim 2018 annual performance of the key market indices, which posted some of their poorest showings in a decade: S&P 500 (-6.2%); Dow Jones Industrial Average (-5.6%) and the NASDAQ Composite (-3.9%), according to share price data published by Yahoo Finance on Dec. 29, 2017 and Dec. 31, 2018.

As you can see in the chart, the only publicly held manufacturers of electrical equipment that topped the key market indices and showed an annual share price gain for 2018 were Cree (+15.2%); the battery and power systems manufacturer Enersys (+11.5%); Encore Wire (+3.1%); and Generac Holdings (+0.4%). Revolution Lighting Technologies (-87.7%); General Electric (-56.6%); LSI Industries (-53.9%); and Nexans (-53.9%) all saw their shares take a very painful haircut, losing half their value during 2018.

Although not as extreme as some of the annual declines seen with electrical manufacturers, some distributors of electrical, industrial and electronics also were hit with double-digit declines in their share prices: Rexel (-38.5%); Houston Wire & Cable (-29.7%); Anixter (-28.5%); and MSC Industrial Direct (-20.4%).  W.W. Grainger (+19.5%) and Genuine Parts (+1.1%) were the only distributor stocks showing growth in the price of their shares. Fastenal (-4.4%); and Kaman Corp. (-4.7%) outpaced the Dow Jones Industrial Average and S&P Index, but not the NASDAQ Composite.

Publicly held contractors were also singing a sad song about their stock prices in 2018, with no companies beating the major indices or showing growth, and three companies showing double-digit share declines: Emcor (-27%); Quanta (-23%); and MasTec (-17.1%).

All in all, executives at most publicly held electrical stocks will consider the drop in their 2018 share prices to be a bad dream. The industry as a whole will show 2018 sales through electrical distributors on a national basis increasing in the mid-single digits range, and many companies are sure to show some growth in their revenues and profits for the year. But when they publish their 2018 10Ks, their stock performance for the year will be a statistic they may forget to mention or at least bury in microscopic type deep in appendices of their 2018 annual reports.