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Letter to the Editor
This article originally appeared in the January 2004 Issue of INSIGHT
Key Notes and Indications
It is looking like a very good year for most corporations with a tie to the Collision Industry.
This is in direct contrast to last year, when gains in stock values were few and far between.
This year, in contrast, 82 percent of the securities covered were up for the year, and some with outstanding gains.
Of those with the closest direct ties to the collision repair business, Keystone led the pack with an almost 60 percent gain in value over the year. Keystone's growth in sales came from a combination of modest same store sales increases in crash parts plus expansion of its paint and wheel sales coupled with acquisitions.
For 2004 Keystone, as well as other aftermarket suppliers, would get a significant uplift if in fact the State Farm - Avery decision were to be reversed.
Other major winners in 2003 were the insurers, with Progressive leading the pack with a 64 percent gain in stock value for the year.
Progressive has gained significant market share while at the same time controlling costs to achieve a combined ratio in the high 80s. Another insurer we cover, Tokio Marine, also showed a significant stock gain of almost 70 percent.
On a percentage of gain basis, the biggest winner of the year was United Auto Group, a part of the Penske empire.
As covered in an earlier issue of INSIGHT, the UAG body shop in Phoenix (Scottsdale Paint and Body) is not only one of the largest (155,000 sq. ft.) in the U.S., but also one of the best equipped and best laid out shops I have seen.
At the other end of the growth spectrum, we have Insurance Auto Auctions with a 22 percent drop in value for the year, CCC with a six percent drop, and Earl Scheib with an eight percent drop.
Our INSIGHT Fund did rather well, with an almost 20 percent gain in 2003. It would have been higher but for the drop in FinishMaster prior to its going private, coupled with the drop in CCC stock.
Looking at our fund for 2004, we are dropping CCC and DuPont, and FinishMaster and adding LKQ and UAG. The INSIGHT Fund for 2004 will include PPG, Keystone, 3M, Travelers, Progressive, Sherwin-Williams, and Boyd, along with LKQ and UAG.
Interestingly, over the five years that we have been following our virtual fund the stock with the greatest overall gain has been Sherwin-Williams, with an overall growth of over 100 percent. The poorest performer has been DuPont, with an overall loss of about 33 percent.
All in all, the Market ended 2003 on a pleasant note, and with 2004 a presidential election year, the economy should chug along rather nicely.
I wish you and yours a New Year filled with happiness and prosperity!
-Charles Baker-
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