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Letter to the Editor

April Showers

The headlines for the last several Investment Page columns I have written make me wonder “whether” I am providing “weather” reports for my readers. Upon reflection, I must conclude that reporting on financial and economic trends is not much different than predicting weather patterns. There is a saying in my hometown: “If you don’t like the weather in Cleveland, just wait a minute. It will change.” Lately, it seems to me that you could make the same comment about the Wall Street climate.

As I put pen to paper today, the Dow Jones is up 200 points from the 12,159 mark of March 15, indicated in the Stock Chart to the right. Tomorrow it may well post a 200 point decline. The wind blows hot and cold lately, but so far not as fiercely in the Stock Market as in the U.S. Plains, where tornado damage has been severe this week.

The sunny skies I see this month for our Collision Industry related stocks are shining over the major refinish paint manufacturers. Akzo Nobel, wafted by breezes suggesting acquisitions may be in the air, posted a per share stock price of nearly $73, an increase of almost 18 percent.

The Sherwin-Williams Company got a nice write-up in the BusinessWeek 50 + 25 Rankings as Number 22. Despite the drop in new housing and a slowdown in home remodeling, the company’s expansion of automotive paint operations in Latin America and hints of more acquisitions are encouraging to company CEO Christopher Connor. He has predicted up to a ten percent increase in 2007 earnings over its record $576 million in 2006.

Dark clouds still are gathered over the nation’s large auto dealerships. The United Auto Group posted an over 11 percent drop in its per share price in March. CarMax, despite reporting a 15 percent rise in earnings over last year, missed Wall Street estimates for the quarter. Car dealerships are certainly hoping that consumers will renew their love of SUV’s in time for summer vacation road trips enough to get sales figures up, despite rising gas prices at the pump.

Salvage vehicle processor Copart, Inc. reported a slightly improved Second Quarter. The handling of vehicles damaged by the 2006 Gulf hurricanes cost Copart nearly $10 million dollars during the past six months, definitely impacting the company’s bottom line. However, that costly task should be just about completed by now. I believe that the financial outlook for Copart will be sunny and warmer for the rest of 2007.

Vehicle repair facility consolidator The Boyd Group’s per share stock price in Canada showed its first positive move of 2007 this month, up over 17 percent YTD. A lot of work must be done to make this upward movement a real trend. The company’s total debt outstanding climbed to a reported $41 million Cdn as of December 2006. That is a lot of baggage.

Note that insurer St. Paul’s Travelers Companies has changed its name to The Travelers Companies, trading on the NYSE under the ticker symbol “TRV.”

That concludes my weather/stock report for this month. Stay tuned for next month’s “May Flowers?”

-Charles Baker-

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