?Amazing Bargains? (Jeff Hankins Publisher’s Note)

We should take whatever positive national news we can these days on Arkansas-related public companies.

The Nov. 13 edition of Forbes’ “Money & Investing” section made reference to an amazing six Arkansas-related stocks. And those references in an outlook piece on corporate earnings for 2001 were positive no less — welcome news for a state whose stocks generally have been beaten down during the past two years.

Alltel Corp. stock has rallied during the past four weeks after sinking with the rest of the telecommunications sector. Forbes listed the Little Rock company among 10 widely held stocks that are cheap because they are selling at cash-flow multiples ranging from 4 to 20. Alltel’s ratio was 8 at $52.50 a share, on the basis of 2001 estimates for cash flow.

Another stock in the “cash-flow bargain” category was FedEx Corp. of Memphis, which will receive heightened interest in the state with news of its planned $1.2 billion acquisition of American Freightways Corp. of Harrison. FedEx was trading at just six times estimated cash flow per share and has since risen.

Earnings surprises are always a big factor in stock prices these days, and Murphy Oil Corp. of El Dorado was listed among eight companies to watch for better-than-expected earnings-per-share performance for 2000. High oil and natural gas prices have been a boon to Murphy this year. Murphy today is well off its high mark of $69.06 a share in September as investors return to reality with oil stocks and take profits.

In the “Zoomers” category was Power-One Inc., the California-based power supply company that Stephens Inc. took public and that has been a gold mine for local investors. Despite its free-fall from $87 to $45 in the past six weeks — seemingly fueled by big insiders’ profit-taking — the stock is still up 221 percent year-to-date. Forbes declared Power-One an expensive stock at $70, but said the price was justified because of projected EPS growth of 63 percent.

Finally, in a special stock focus on trucking companies, Freightways and J.B. Hunt Transport Services Inc. of Lowell were touted because of expected profit gains in the 20 percent range. Freightways stockholders will be handsomely rewarded with a $28-per-share sale price in early 2001. J.B. Hunt remains a hit-or-miss prospect because of fuel prices and labor costs, but talk of a rollup of trucking companies is intriguing.

The bottom line is that it was nice to see some Arkansas-related stocks receive some positive national attention amid the price woes of Loislaw.com, Dillard’s Inc. and most of the state’s small-cap issues.

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Assuming the FedEx-Freightways merger is consummated, the synergies created will be another piece of the puzzle to move forward with the proposed Delta Transportation Technology Center at Mid-South Community College in West Memphis.

Glen Fenter, president of Mid-South, has developed a plan to create a state-of-the-art facility in the Delta that would provide high-tech training for the nation’s transportation industry. The state has provided seed money, but it’s a $30 million project that lacks funding.

A combination of funding from leading companies with national and state interests — J.B. Hunt, FedEx, Union Pacific Corp. and Arkansas Best Corp. come to mind — and matching federal and state government sources could make this a reality. Foundations with strong interests in the Delta should also be partners.

We have to continue to encourage and support this kind of economic development in the Delta.

(Jeff Hankins is president and publisher of Arkansas Business Publishing Group. He can be reached via e-mail at [email protected].)