by Joseph DiStefano, Philadelphia Inquirer
The Standard & Poor’s 500 index of big-company stocks jumped nearly 20 percent in 2017 — its ninth annual rise in a row — as if to welcome President Trump.
That was the S&P’s biggest yearly gain since it went up 32 percent in 2013 and 26 percent in 2009, as if to celebrate the election wins of Barack Obama.
That’s not predictive science, it’s backward-looking desktop analytics, available free to anyone who can afford internet service and manage the free stock-tracker services.
So much data, so little insight. No wonder Americans are investing $1 billion a day with Malvern-based Vanguard Group, the index-fund leader. Whoever’s president, Vanguard is cheerfully pessimistic about the market’s ability to keep rising at double-digit rates. You aren’t likely to beat the market, Vanguard points out, so buy our funds, which charge low fees, and you get to keep more.
All right. But there are still optimists out there who bet that advances in medical and communications technology will deliver higher profits and faster-rising shares than the familiar corporate giants.
In mid-September, I listed four Philadelphia-area health and tech companies whose shares had been beating the market. On Friday three of the four closed the year with fat gains for insiders and other investors:
Universal Display (OLED), the Princeton-based company that supplies “organic” light-emitting diodes for Apple and Google smartphones, more than tripled in value during 2017, closing Friday at $172.75.
Teleflex (TFX), the Wayne-based medical-device company that bet big on the UroLift urinary-tract implant for patients with enlarged prostates, rose more than 50 percent, closing Friday at $249.47.
And Tabula Rasa HealthCare (TRHC), the Moorestown medication-software company nurtured by veteran executives from Children’s Hospital of Philadelphia and backed by locally based Rittenhouse Ventures, more than doubled, to $28.30.
Tabula Rasa sold more stock this fall and paid off its debt, noted analyst Matthew Gillmor in a recent report to clients of Baird & Co. He sees “meaningful upside potential” from its recent acquisitions of other firms that help doctors, drugmakers, and patients track drug use.
And then again, you could have sold each of those stocks the day after Thanksgiving and made a lot more money for the year: Universal Display, Teleflex, and Tabula Rasa slipped significantly in December. Yet the broad indexes continued to rise, as the market “narrowed” toward large-cap, blue-chip stocks that kept going up, writes Jim Meyer, chief investment officer at Tower Bridge Advisors in West Conshohocken. Meyer sees this as an annual event, not necessarily a warning that stocks are higher than the times justify.
Dan Wantrobski, research boss at Janney Montgomery Scott, the largest brokerage based in Philadelphia, is another optimist. “Back to Ben Franklin’s time,” the market tends to rise as the population rises from baby booms or immigration. So he’s bullish: “There are maybe 90 million millennial children of the baby boomers, vs. 80 million baby boomers,” he told me. After nine years of economic recovery and expansion, “this group is getting integrated into the workforce. They are more likely to work [than middle-aged people]…. They will be consumers, investors, savers. A new generation looking for work, building houses, trying to buy cars. Disruptive. Very bullish. Stocks tend to thrive off that.” Plus, thanks to Obama capital rules and Trump tax cuts, banks have extra money to lend to keep the party going.
All is not roses, as Chadds Ford investor Foster Friess used to remind clients with his quarterly list of losers: The fourth stock I noted back in September, Wilmington-based Incyte (INCY), the cancer- and pain-fighting drug developer, ended the year down about 5 percent from the end of last year, and 20 percent from its late-spring high. Spark Therapeutics (ONCE) another Children’s Hospital-tech-based company whose price rocketed from $51 in January to a high of $91 in March, closed back around $52 on Friday.
Fun to watch, and to track. But this newspaper isn’t in the stock-picking business. Good luck with your picks.