Heard Off the Street: Pittsburgh-region stocks make grade in 1st half

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Not even Federal Reserve Chairman Ben Bernanke presaging the end of easy money could dent the first-half performance of the region's top performing stock.

The ExOne Co. [ticker: XONE], the North Huntingdon 3-D printer maker, produced three-digit returns over the five months since it went public in February. The rise was fueled by investor speculation that 3-D printing -- which enables the production of goods using printers that emit plastic, metals and other materials based on a digital image -- could be the next big thing.

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ExOne shares got a boost last week when Microsoft announced its Windows 8.1 operating system supports 3-D printing and that it will sell the printers in its stores.

ExOne shares hit another all-time high Friday before finishing at $61.72, up 242.9 percent from their $18 offering price.

The Post-Gazette/Bloomberg index of regional stocks rose 10.8 percent in the quarter. That lagged both the S&P 500, which jumped 12.6 percent, and the Dow Jones industrials, which climbed 13.8 percent. Of the 60 stocks in the regional index, 46 advanced in the first half while only 14 declined.

Among the advancers, 30 jumped 10 percent or more since Dec. 31.

The second-best performer, Supervalu [SVU], benefitted from a restructuring that included the sale of five of its biggest grocery store chains. The Eden Prairie, Minn., food distributor and grocery store operator supplies Shop 'n Save and Foodland stores in the Pittsburgh area and operates a distribution center in New Stanton.

Supervalu also announced plans in March to lay off about 3 percent of its workforce, always a crowd pleaser on Wall Street. Its shares closed Friday at $6.22, up 151.8 percent for the first half.

About half of rue21's [RUE] appreciation was based on the $42-per-share cash offer Apax Partners, a private equity firm, made for the Cranberry retailer's shares May 23. The shares closed the previous day at $34.12. Prior to that announcement, the run-up was fueled by analyst speculation that rue21 was a takeover target.

The sale is expected to close before the end of the year. London-based Apax was the majority owner of rue21 when the company went public in 2009 at $19 per share.

Rue21 closed Friday at $41.61, up 46.6 percent for the first half.

Wall Street's rally benefitted Federated Investors [FII], which recorded double-digit, first quarter increases in the amount of equity and fixed income assets the Downtown investment firm manages. Federated shares advanced 35.4 percent in the first half despite the possibility the company's core money market fund business could face a new round of regulations. Federated, the fourth-best performing regional stock, closed Friday at $27.40.

EQT [EQT], the fifth-best performer, benefitted from rising natural gas prices. Shares of the energy producer advanced after the company reported a 39 percent increase in first quarter earnings. EQT is in the process of selling its Equitable Gas utility arm to Peoples Natural Gas so that it can focus on natural gas drilling. In May, the company announced it would pay Chesapeake Energy about $113 million for roughly 99,000 acres in southwestern Pennsylvania's Marcellus Shale region as well as 10 horizontal Marcellus wells in Washington County.

EQT shares finished Friday at $79.38, up 34.6 percent for the first half.

Another natural gas producer, Consol Energy [CNX], did not fare as well during the quarter.

Lower coal prices, and a mid-March fire that shut down Consol's Blacksville No. 2 mine in Greene County, caused the company to report a first quarter loss of $1.6 million. Consol shares fell 15.6 percent for the quarter, finishing Friday at $27.10.

Metals producers were the worst performing stocks in the region. The biggest losers were West Chester, Ohio-based AK Steel [AKS], down 33.9 percent and U.S. Steel [X], off 26.5 percent.

Analysts forecast that Europe's ongoing economic problems and a slowdown in China will keep a lid on steel prices and could mean steel makers will generate lackluster results for the second and third quarters, typically the industry's prime time.

Last week, Jefferies analyst Luke Folta lowered his second quarter outlook for AK Steel, citing guidance the company issued a week earlier and a June 22 mechanical failure at the company's Middletown, Ohio, blast furnace. Mr. Folta expects the company to lose 38 cents per share for the quarter versus the company's forecasted loss of 33 cents to 38 cents per share.

Other metals producers losing ground in the first half were Universal Stainless & Alloy Products [USAP], down 19.8 percent; Allegheny Technologies [ATI], off 13.3 percent; and Alcoa [AA], down 9.9 percent.

On Friday, Alcoa announced it is shuttering an aluminum smelter in Fusina, Italy, because of weak pricing that has plagued the industry. In addition to the 44,000 metric tons in annual capacity the Italian closure will take off the market, Alcoa is considering idling up to another 460,000 metric tons of capacity offline. Alcoa shares closed Friday at $7.82.

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Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.


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