Cost Plus Inc. powered to a ninefold increase in its stock price last year, making the specialty retailer the best-performing -- by far -- stock in the Bay Area during 2010.
Oakland-based Cost Plus gained 851 percent during 2010, thanks to improved sales and income as well as a rosy outlook for its business. Cost Plus offers an eclectic array of furniture, rugs, baskets, ceramics, and other home decor, along with exotic foods and beverages. Its prices are modest, which may match the mood of worried consumers.
Overall, Bay Area and East Bay stocks generally matched the performance of the broad stock markets last year.
Nevertheless, the big winner was Cost Plus, which saw most of its upswing begin in November. On Nov. 18, the company posted better-than-expected results. The retailer also offered a favorable outlook for same-store sales and profits at that time.
On Nov. 19, the first trading day after the upbeat disclosures, Cost Plus zoomed 35 percent higher. The company's shares followed up with a 10.8 percent gain Nov. 22, the second trading day after the results.
The next-strongest Bay Area performance came from Redwood City-based Cardica Inc., which makes products used in coronary bypass surgery. Cardica jumped 277.6 percent in 2010.
The second-best East Bay stock was Fremont-based AXT Inc., a semiconductor company bolstered by demand for its products in the cutting-edge sectors of wireless phones, television,
The worst-performing stock in the Bay Area was Fremont-based ARYx Therapeutics Inc., whose shares plunged 91.6 percent in 2010.
ARYx makes an experimental heart medicine. The company disclosed in February that it had failed to complete a licensing agreement for the drug and would be forced to slash its staff to fewer than 20 workers.
East Bay public companies outgained those in the nine-county Bay Area during 2010.
The companies that make up the Bloomberg East Bay 50 gained 13.5 percent in 2010. East Bay companies outpaced the broad-based S&P 500, which was up 12.8 percent last year.
The Bloomberg Bay Area Index rose 11.6 percent, a surge that lagged the S&P 500 Index in 2010.
"Corporations did very well in 2010, if you look at their profits, cash flow, and how much cash they were able to amass," said Elizabeth Mihalka, president of Livermore-based Altamont Wealth Management, an investment firm. "Companies are actually doing very well."
Other investment executives think the hundreds of billions of dollars in taxpayer-funded federal efforts could have bolstered the performance of stocks during 2010.
"You had a lot of stimulus dollars from the federal government and the Federal Reserve," said Jeffrey Elfont, president of Walnut Creek-based Pinnacle Capital Management. "Those dollars were spent and some growth occurred."
This year, Congress is likely to be more inclined to chop spending and to curb stimulus programs and bailouts. So whatever stimulus occurred in 2010, if any, that boost won't materialize in 2011.
Even worse, the economy continues to face headwinds in 2011.
"Housing could be going into a double-dip downturn," Elfont said. "We need to have a clearing mechanism to resolve the problems. With housing, you just have to let the downturn occur."
Despite corporate profits, the big problem facing the economy continues to be the labor picture.
"Companies are still not hiring a lot," Mihalka said.
In addition, hiring reluctance could hold back the stock markets in 2011.
"We will see modest gains in the stock markets and a modest recovery for the economy in 2011," Mihalka said. "The rebound won't be glitzy and it won't be fun. It will be down-in-the-trenches sort of stuff."
Contact George Avalos at 925-977-8477.