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Stock Performance

What Went Right?

1Jun

Corporations couldn't stop the price-drop virus that infected Nasdaq over the past year, but a handful of health-care companies managed to inoculate themselves. The quintet, plus three apparel companies, a bakery chain, and an education firm, were the top 10 stock performers in the United States from March 2000 to April 2001, according to New York­based Thomson Financial/First Call.


As the technology sector imploded, sending Nasdaq down 61 percent, dialysis provider Total Renal Care Holdings, of Torrence, Calif., reinvented itself as DaVita Inc. and saw its stock price soar 526 percent. The company stock had been battered by an aggressive acquisition strategy and class-action lawsuits related to billing practices. The cure: DaVita revamped its executive team, restructured debt, focused on cash flow, and sold noncore businesses. "We started with a company that was very sick," says CFO Rich Whitney, who credits the company's 12,000 employees with a sweeping turnaround that sent the stock price from below $3 to more than $16 per share.


Other top-10 companies also reworked business strategies to outperform the pack. Women's clothing retailer Brauns Fashions, of Plymouth, Minn., changed its name to Christopher & Banks Corp. in July 1999 to build a brand and promote a more upscale image, which helped push its stock price from about $7 to $34.50. Likewise, The J. Jill Group, of Canton, Mass., folded its print catalog business to focus on retail and online sales. The market responded by sending its stock up more than 400 percent.


With an eye on expansion, Panera Bread Co., of Richmond Heights, Mo., increased its eponymous bakery-café chain to 262 retail outlets that serve up signature sourdough and other "baked fresh daily" treats in 27 states. With a stock price that has climbed 362 percent in one year, Panera--formerly Au Bon Pain--plans to double its outlet count over the next few years. "We think our cafés and expansion plans hit the market at just the right time," says CFO William Moreton. He also believes that declining real estate and labor costs from a softening economy will fuel expansion plans.


Corinthian Colleges Inc., of Santa Ana, Calif., a growing network of for-profit colleges, has already realized benefits from the softening economy. "Our industry is countercyclical," explains CFO Dennis Beal. "As the economy weakens, more people tend to seek education." Corinthian passed the shareholder test with flying colors: its stock price is up 300 percent over last year.


Investors also sought, and rewarded, companies with strong top-line growth, a fresh business focus, and a stable outlook. Among them was disease-management company American Healthways Inc., of Nashville, which signed contracts with Cigna and Blue Cross last year. CFO Henry Herr says that with American Healthways's stock hovering at $17 per share, the company's next venture will be an Internet-based health- assessment program. So far, no word on whether it can treat the ailing Internet economy. -- Tama Miyake



CFO SPROUTS


The Treasury Dept. and blue chips like Merrill Lynch and Kodak are backing a JumpStart Coalition financial literacy program for middle- school kids that includes "Math & Taxes."



BEAR BUSTERS



Top 10 performing stocks.

RankCompanyPrice 3/00 Price 4/01% Change
1DaVita2.6916.84526
2Christopher & Banks6.7234.5413
3The J. Jill Group3.6318.3404
4Panera Bread6.530362
5American Healthways3.8117.02347
Advanced PCS12.5655.36341
7Skechers USA6.0626.4336
8TARO Pharmaceuticals11.5647.45311
9Corinthian Colleges5.3138.08300
10Sterile Recover5.3120.5286

SOURCE: THOMSON FINANCIAL/FIRST CALL

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