Cuisine Solutions Sizzled in 2005

By Jerry Knight
Monday, January 2, 2006

Washington investors had to read the food section and restaurant reviews to find last year's top-performing local stock -- Cuisine Solutions Inc., an Alexandria company that makes gourmet frozen food.

Don't think for a minute that gourmet frozen food is an oxymoron. A two-pound package of Cuisine Solutions Kobe beef goes for $99.95 at Costco -- though it doesn't sell as well as the company's lamb shanks in veal sauce at four servings for about $18.

More important than the price of the products, however, is the price of Cuisine Solutions stock, which ended the year at $9 a share after gaining 131 percent over the past 12 months.

The stock peaked at $11.22 a couple of days before Christmas, then retreated sharply as investors who had doubled their money in less than a year cashed in.

Such sharp drops are one of the risks of investing in the small companies that often record the biggest gains in the yearly performance rankings of local stocks.

Cuisine Solutions stock fell 13 percent last Thursday on trading volume of just 87,500 shares. You could trade that many shares of Lockheed Martin Corp. or Fannie Mae at the touch of a button without budging the price.

But 2005 was not a year to bet on big names or to go with the flow by investing in index funds that mirror overall market trends.

The Standard & Poor's 500-stock index, regarded by Wall Street professionals as the best measure of the market, advanced just 3 percent last year. The Nasdaq Stock Market composite index gained 1.4 percent in 12 months and the Dow Jones industrial average fell 0.6 percent.

Even compared with those paltry performances, it was not a very good year for investors in companies based in the District, Maryland and Virginia.

The Washington Post-Bloomberg regional stock index fell 3 percent. It was local stocks' worst performance since 2000, when the stock market crashed.

Many of the region's biggest and best-known companies were down for the year. Freddie Mac stock fell 11 percent, Fannie Mae dropped 31 percent, The Washington Post Co. lost 22 percent and Gannett Co. fell 26 percent.

With a bear market for media companies and mortgage-makers, and a mediocre market for most other stocks, Washington investors had to work hard to sniff out big gains.

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