The fickle finger of fashion is pointing toward French designer jeans, making a small Baltimore clothing company the hottest investment in Maryland, Virginia or the District so far this year.
I.C. Isaacs & Co. never puts its own name on the jeans it makes, or the coordinated jackets, tops and other sportswear.
The clothes carry the Marithe and Francois Girbaud brand, which the husband and wife designers license to Isaacs for the American market.
Since I.C. Isaacs brought in a prominent fashion executive to run the company, business has gotten much better, profits have returned and the company's stock has climbed to its highest level in more than five years.
The stock was the best performer in the region for third quarter and also is the biggest gainer for the year-to-date.
I.C. Isaacs shares nearly doubled from $1.18 a share to $3.30 last quarter. The stock more than tripled for the first nine months of 2004.
The huge gain in the stock reflects the results I.C. Isaacs has been turning in. Second-quarter sales grew to $28.2 million from $16.2 million, and profits nearly tripled to $1.3 million from $471,000.
Credit for the turnaround goes to chief executive Peter J. Rizzo, who in July also became chairman. Before joining I.C. Isaacs, Rizzo was president of Bergdorf Goodman, president of the retail division of Polo Ralph Lauren and vice president of Barney's New York.
I.C. Isaacs shares trade on the over-the-counter bulletin board -- the market for companies too small or too weak financially to qualify for the Nasdaq Stock Market.
Bulletin board stocks often take big jumps after they generate buzz among the small-time speculators who talk up their investments in Internet chat rooms. But I.C. Isaacs stock has been making steady gains this year without such hype. If anybody is talking up I.C. Isaacs, it's probably in the coffee shops of New York's garment district, where Rizzo's name has helped increase the visibility of the Girbaud brand.
In fact, little companies such as I.C. Isaacs dominated the list of the region's best performers for the third quarter, when local stocks handily outperformed the overall market. The Washington Post-Bloomberg Regional Stock Index was up 3.5 percent for the quarter while the Standard & Poor's 500-stock index fell 2.3 percent, the Dow Jones industrial average fell 3.4 percent and the Nasdaq Stock Market composite index fell 7.4 percent.
Other little companies that did well in the third quarter: Convera Corp., a Vienna maker of multimedia search software, rose 60 percent; TVI Corp., a Glenn Dale maker of emergency shelters, rose 41 percent; and Sutron Corp., a Sterling environmental monitoring service, rose 28 percent.
Among the bigger and better-known companies, Rouse Co. of Columbia, Black & Decker Corp. of Towson, and W. R. Grace & Co. of Columbia are the big winners for the quarter.
With little upward momentum in the market, several of the quarter's top local stocks were one-day wonders -- stocks that had single-day gains big enough to give them a great quarter.
Rouse and DigitalNet Holdings Inc. of Herndon got their big day when they accepted buyout offers. Black & Decker did it by announcing a big acquisition. The stock of CACI International Inc. of Arlington rocketed after it turned in a strong quarter and a news report suggested the company might be in play. Orbimage Inc. of Dulles got its boost from a huge spy-in-the-sky contract.
The 20 biggest gainers for the quarter are listed in the accompanying chart. Complete rankings of the third-quarter performance of all local stocks are at washingtonpost.com/business.
Here's a closer look at some of the strong performers:
Grace is slowly digging itself out of the bankruptcy it fell into because of its now-defunct asbestos business. Grace stock, which had traded in the $2 to $4 range for years, ended the quarter at $9.45, up 52 percent as Congress completed work on legislation to pay for asbestos injuries. Senate Democrats and Republicans have agreed to set up a $140 billion trust fund -- financed by asbestos companies and their insurers -- but have not come to terms on limiting asbestos lawsuit. Though the measure has not passed, agreement on the trust fund was enough to lift the stocks of Grace and others asbestos companies.
Black & Decker stock had its biggest single-day jump ever on July 19 after the toolmaker agreed to pay $774 million to buy Pentair Inc., a Minnesota rival whose brands include Delta and Porter-Cable. Black & Decker stock jumped from about $60 a share to $67 that day and ended the quarter at $77.44, up 25 percent.
Rouse is being sold to General Growth Properties for $7.2 billion. After that $67.50 a share offer was made on Aug. 20, Rouse stock jumped $16 a share to about $67. The real estate company's stock is now holding just below the buyout price, a discount that reflects the risk, however slight, that the merger will not go through on time. Rouse ranks eighth among the local stocks for the quarter, with a 41 percent advance.
A buyout also put DigitalNet on the list in the No. 6 spot, up 49 percent for the quarter. DigitalNet is being acquired by BAE Systems PLC, Britain's largest defense contractor, in a deal valued at about $600 million. BAE is paying $30.25 a share in cash for DigitalNet, which builds and operates high-security computer and communications systems for the government. BAE earlier bought a division of Lockheed Martin and is said to be shopping for other defense acquisitions.
A defense contractor that would make a prime, if costly, acquisition is CACI, which managed to produce the 13th-best performance for the quarter. CACI is best known as the Pentagon's favorite information technology contractor, but the Defense Department also used one of its contracts to hire interrogators to question Iraqi prisoners at Abu Ghraib. After the scandal broke, critics led by California Treasurer Phil Angelides urged pension funds to dump CACI stock. Revelations that at least one CACI worker was under investigation quickly knocked 12 percent off the shares. No charges have been filed.
CACI investors made up for that loss in a single day after Bloomberg News suggested on Aug. 20 that the firm might be interested in attracting a buyer. In an interview, Chairman Jack London told Bloomberg that company executives "pay a lot of attention, so to speak, to keeping our skirts clean so we're constantly attractive." But London added, "It's not our goal to go out and find a buyer." And a company spokeswoman said later London was merely acknowledging the duty of any chief executive to maximize value for shareholders.
It also helped that CACI had just reported quarterly profits of 69 cents a share, blowing past the 58 cents estimated by analysts.
Orbimage, a spinoff of Dulles-based Orbital Sciences Corp., scored its big gain on the last day of the quarter when the National Geospatial-Intelligence Agency announced a $500 million, four-year contract. The agency, which runs the nation's spy satellite network, is outsourcing some work, starting with the contract for Orbimage to build and launch a photo reconnaissance satellite.
Orbimage stock blasted off like a rocket, rising 70 percent to $13.50 a share Sept. 30. The stock traded as high as almost $17 but has settled back to about $14.50 since the quarter's end.
Why was one contract enough to double the company's stock price? Because Orbimage's revenue has been running in the $2 million a quarter range -- which makes a $500 million, four-year contract a very big deal.