Historically, North Carolina was well-known for tobacco, furniture production, and textiles. Though the Tar Heel state is still a leading textiles employer, both textiles and furniture production have been diminished by offshoring; North Carolina is one of the states most affected by job loss to other parts of the world. The state also remains a leader in tobacco production, but concerns about the loss of government subsidies have prompted many farmers to switch to other crops or to quit farming altogether.
Today, Charlotte, North Carolina, is known as the second largest financial center in the U.S., and the Raleigh-Durham area is a tech and research district. Carlisle Cos. (NYSE: CSL), Commscope Inc. (NYSE: CTV), and Red Hat Inc. (NYSE: RHT) can be found in the state.
The Forbes 2007 list of the 100 best mid cap stocks included two from North Carolina. One of those is Charlotte-based Carlisle, a manufacturer of such diverse products as brakes for heavy-duty trucks, roofing materials, food service equipment, and aerospace cabling assemblies. Carlisle appointed a new CEO in June, and in August it marked its 31st consecutive year of dividend increases. Carlisle's five-year EPS growth rate of 19.4% is better than its industry average, but less than the S&P 500. Earnings missed Wall Street estimates in the first three quarters of 2007, the company reporting 84 cents per share in the recent third quarter report, missing expectations by three cents, but 14 cents more than in the same period last year. The share price began to slide even before Carlisle trimmed its full-year guidance again in October, to open at $39.43 on Friday, down from the 52-week high of $51.57 in August.
The other North Carolina company on the Forbes list is Commscope, which is headquartered in three-time All American City Hickory, North Carolina. Commscope manufactures coaxial, fiber optic, and other high-performance cables, and has a five-year EPS growth rate of 126.6%. It has offered upside surprises in every quarter for the past three years, so it's no surprise that most of the analysts surveyed by Thomson Financial rate CTV a strong buy. Analysts expect earnings per share of 53 cents in the fourth quarter, up from 40 cents in the same period last year. The share price has trended downward since reaching a 52-week high of $63.51 in July; it opened at $46.52 on Friday. While some have expressed reservations about Commscope's acquisition of rival Andrew Corp. (NASDAQ: ANDW), others have expressed confidence.
When the Motley Fool looked for investing opportunities in North Carolina way back in the spring, it of course looked at some major banks, such as Bank of America (NYSE: BAC) and Wachovia (NYSE: WB), which have since become entangled in the credit crunch. But it also mentioned Red Hat, which dominates the market for Linux, the open-source operating system that rivals Microsoft's (NASDAQ: MSFT) Windows. Raleigh-based Red Hat's five-year EPS growth of 79.1% is well above the technology sector average. In Red Hat's second quarter FY2008 report back in September, earnings were in line with Wall Street estimates, the first time since the fourth quarter of 2005 that Red Hat had failed to beat expectations. The analysts surveyed by Thomson Financial are looking for earnings of 18 cents per share in the third quarter, continuing the recent penny-a-quarter progression. For the past six months, the analysts' consensus recommendation has been to buy Red Hat. The share price reached an all-time high of $25.25 in June, and opened Friday at $21.47. For more news on this company, see BloggingStocks' Red Hat coverage.
I do not own shares in these stocks. As always, be sure to do your homework before investing.
See also: Investing in New Jersey, Investing in Tennessee, and Investing in Oregon.
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