IN THE WORLD of direct marketing public company investing, there is strength in few, not in numbers.
While the average price of DM service supplier stocks increased nearly 63% during the 12-month period ended March 31, more than half the issues in that sector of Gruppo, Levey & Co.’s Direct Marketing Index declined.
Even during the first three months of this year, when the broader market rebounded from an end-of-year lull, 19 out of the 37 service sector stocks lost ground.
The laggards were led by the telemarketing and printing segments, as only four out of 16 companies in those groups recorded stock price hikes. The telemarketing segment proved particularly hard on investors, with nine of the 12 companies trading for less than 60% of their year-earlier value.
This weak performance contrasts sharply with the 62.7% average gain recorded by DM suppliers for the period April 1, 1998 through March 31, 1999, and the 26.4% increase generated over the last three months. The triple-digit stock price improvements of three companies-DoubleClick, Marketing Services Group and ACI Telecentrics-accounted for most of the gains during the three-month period and created significant distortion in the overall index.
Among individual stocks, DoubleClick Inc. and Marketing Services Group turned in the strongest results over the last three months. Both companies rode the wave of momentum that’s pushing Internet issues-particularly those from firms with electronic commerce capabilities-to new heights.
Moreover, on March 10 Marketing Services Group announced a tentative deal to acquire two operating units of CMGI Inc. (one list- and computer service-related, the other Net-oriented).
MSG benefited immediately from the association with CMGI, a company that’s widely known for funding successful Internet start-ups.
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