Clearfield Inc. Ltd., the Brooklyn Park-based fiber optic company that started as a subsidiary in 2008, has never had an unprofitable year. Nor has it ever been a year like 2021.
Revenue increased 50% to $140 million in the fiscal year ending in September. Expenses didn’t rise nearly as much, and her net profit doubled to just over $20 million.
Investors have not only seen the performance in Clearfield, but with broadband heading into single homes, there is more opportunity ahead.
Clearfield’s share price more than tripled from $24 to $84.42 at the end of Friday, pushing its market value over $1 billion and making it the second-best performer of 77 major public companies in Minnesota in 2021.
“We’ve seen an explosion of demand. We’ve done it,” Sherry Beanque, the company’s co-founder and CEO, said last week. “We’re going to spread as much fiber in the next five years as the last 20 years… We’re as worth $80 as we were at a fraction of that.”
In a year in which the S&P 500 generated a total return of about 27%, the Piper Sandler Minnesota index was up 23%. That difference is shaped by some of the big names in Minnesota that have outperformed the S&P including Best Buy, which is down about 5% in 2021, and Medtronic, whose shares are down more than 10%.
Best performing company in Minnesota? Recently shipped Brooklyn Park-based Insignia Systems is a provider of digital and in-store advertising screens for consumer goods companies. The company announced that it was exploring strategic alternatives on December 6, and since then speculators have raised the stakes. Its share price has nearly tripled during the year with all the growth in the past weeks.
The Russell 2000 Index, a broader survey of stocks with smaller capitalizations of $2 billion or less, jumped 14% in 2021.
Broad market indices like the S&P 500 set new records multiple times in 2021, as stock values soared as a result of strong corporate earnings, lower interest rates, and the lingering effects of government stimulus originally intended to weather the coronavirus pandemic.
Three of the four public companies in Minnesota have seen their stock prices rise.
Some of the big gainers are North Oil and Gas, which more than doubled in value in 2021. The Minnetonka-based company’s performance reflects the revival of the oil and gas sector that led the S&P 500 index with a 49% increase in value.
BBQ Holdings, parent company of Famous Dave brewers and brewers, Granite City, increased its value 230% last year, topping $15 per share; Albeit well below its all-time high of $30 in 2015. Minnetonka recently acquired six California restaurants Tahoe Joe’s for $4.2 million in cash, following its $13.5 million acquisition in June of Village Inn and Bakers Square restaurants.
Minneapolis-based investment bank Piper Sandler, which reflects hot mergers and public offering markets, is up 87% last year. Ameriprise Financial, the financial planning and asset management giant in Minneapolis, saw its shares rise 59%.
Vista Outdoor, owner of Anoka-based Federal Ammunition, rose 91% last year as it diversified through acquisitions under CEO Chris Metz, who moved the company from Utah to Minnesota in 2019. Vista has acquired Outdoor last month on Stone Glacier, a Montana-based apparel and equipment maker. It is Vista’s seventh acquisition in 16 months.
On the other side of the performance chart, Minneapolis-based Regis Corp., a hair salon company in the midst of a turnaround, was the worst performing Minnesota stock this year, down more than 81%.
The company is still dealing with the effects of the COVID-19 pandemic, first with the mandatory closure of salons in 2020 and a designer shortage in 2021 affecting volume. The transition to the all-privilege model is basically completed. New leadership is coming. Regis CEO Felipe Athayde resigned on December 23 after just over 15 months in the job.
Bright Health, which is run by United HealthGroup veterans that raised $924 million in an initial public offering in Minnesota in June, and then another $750 million more recently, has seen its shares drop nearly 80% since the IPO.
An investment unit of giant Cigna has made the latest investment. Kevin Fishbeck, an analyst at Bank of America, said in December that the deal immediately solves Bright Health’s liquidity needs. He estimated that the health insurance company would run out of cash by the end of 2022.
Bright Health has plans for further growth.
So is Clearfield.
With about 250 employees, it plans to add another 150 as the list of municipal businesses, facilities and customers grows. The company announced in 2021 that it would double the size of its Brooklyn Park research center, manufacturing and distribution center and headquarters. It will help in a major expansion of a Mexican manufacturing company that depends on it.
Needham & Co analyst Ryan Koontz began covering Clearfield in December with a “buy” rating and a 12-month target price of $92 per share, above the consensus estimate of $90.
“We view ‘CLFD’ as a relatively undiscovered story, already benefiting from increased investment in rural broadband infrastructure, with the vast majority yet to be deployed,” Koontz said in a report. “The clear leader in the [smaller] Markets where we estimate they have a 50% surplus share with minimal competition.”