Thanks to strong performances from its well-known companies, Maryland has provided some of the best bang for investors’ bucks over the past five years, according to a new analysis by financial technology company SmartAsset.
With prominent companies headquartered in the state providing a substantial return while moderating risk, Maryland finished in the top third of states by SmartAsset’s stock performance index.
To construct that index, the analysis measured U.S. companies with a market value greater than $50 million at the end of the first quarter of 2015. Each company received a score calculated using the Sharpe Ratio—average annual return minus the risk-free rate divided by volatility—based on its returns from the last five years.
On the strength of an average annual return of 59.15 percent since 2009, Under Armour was the highest-rated Maryland company, placing 34th nationally and 15th among “large-cap” corporations, designating companies with a market value greater than $10 billion.
Under Armour’s stock has risen by more than 1,000 percent since the start of 2010, from less than $7 per share in early January 2010 to $84.59 per share at the close of markets last week. A.J. Smith, the managing editor of SmartAsset who oversaw the study, noted that a stock’s positive performance over a five-year period is more descriptive of its general behavior than just looking at recent performance.
“This isn’t just a one-year, one-month blip on the radar. We wanted to go over a time period to get some perspective,” Smith said.
Second best in the state was Columbia-based GP Strategies Corp., which squeaked into the top 100 nationally in 99th place.
Besides Under Armour, Sparks-based McCormick & Co. (fifth in Maryland, 283rd nationally) and Hunt Valley’s Sinclair Broadcast Group, Inc. (sixth, 286th) were the other Baltimore-area companies to place in Maryland’s top 10.
Despite a lower average annual return than its peers in the top 10, McCormick received its high ranking because of its stock’s low volatility, indicating a smaller amount of risk for investors. The rankings reflected risk-adjusted return, Smith said, because looking just at annual returns can obscure the unpredictability some stocks might present.
“You just see that really high return,” she said.
Smith cautioned that the rankings aren’t predictive of future performance and the three Baltimore area-based businesses on Maryland’s list may soon be subject to increased volatility as each one has been making moves toward expansion over the past year.
Sagamore Development, Under Armour founder and CEO Kevin Plank’s real estate firm, has acquired large tracts of land in south Baltimore and Under Armour is rumored to be developing a plan for a larger campus.
McCormick acquired three smaller spice and seasoning companies, most notably barbecue sauce maker Stubb’s, in the first half of 2015.
And Sinclair launched the American Sports Network and formed an entertainment division last summer. Last month it announced partnerships with both Metro-Goldwyn-Mayer and The Tornante Co. to create first-run original programming.
The other companies in Maryland’s top 10 were the Lockheed Martin Corporation (third), Eagle Bancorp Inc. (fourth), W.R. Grace & Co. (seventh), Marriott International, Inc. (eighth), the Colfax Corporation (ninth) and United Therapeutics Corporation (10th).