The Best of Stocks, the Worst of Stocks

The beginning of a new year, however arbitrary a point in time, can be a good time to re-evaluate your portfolio. This is particularly true for those of you who do your own stock research. How have your stocks performed in the past year? And what were the factors that moved their share prices up—or down—during the year?

We took a look at all the publicly traded Minnesota companies, and (given this publication’s deadlines), ranked them through September 30, highest to lowest. So here are the best and worst of Minnesota stocks, the 2009 edition.

Best: Life Time Fitness
(NYSE: LTM)

Chanhassen-based Life Time Fitness’s stock price during the period was up 117 percent, to $20.85. This result is likely to surprise a lot of people. After all, the stock plummeted by more than 70 percent in 2008. What changed in 2009? Like many companies during this year’s market rally, Life Time benefited from low investor expectations.

Case in point: LTM hit an all-time low of $7 in March, before the company’s first-quarter earnings. In the midst of rising unemployment and a horrible economy, investors were skeptical that Life Time could grow memberships. But lo and behold, memberships grew 15 percent in the first quarter, the most since 2007. An aggressive marketing campaign featuring a price cut, no initiation fees, and no payments for three months was enough to get new folks into the gym.

At the same time, the company began dramatically cutting costs. After opening 11 new clubs in 2008, Life Time management opened only three this year. The result: The company was able to increase full-year profit forecasts, sending the stock skyrocketing.

The outlook now is a little cloudier. Even though Life Time’s stock performance ranked first through September 30, new memberships increased only 6 percent in the third quarter, and the membership attrition rate jumped to 9.8 percent.

Clearly, the terrible employment picture is taking its toll. Life Time has surpassed expectations this year, but until there is a meaningful jobs recovery, this stock looks a little flabby. Cost cutting and price reductions have been common corporate reactions to the recession. But those are usually only short-term solutions, so look for revenue growth to spot the next winner.