In the three years the Business Journal has published the List of Fastest Growing Public Companies in Los Angeles, only five companies have had the staying power to appear each time.
The companies offer a potpourri of products and services: food, anti-aging cream, semiconductors, optical lenses, and loans to people with poor credit ratings. The youngest of the five was incorporated in 1991 and the oldest in 1947.
In short, not much in common.
Koo Koo Roo Inc., purveyor of skinless chicken, has shown the highest consistent growth. Incorporated in 1991, the company has grown from two L.A.-area outlets into a public company with more than 35 restaurants. The company aims to open one restaurant a week through the end of 1998, said Robert Kautz, Koo Koo Roo’s president.
“We’ve built an infrastructure now where we can really cookie-cutter new restaurants,” Kautz said. “We expect 100 percent growth in terms of revenues and numbers of restaurants this and next year, just like we’ve had in the past two years.”
No. 16-ranked Koo Koo Roo’s revenues grew 233 percent in 1996, hitting $39.8 million. That follows a 117.5 percent jump in 1995 and 93.7 percent growth in 1994.
The company with the highest rate of growth is Woodland Hills-based Incomnet Inc., which manufactures optical lenses through its Fast Cast Inc. subsidiary. Another subsidiary, National Telephone & Communications, resells long distance telephone services to small businesses.
Most of Incomnet’s growth, as well as more than 90 percent of its revenues, are being generated by National Telephone. Last week, Incomnet’s stock was trading at about $5 a share, only about 50 cents below its 52-week high.
The other technology-related company on the List three years in a row is International Rectifier Corp. of El Segundo, which makes semiconductors.
“The reason for International Rectifier’s continued growth is very simple,” said Michael Gumport, an analyst at Lehman Brothers. “They own patents on the basic technology for a specialized and highly used type of semiconductor.”
The semiconductors are used in a broad variety of devices, including computers, fax machines, anti-lock brakes, video cameras and automotive airbag activators.
“We are the leader in this field partly because of the patent portfolio,” said spokeswoman Shelley Wagers. “We are also the leader because of our aggressive investing in manufacturing capacities and sales and marketing.”
In 1996, International Rectifier enjoyed 34.4 percent growth, earning it the No. 74 spot. That’s off a bit from the 36 percent growth it posted on last year’s List.
Some companies, while showing impressive growth in recent years, have been beaten up of late.
For example, Chantal Pharmaceutical Corp. was the fastest-growing L.A. company on the 1995 List, posting a 2,255.8 percent growth rate with revenues of $3.9 million based largely on sales of its anti-wrinkle cream, Ethocyn.
On last year’s List, Chantal’s growth rate was even higher, at 4,003.4 percent, but it was edged out of the No. 1 spot by All-Comm Media Corp. of Culver City.
On this year’s List, though, Chantal weighs in at No. 32 with a more modest 82 percent growth in revenues.
At one time, Ethocyn was being touted by Tony Curtis and other stars for its purported youth-enhancing properties. However in early 1996, a series of events led to a sharp drop in its stock prices. These included market jitters over a new and competing product from Johnson and Johnson and an unflattering article in Barron’s magazine. The article questioned the effectiveness Ethocyn and the validity of the company’s sales figures.
Last week, Chantal’s stock was trading at about $1 a share.
Another company whose market image has been battered recently is Aames Financial Corp. The company, which is a sub-prime lender that makes loans at relatively high interest rates, had revenue growth last year of about 133 percent (ranked No. 22).
Problems began last October, however, in the sub-prime lender industry, and the company’s stock dove from a high of more than $40 to below $11 in May. It was trading at about $18 last week.
Analysts say the tumble reflected financial scandals last year that centered on other sub-prime lenders and which made investors wary of companies like Aames.
In April, Steven Eisman, an analyst with Oppenheimer & Co. Inc., wrote that, “from a capital perspective, Aames is in excellent shape. However, it is somewhat beholden to the correspondent market.”