April 27, 2020

The greater Rochester-area has several publicly traded companies right in our own backyard. While some names remind us of the prior lifeblood of the local economy – Xerox or Kodak – there are several companies that have replaced them as our dynamic economy continues to adapt to the times. Constellation Brands, L3 Harris and Paychex now ring familiar with many, not just through upstate New York, but around the globe.

While the impact of the Covid-19 pandemic has reshaped our lives for the last several weeks and may continue to do so for the foreseeable future, these companies demonstrate the importance of a strong leadership group’s vision for the long-term future.

Constellation Brands has retooled their product mix of late and has attempted to diversify their revenue streams. Paychex continues to find novel ways to integrate themselves and their human resources solutions into the fabric of companies throughout the country. The former Harris Corporation has created a new entity through a merger with L3 that leverages their combined strength and should create synergies across their respective target markets.

These are but a few examples of the powerful innovation taking place right here in our city. Of course, many are concerned with how the fallout from the coronavirus will impact not just some of our larger local companies, but our restaurants, bars, shops and small businesses that make this vibrant area what it is.

While there are concerns with how the temporary closure of restaurants and bars will impact Constellation Brands revenue, there is always another side to the coin. A recent Wall Street Journal article (“US Liquor Sales Come with a Pinch of Salt” 4.23.20) noted that during the week ending April 11^th, alcohol sales at grocery and convenience stores were up 26% compared to the same period in 2019. To put that in perspective, consumer staples were only up 14% during the same period.

Paychex’s exposure to smaller and medium-sized companies will prove to be vitally important in their ability to be successful not only through our current situation, but after as well. Likewise, L3 Harris will face unforeseen challenges in integrating two businesses together under these unique circumstances. Leadership will prove to be critically important as several of our local companies try to navigate these waters as deftly as possible.

While the economy and the stock market are not as connected as they once were, the share price and performance of these companies can give us an indication of how successful they are, and how successful investors think they will be during these trying times. From a year-to-date perspective, some of our local companies have shown the ability to outperform on a relative basis compared to their peers while others have struggled. The discrepancies can be large, L3 Harris is down 2%, Constellation Brands is down 16%. Avangrid, the parent company of Rochester Gas & Electric has seen shares decrease 10%, while Paychex has seen a decline of 20%. For a more comprehensive list of Rochester’s public companies’ performance, please see the chart below (MarketWatch 4.27.20).

While the near-term outlook is cloudy and earnings forecasts and guidance are hard to come by, we can find solace in the historical resilience of not only Rochester and upstate New York, but our economy and the dynamic businesses that help support it. Times like this are difficult for all of us, but the future for this country and our city remain bright and there remains great opportunity for our local companies and innovators.

Raymond DeMonte Jr.

Financial Advisor

E-Mail: rdemonte@brightonsecurities.com

Direct: 585.340.2209