The "old economy" is back.

In contrast to the technology slant of Georgia's top-performing companies in the late 1990s — and even last year's domination by financial services firms — the top of the 2004 edition of the Georgia 100 is a lesson in getting back to low-tech basics.

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The No. 1 company, Georgia Gulf, manufactures specialty chemicals and moved up 78 places from its rank on last year's Georgia 100 list, which was based on fiscal 2003 operations.

It's also a three-peat firm, having ranked in the Georgia 100 Top 10 in 2003 and 1996. And its latest success reflects the trend last year toward cyclical stocks — companies that outperform the market during economic expansions.

Also in the Top 10 are RPC, a petroleum services company; Spectrum Brands (formerly Rayovac), a manufacturer of batteries and other consumer products; National Vision, which retails eyewear products; Marine Products, a manufacturer of leisure and powerboats; Beazer Homes USA, which builds houses in the South and other regions; World Air Holdings, a charter or contract air carrier, and Aaron Rents, which sells and rents home and office furniture.

The companies that come closest to high-tech are Witness Systems, which provides software for call-center communications, and Intelligent Systems, which among other things incubates new high-tech companies.

A solid year

Fueled by the explosive growth of those Top 10 companies, Georgia's publicly traded firms had a solid year — even beating the S&P 500.

The Bloomberg News index of Georgia stocks advanced 17.6 percent in 2004 vs. 8.9 percent for the S&P 500. The predominance of smaller-capitalized stocks in Georgia accounted for much of the state's better-than-average performance, analysts said.

"If well run, a smaller company can grow faster than a larger company, and that spells better performance," said Stephanie Haggerty, who researches smaller stocks for Register & Akers Investments in Atlanta.

Significantly, 2004 was also a comeback year for big companies, especially in Georgia.

Sixteen of the first 50 companies on the latest Georgia 100 list recorded sales in excess of $1 billion last year, and 23 have a market value (share price times shares outstanding) of better than $1 billion.

Another way that 2004 was a good year for corporate managers was that it allowed them to get things done that had been on hold in 2003 and earlier.

Last year, 77 Georgia companies made a total 161 acquisitions of all types, 24 repurchased shares of their own stock, 20 announced stock splits, 18 had stock offerings, 15 reduced their debt load and 21 issued new debt offerings.

After a slow period in new stock offerings, six companies entered the market in 2004: BlueLinx Holding, a spinoff from Georgia-Pacific; Gold Kist, a former food cooperative; HomeBanc, a real estate investment trust; Inhibitex, a biotech company; Atlantic Coast Federal, a thrift holding company; and Neenah Paper, a spinoff from Kimberly-Clark.

Not all good news

Yet 2004 was another troubling year for some major Georgia companies.

Delta Air Lines faced the prospect of a Chapter 11 bankruptcy filing, although a pay deal with pilots and emergency financing agreements helped to avert this. But it remains a possibility in 2005.

Savannah fine jewelry retailer Friedman's and home textile producer WestPoint Stevens joined Mirant, an energy broker, in Chapter 11 reorganizations.

For corporate executives and stockholders in Georgia and elsewhere, 2004 was a good year that took a while to get going.

Measured by gross domestic product, the economy expanded by 4.4 percent, compared with 3 percent in 2003. The jobless rate fell to 5.4 percent from 5.7 percent in 2003.

And while consumer prices rose 3.3 percent in 2004 — above the long-term average — inflation stayed below 5 percent for the 22nd of the last 23 years.

Publicly traded companies posted good gains in sales and extraordinary profit growth as the economy expanded.

Wall Street produced positive returns for big and small stocks, but small stocks ended the year ahead of big stocks for the sixth straight year.

At the same time, it was a difficult year for investors, full of economic, political and geopolitical uncertainties. Only some of those, such as the presidential election, were resolved.

"It was a pretty solid year economically, but a difficult year for stocks until the fourth quarter," said Gary Tapp, quantitative analyst for SunTrust Robinson Humphrey in Atlanta.

The Standard & Poor's 500-stock index languished in the first half of the year, with a subpar gain of 1.3 percent, then suffered an outright loss of 2.3 percent in the July-September quarter.

It was not until the final quarter, when the presidential race was over, that the market advanced at a respectable 8.7 percent rate.

Narrow price range

Stocks traded for most of the year within a relatively narrow price range — about 1,000 points for the Dow Jones industrial average.

Big stocks of the kind that make up the S&P 500 returned an average 10.9 percent to investors last year. That figure, which includes dividends, was slightly better than the long-term annual average.

It was the second straight positive year for stocks since the bear market ended in October 2002, and the gains were attributed largely to a dramatic improvement in corporate profits.

According to Thomson First Call, profit growth of Standard & Poor's 500 companies averaged an impressive 20.2 percent year over year.

It was even better on a quarterly basis.

Profit growth exceeded 20 percent for four straight quarters, from the third quarter of 2003 through the second quarter of 2004.

Even the fourth quarter just missed 20 percent growth by three-tenths of a percentage point.

Analysts expect 2005 to be remarkably similar to 2004, at least for stockholders.

Rising interest rates, still-high oil prices and a weak dollar, as well as geopolitical factors, remain investor concerns.

Analysts see corporate earnings continuing as a market driver, though growth is not expected to equal that in 2004.

According to analyst Haggerty, it will be even more important in 2005 and beyond for investors to do their homework about where to put their money.

"It will be very much a stock picker's market, in our opinion, characterized more by the performance of individual stocks than the behavior of their respective industry groups," she said.

Analysts also agree that investors would be well advised to shop for opportunities among the public companies based in Georgia.