Most O.C. Firms Prospered Amid Bankruptcy : Review: Vast majority of public companies posted gains of at least 10% in stock prices in 1995, with the average a healthy 35%. High-tech enterprises did the best--and worst.

Financially speaking, 1995 will probably be remembered as a bleak year for Orange County, thanks to the series of unseemly revelations that followed the county’s bankruptcy last December.

But investors in Orange County’s public companies, for the most part, will have far sweeter memories of the year--and substantially richer stock portfolios.

The vast majority of public companies in Orange County posted stock price gains of at least 10% over the past year. Overall, the Bloomberg index of 117 Orange County stocks ended 1995 at a record high, up nearly 35% from a year ago, when the index was started with a base of 100.

The surging Orange County index matched the ascent of some of the nation’s most closely watched measures of stock price performance.

The Dow Jones Industrial Average, an index of 30 blue-chip stocks, closed the year at 5,117.12, up 33.5% from the end of 1994. The S&P; 500 index, which measures the performance of 500 widely held common stocks, posted a 34.1% gain in 1995.

Predictably, high-tech companies dominated the ranks of best and worst performers in Orange County among stocks that closed the year at $5 per share or greater.

“Because technology is the fastest-growing part of the economy, it has the potential to produce the biggest winners every year,� said Michael Murphy, editor of the California Technology Stock Letter. “But because it’s the fastest changing, companies have the possibility to do a face-plant.�

For some Orange County companies, the gains were stratospheric. Quality Systems Inc., a Tustin company that sells office-management computer software to dentists and doctors, watched the price of its stock soar 792.3%, closing at $29 per share.

Sheldon Razin, chief executive of Quality Systems, says there are a number of reasons for the rapid climb, not the least of which is the fact that the company’s stock was trading at just $2 per share in February, and had virtually nowhere to go but up.

Investors also apparently liked the company’s acquisition earlier this year of a 25% stake in Clinitec, a Pennsylvania company that sells software that helps keep track of medical records. “Integrating electronic medical records along with practice management . . . is perceived as something very powerful in the marketplace,� Razin said.

Quality Systems reported sales of $7.99 million for the six months that ended in September, up 36% from a year earlier. Net income was $1.07 million, nearly triple earnings of $385,500 in the first six months of fiscal 1995.

L.L. Knickerbocker was another top performer for 1995, even though investors spent much of the year betting against the Rancho Santa Margarita-based collectibles distributor. The company, touted by controversial stock trader Rafi Khan, had sales of just $8 million in 1994, but watched its stock price skyrocket from $4 in June to $52 in August.

Skeptics borrowed and sold huge portions of Knickerbocker stock, betting that a collapse was imminent. But after a five-for-one stock split, Knickerbocker ended the year at a sturdy $8.25 per share, beating all but one of the other 93 Orange County stocks that closed at $5 per share or more.

The worst performer among the bunch was Platinum Software Corp., an Irvine-based publisher of accounting software that is still trying to recover from a bookkeeping scandal last year. Amid steep sales declines and layoffs of 100 employees, Platinum watched its stock price fall from $42 per share in June to $5.625 per share by year-end, down 86.6%.

The list of losers also included former Wall Street darlings such as Wonderware Corp. and AST Research Inc. Wonderware’s stock price has nose-dived since Dennis Morin, founder and longtime chief executive of the Irvine software company, resigned last month. And AST, a once-mighty computer manufacturer, is struggling to return to profitability after losses totaling $196 million over the past five quarters.

But the stock price gains far outstripped the losses in Orange County in 1995, especially in the high-tech sector, and analysts said next year should bring more of the same.

Computer sales are expected to rise by more than 20% next year, fueled by corporate customers replacing their aging machines with newer, faster PCs, said Murphy, editor of the stock letter.

“A good PC year is like ripples in a pond,� he said, adding that PC upgrades usually lead to other spending on networking devices, memory components, software and other computer products--much of them made by Orange County companies.

“I think in general it’s good news for Orange County for the next couple of years,� Murphy said.