A good performance, but only polite applause.

Minnesota's biggest companies boosted overall sales and profits in double digits last year, but investors were not impressed. The market value of the 100 companies that make up the Star Tribune 100 rose just 2.5 percent in the past 12 months, far slower than the 9.3 percent growth of the Standard & Poor's 500, and it also trailed most other major indexes.

It was the first time in five years that the Star Tribune 100 trailed the S&P 500. Ninety of the 100 companies delivered higher sales in 2006 than 2005; 75 posted profits and 72 added jobs -- but only 54 saw their market values rise.

Medical device giant Medtronic Inc. illustrates the disconnect: Sales rose nearly 10 percent and profits jumped nearly 39 percent. But market capitalization (that's the share price multiplied by the number of shares outstanding) dropped 13 percent as investors shaved $8.6 billion in market value off the company. And Medtronic was not alone. It was the same story at 3M, Best Buy and ADC Telecommunications.

What's gives? Several factors explain the valuation gap, and geology -- not geography -- is perhaps the biggest.

It was the first time in five years that the Star Tribune 100 trailed the S&P 500. Ninety of the 100 companies delivered higher sales in 2006 than 2005; 75 posted profits and 72 added jobs -- but only 54 saw their market values rise.

Medical device giant Medtronic Inc. illustrates the disconnect: Sales rose nearly 10 percent and profits jumped nearly 39 percent. But market capitalization (that's the share price multiplied by the number of shares outstanding) dropped 13 percent as investors shaved $8.6 billion in market value off the company. And Medtronic was not alone. It was the same story at 3M, Best Buy and ADC Telecommunications.

What's gives? Several factors explain the valuation gap, and geology -- not geography -- is perhaps the biggest.

"We just weren't Texas last year," said Michael Swanson, senior economist at the Minneapolis office of Wells Fargo & Co. Swanson is referring to the oil patch, where high oil prices boosted the earnings and market values of energy companies last year. High global energy prices largely explain the S&P 500's big gains. Oil giant Exxon Mobil posted the largest annual profit in U.S. history last year ($39.5 billion). The Star Tribune 100 does not contain many companies that benefit from higher commodity prices.

But one exception proves the rule: global fertilizer giant Mosaic Inc., which joined the Star Tribune 100 in 2006. At Mosaic, a Cargill Inc. spinoff, sales dropped 5 percent and earnings sank 67 percent. But the company's market value has doubled in the past 12 months.

The reasons? Higher fertilizer prices on world markets; relatively cheap natural gas prices (a raw material for making fertilizer), and the ethanol boom, which is prompting U.S. farmers to plant a record-size corn crop this spring to cash in on demand for the fuel.

"That's a pretty good combination for profits," Swanson said. "Mosaic is one of the lone companies on the Star Tribune 100 to benefit from a run-up in commodity prices."

Besides geology, Swanson and Christopher Puto, dean of the Opus College of Business at the University of St. Thomas, believe two other factors are in play: the law of averages in general and special controversies in the health care sector, where Minnesota companies have a strong presence.