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It's been 5 1/2 years since the stocks of the companies based in the Buffalo area have had a quarter this good.

And what a quarter it was.

Not only did the local stocks, as a group, beat all of the major market indexes, but their good fortune was spread around nicely among the 25 stocks that make up the Buffalo Portfolio.

If an investor owned a single share of each of the local stocks, the value of those shares would have risen by 19.1 percent during the third quarter, topping the gains that the local stocks put together during the entire years of 1993 and 1994. It was the best quarter for the local stocks since a 19.4 percent rise during the first quarter of 1992.

The surge by the local stocks also was more than five times the 3.6 percent gain in the Dow Jones Industrial Average and more than double the 7 percent jump by the Standard & Poor's 500 index.

The local stocks, led by gains of more than 50 percent apiece by International Imaging Materials Inc. and Servotronics Inc., even beat the technology-laden Nasdaq composite index, which rose by 16.9 percent during the quarter.

The eye-popping third-quarter gains put the local stocks on a pace for their third straight year of impressive returns, in the wake of a 29.1 percent rise in 1995 and the 38.8 percent jump last year.

Through the first nine months of this year, the local stocks are up 35.7 percent, easily outpacing the 23.2 percent gain by the Dow and the 27.9 percent rise in the S&P 500, as well as the 30.6 percent increase in the Nasdaq composite.

In the third quarter, most of the local stocks shared in the prosperity, with just three of them going down. Of the 22 stocks that went up, 16 managed to turn in gains of at least 10 percent and eight rose by 20 percent or more.

Leading the way during the quarter was Iimak, the Amherst printing-ribbon manufacturer whose stock had missed out on the roaring bull market of the last two years and was one of the few local shares to decline during both 1995 and 1996.

But Iimak's fortunes improved abruptly in mid-July, when Paxar Corp. agreed to buy the company in a stock deal that, barring a collapse in Paxar's share price during the next month, will give Iimak shareholders 1.5 shares of Paxar stock for each Iimak share they own. As a result, Iimak's stock soared by 78.5 percent during the third quarter.

The takeover announcement gave Iimak an immediate 39 percent boost, reflecting the premium that Paxar had agreed to pay. And since then, Iimak's shares have risen even further by riding the coattails of Paxar's stock, which has shot up by 29 percent since the deal was announced. Because the merger was structured as a stock deal, Iimak's share price rises and falls in tandem with Paxar's shares.

Far behind Iimak was Servotronics Inc. The Elma servocontrols and cutlery manufacturerfinished the quarter with the second biggest gain among the local stocks, with shares zooming by 54.2 percent. Its earnings have been steadily improving, rising for five straight quarters, including an 11 percent increase in the second quarter.

Astronics Corp. had the third-biggest gain as its stock resumed its upward push by shooting up by 41.6 percent after stalling during the second quarter.

Astronics' earnings have been booming, and that has pushed the stock sharply higher for most of the last two years. The Buffalo-based firm, which makes specialty printing and packaging, as well as electronic systems, has boosted its profits for 12 straight quarters, including increases of 71 percent in the second quarter, 59 percent in the first and 46 percent during the final three months of last year.

Amherst chain and hoist maker Columbus McKinnon Corp. continued its strong run this year by rising 38.2 percent in the third quarter, even though a big jump in interest costs led to a 12 percent drop in first-quarter earnings. But the acquisitions that caused the increase in borrowings helped the company boost its sales by 89 percent.

Moog Inc. also had a strong quarter, with its tightly controlled Class B stock rising by 26.7 percent and its Class A shares increasing by 26.6 percent as the Elma aerospace company posted its 12th straight quarter of higher profits.

Among the losers, no company had a tougher quarter than Integrated Waste Services Inc., which saw its stock plummet by 66.7 percent to just 6 cents a share.

The Buffalo company, which once had a diverse stable of ventures ranging from garbage collection to landfill operations, tire shredding and demolition services, now is reeling under serious financial problems.

But the garbage and tire shredding businesses are gone. And the company is selling off and closing down its demolition and industrial cleaning businesses. The company has said it will need an infusion of new money if it is to obtain a permit to build the new landfill in Farmersville that company executives have been counting on.

Taylor Devices Inc. stock fell by 17.5 percent. The North Tonawanda shock absorber manufacturer's profits rose by 5 percent during its fourth fiscal quarter, but ended the year down by 13 percent. Still, the company announced plans to expand its plant and add up to 40 new jobs as part of a $1 million expansion in response to growing sales in its construction markets.

The other loser during the quarter was Merchants Group Inc., a Buffalo-based insurance company, whose stock slipped by 9.2 percent after second-quarter earnings fell by 49 percent.

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