Stock Picks Bob's Advice
Friday, 23 May 2003
May 23, 2003 NVR, Inc. (NVR) (AMEX stock)
It is getting late in the session...I guess you could say it is long in the tooth and I need something better for all of you stock fans.
Didn't see much on the NYSE or NASDAQ but on the Amex list we have one called NVR, Inc. According to Morningstar, NVR "builds single-family homes, condominiums, and townhouses, primarily in the Washington, D.C. area. The company builds about 3,000 homes per year ranging in price from $70,000 to $640,000 and averaging $182,000." NVR "also provides morgage financing through 23 offices in 15 states." A little bit of overlap with our New Century Financial I guess....but not much.
Not a cheap price, but not at the Berkshire Hathaway level (!), but today stock is trading at $394.86 (!) up $16.36 at 1:32 pm (CST) or a 4.32% increase.
Driving this stock higher was the release on April 16th of the first quarter result ending March 31, 2003. They announced that total revenue increase to $743 million compared to $692.2 million last year, and earnings per share exceeded last year's result by 24%.
Looking at the last 5 years, we find that revenue has grown from 1.5 billion in 1998, 2.0 billion in 1999, 2.3 billion in 2000, 2.6 billion in 2001, and 3.1 billion in 2002.
Free cash flow, as reported in Morningstar, has grown from 189 million in 2000, to 149 million in 2001 (a decrease), then back up to 369 million in 2002. This company really generates money!
Market cap is 2.7 billion, no dividend is paid, and the p/e is a rather cheap 10.94. Just the PRICE is high! (Just buy less shares). I do not own any shares of this company...but it looks like a nice investment to me! Happy investing and a Peaceful Memorial Day to all my friends! Bob
May 23, 2003 Red Robin Gourmet Burgers (RRGB)
TGIF. No not the restaurant but the day of the week! Terror alert up, unemployment up, volatility up. Anyhow, found this one this morning. Don't know much about it personally....and do not own any shares of this issue.
According to Morningstar, Red Robing Gourmet Burgers, Inc., "is a chain of 184 casual restaurants, 87 of which are company owned and 97 of which are franchised". Sounds a little like the old Fuddruckers chain (anybody been in one of those lately?).
The stock is grilling up pretty nicely today (sorry).
Currently (10:15 am Central), stock is at $17.00 up $1.17 or 7.39% on the day. Yesterday they reported the first quarter of 2003 (reported 5/22/03), per the New York Times website, "Total Company revenues increased 17.3% to $92.9 million, Company-owned comparable restaurant sales (sort of like retail same store sales figures)...up 2.1%," and reported that per share income unchanged at about $.23.
Annual revenue figures show steady increases from $115.7 million in 1997, 118.2 million in 1998, $130 million in 1999, $189.2 million in 2000 and $224.5 million in 2001, and $249.2 million in trailing twelve months per Morningstar.
Balance sheet wise we find a bit too much debt on this issue to make me very excited and per Morningstar is not yet cash flow positive....so looking closely, a possible purchase....but for my picks....not one of the top choices on this page.
Good luck investing....will see if we can find a better one later today! Bob
Thursday, 22 May 2003
May 22, 2003 Enzo Biochem (ENZ)
Here is a new one for you. Near the top of the list for the NYSE best advancers is Enzo Biochem (ENZ). They are trading currently (1:42 pm Central time) at
$20.40 up $2.36 on the day or a gain of 13.08%.
News for the day is about a new Phase I Clinical Trial result for Crohn's disease....Phas II study to be initiated (this was on 5/20/03). Crohns is a form of inflammatory bowel disease which is "a highly debilitating widespread ailment for which there is no effective treatment"...quoting Dean L. Engelhardt, Ph.D., the President of Enzo on the NYTimes internet site.
Last quarter, revenues increased 11% and net income was up 76%. In actual amounts, revenue for the 3 months ending 1/31/03 amounted to $13.1 million vs $11.8 million a year ago...and operating income was about $2.0 million vs $1.0 million last year. According to the same news story cash flow, an important criterion to consider, was strongly positive at $9.3 million with cash and cash equivalents at $75.9 million vs $61.9 million a year ago.
Looking at the 5 year growth in revenues on Morningstar, we find 1998 at $40.4 million, 1999 at $44.3 million, 2000 at $42.8 million, a slight drop, 2001 at $52.3 million, 2002 at $54.0 million, and $59.3 million for the trailing twelve months.
Cash flow has indeed improved with a $4 million positive in 2000, $7 million in 2001, $9 million in 2002 and $14 million in the trailing twelve months.
Looking a Yahoo, we find the stock with a market cap of $578.4 million, and a p/e of 58.19. An interesting if not compelling issue to be considered for investment. I do not own any shares of this stock nor plan to be buying any in the immediate future. Good luck! Bob
May 22, 2003 Dicks Sporting Goods (DKS)
When the market is strong, more of our kind of stocks come to the fore. Is that a proper word? Anyhow, DKS is a relatively recent issue...came public recently. I do NOT own any shares of this anywhere....I do have a managed account that COULD own shares of anything....but don't own this one.
DKS is trading today (10:04 am) and $29.75, up $1.62 or a 5.76% rise. The graph is beautiful...and appears to have come public in mid-October, 2002. Stock has moved up fairly steadily from about $14 to its current price of $29.75.
They are making an additional move today as they announced that they will discuss their first quarter 2003 results today after the close of the market. It appears that the 'street' thinks that there will be positive comments made.
For the last quarter ending 2/1/03, revenues rose 18% to 1.27 Billion. Net income rose 63% to $38.3 Million. This was due to solid increased comparable store sales and the opening of seven new stores. I believe the same store sales were up in the 5% range.
Looking at Morningstar we see sequential annual revenue growth from 0.6 billion in 1998, $0.6 billion in 1999, 0.7 billion in 2000, $0.9 billion in 2001, and $1.1 billion in 2002. Unfortunately, Morningstar suggests that the company is still burning through some cash and is $20 million NEGATIVE cash flow the trailing twelve months.
Anyhow, that is it for pick #2 today. Good luck and remember those 8% stops and when things get good, peel a little off each 50% gain....Bob
May 22, 2003 New Century Financial (NCEN)
As you can see from my post yesterday on the main website page here (http://bobsadviceforstocks.tripod.com), I am an owner of New Century Financial...in my trading account. I have actually purchased this several times starting in 12/02 when I purchased 100 at an average cost of $23.41, 12/24/02 another 100 at an average cost of $26.68, and a final 100 at an average cost of $28.03. Following my own rules, I sold 100 on 5/5/03 for an average cost of $39.93. I had reached over a 50% gain in this issue in a short period of time and starting lightening up a little. So important to sell losses QUICKLY and sell gainers SLOWLY. Can only help to bias your results to the upside.
Anyhow, NCEN is having a GREAT day trading at $47.02 up $6.57 as we write at 9:22 am Central Time. What caused this pop is the fact that NCEN TODAY announced that in was INCREASING 2003 eps guidance from the $7.40-$7.50 range up to $8.75 to $9.25 range. Yes....this company is anticipating earnning about $9.00 per share (!!!) and sells even after this move for only $46. The company "is engaged in originatin, purchasing, selling and servicing subprime mortgage loans secured by first mortgages on single-family residences," according to the CNN.money site http://money.cnn.com/MGI/snap/A1434.htm (I hope that works for you to get to the profile section). Last quarter total revenues rose 61% to $181 million and net income rose 50% to $45.7 million.
Looking at Morningstar.com on this issue, we find
sequential growth in revenue from $98.6 million in 1997, $176.4 million in 1998, $233.9 million in 1999, $163.9 million in 2000 (which IS a drop which I would RATHER not see....but the rest of this is so good!), $293.3 million in 2001 and $511.1 million in the 'trailing twelve months'.
In addition, in today's announcement, NCEN indicated that they would maintain their $.10/share dividend (an added plus)...which means in effect a 50% increase in effective dividend return. This is a 50% increase because they announced a 3 for 2 stock split.
Unfortunately, Morningstar does not have the free cash flow report but interestingly does have the growth in revenue the last four quarters showing a 779.39%, 134.17%, 117.42%, and 86.84% increase in revenue each quarter. Pretty impressive!
For a final note, even AFTER today's big price rise, NCEN sells at a p/e ratio of only 6.18 suggesting tremendous value in their shares.
As a caveat, I know NOTHING about the management of this company...and would hold to an 8% stop loss on any purchase which I always suggest on all issues. If the stock should rise further....start selling some shares at a 40-50% range in gain....this is really an insurance of reducing your overall cost on any purchase. Good luck and happy investing.
Wednesday, 21 May 2003
This purchase today was against my own rules...I confess...just had to buy some SYNO...#1 should have waited for an 8% loss to sell KOSP, and #2 should have applied the transaction proceeds to my margin account in my trading account....we will see if this small amount of divergence from the 'rules' works! I will give you the rest of the details on my portfolio holdings in a later note....so you can advise/criticize/question or whatever! Have a great evening! Bob
SYNO...I just bot 400
For the sake of transparency, I was quite impressed with SYNO, both recent quarter and long term growth...and technical appearance of the stock price chart. Thus, I sold my 200 of KOSP at a 6.5% loss....a little less than I like to give....and bot 400 SYNO at around $14.49. I hope that was a good move for my portfolio as well! Bob
May 21, 2003 Synovis Life Technology (SYNO)
The market cannot make up its mind today about direction. Appears to need to correct after its fairly good run-up the last two months.
Was checking the CNN-money list of most ups this morning....almost noon here at 11:55 am.....and thought we wouldn't find any candidates for our list. Came across this Synovis Life Technology stock....have never heard of it before....not exactly Peter Lynch investing....and it fits the bill.
SYNO is trading currently at $14.39 up $.94 (or 6.99%) Volume running at 184,572. Stock is SMALL with a market cap of $139.3 million...and only 9.683 million shares outstanding.
What moved the stock today is an outstanding earnings report which showed a 61% growth in Revenue and 63% increase in net income for the second fiscal quarter....not too shabby!
The net revenue increased to $15.3 million in the second quarter of fiscal 2003 from $9.5 million last year per the New York Times report of earnings today.
By the way the company "manufactures medical devices used in cardiac, brain, lung, and other surgeries. Its products include vascular grafts, patching materials, blood-flow interruptors, and vascular probes." That is per Morningstar.com.
Looking at the 5 year growth in revenue we see revenue of 12.0 million in 1998, 19.1 million in 1999, 22.1 million in 2000, 28.5 million in 2001 and 40.0 million in 2002. Extrapolating from the second quarter without acceleration we can anticipate a $60.0 million revenue in 2003.
There appears to be an ACCELERATION of this growth recently (!)....last four quarters before the reported quarter above...show 27.32%, 32.55%, 49.88%, and 48.07% increases in revenue year over year....free cash flow is positive by $1 million....and current assets are over $20 milllion with no long term debt and current liabilities at only $5.8 million.
This is a BEAUTIFUL stock. I don't own a share, never heard of it before scanning the lists today....but might just buy some shares in the future. Great luck investing! Bob
Tuesday, 20 May 2003
May 20, 2003 Home Depot (HD)
Thanks for stopping by. Taking a look first at the NYSE biggest advancers we find Home Depot near the top. We find HD trading currently at $31.10, up $3.03 or 10.79%. I have to confess to some bias in reviewing these charts and let me explain. I have found that the larger cap issues overall tend to perform better with this technique and also stocks over $10. If I can find issues on the NYSE, stocks even like Dell or Krispy Kreme, then I will go with them....many of the smaller issues I have been "shaken out" as they say in the business because a company trading at $4.00 a share, needs to go down only $.32 to reach the 8% stop.
Back to Home Depot. This is a long time growth stock favorite. Recently, it has sold off with relatively slower growth, presumably due to stiff competition with Lowes among other retail outfits.
Last quarter, just reported today (!), sales increased to $15.1 billion from 14.2 billion. However same store sales dropped 1.6% (a negative) although EXPECTATIONS were for a 2-4% drop in same store sales. what is important here is what the 'street' was expecting and HD outperformed.
Looking at Morningstar we find that sales have grown from $24.2 billion in 1998 to $30.2 billion in 1999, $38.4 billion in 2000, $45.7 billion in 2001, and $53.6 billion in 2002. Extrapolating out the first quarter...which is probably unreasonable due to somewhat seasonality of retail business, we can see a near $60 billion rate for the year 2003.
The cash flow of this company has really turned around as well from a -762 million in 2001 to a positive 2.57 billion in 2002 and the TTM as Morningstar says...is $3.6 billion in positive cash flow (TTM is 'trailing twelve months').
Anyhow, the issue is not perfect....but at a p/e of 17.9, this issue is ripe for the picking. Good luck and remember to hold to the 8% stop loss. I do own some shares of this stock among my different accounts...as do members of my family. Bob
Monday, 19 May 2003
May 19, 2003 Bradley Pharmaceuticals (BDY)
As the market nears its close, with the Dow down about 170 points, it seems a strange time to pick stocks with positive momentum. But only the strongest are able to buck the tide.
Bradley Pharmaceuticals (BDY)as I write is trading at $15.77 up $1.02 or 6.92% on the day. This past quarter was reported on April 30, 2003, for the quarter ending March 31, 2003, sales totaled $14.9 million and increase of 60% over 2002. Net income was $1.2 million or an increase of 67% year over year....very nice numbers!
Looking for the 5 year numbers on Morningstar we find revenue of $16 million in 1998, $19 million in 1999, $19 million in 2000, $26 million in 2001, and $40 million in 2002. Extrapolating current sales would give us a $60 million rate for 2003 (!).
Prior to this recent quarter of a 60% sales increase, the prior four quarters in sequence showed a 75.90% (3/020, 57.93% (6/02), 48.84% (9/02), and 41.6% increase in sales (12/02).
The company is small with a tiny market cap of $154 million but is very reasonably priced with a p/e of about 17. Good luck investing and remember the 8% stops EVEN on recent purchases! Bob
P.S. I do not own any shares nor do any of my family members own shares in this company.
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