Stock Picks Bob's Advice
Sunday, 21 September 2003
September 21, 2003 "How are we doing?" A look back on the Week of August 4, 2003
For those of you who may be new to this website, you will realize that I like to give my opinion on stocks. However, to keep me honest, and for you to better assess the validity of this approach, I like to spend the weekend on the site updating the prices on the past picks and looking back at our suggestions a week at a time. Currently we are using about a 5 week trailing view. As we get more experience here, we will soon start looking back six months at a time.
I was fairly busy the week of August 4, 2003. I posted 11 issues: Atrion Corp (ATRI), Intier Automotive (IAIA), and Mylan Laboratories (MYL) on August 4, 2003. FTI Consulting (FCN), Zimmer Holding (ZMH), Pulte Homes (PHM) and DRS Technology (DRS) on August 6, 2003, Jos. A. Banks Clothiers (JOSB) on August 7, 2003, and eSpeed (ESPD) and Emulex (ELX) on August 8, 2003.
ATRI was trading at $34.70 when we listed it here. As of close of trading on 9/19/03, ATRI was $41.64, a gain of $6.94 or 20%. Intier (IAIA) was $16.50 when we listed it, currently as of 9/19/03, IAIA closed at $17.00, a gain of $.50 or 3%. Mylan (MYL) was trading at $34.50 when listed here, it closed Friday (9/19) at $40.27, a gain of $5.77 or a gain of 16.7%.
FCN was listed on 8/6/03 at $21.90. FCN closed on 9/19/03 at $23.06, a gain of $1.16 or 5.3%. Zimmer Holding (ZMH) was $49.79 on 8/6/03 when listed. Zimmer closed Friday (9/19/03) at $53.69 for a gain of $3.90 or 7.8%. Pulte Homes (PHM) was at $63.86 when listed on Bobs Advice on 8/6/03. PHM closed at $68.55 on 9/19/03 for a gain of $4.69 or 7.3%. DRS Tech, one of our few losers during this period, and one I personally own, was listed at $27.98 on 8/6/03. DRS closed Friday, 9/19/03 at $25.64, for a loss of ($2.34) or (8.4%). Finally, Sunrise (SRZ) was also listed on 8/6/03 at $23.95. SRZ closed Friday, 9/19/03 at $26.60 for a gain of $2.65 or 11.1%.
Jos. A. Banks (JOSB) was listed on 8/7/03 at $44.16. JOSB has done well since then closing on 9/19/03 at $45.86 for a gain of $1.70 or a gain of 3.8%.
The final two selections of the week were eSpeed listed on 8/8/03 at $18.98. ESPD closed on 9/19/03 at $26.09 for a gain of $7.11 or 37.4%. Emulex was also listed on 8/8/03 with a price of $22.46. ELX closed Friday, 9/19/03 at $26.93 for a gain of $4.47 or 19.9%.
Overall this was an EXCELLENT week for stock picks with ten stocks gaining and one losing with an average gain of 11.3% over the short 6 week period.
Thanks again for stopping by and I am looking forward to an active week of stock picks and thoughts right here on Bob's Advice.
Friday, 19 September 2003
September 19, 2003 Stratasys, Inc. (SSYS)
Something telling about our posts. I am finding stocks that pretty much fit our criteria but you will notice that the last several I have complained about the p/e. Maybe stocks ARE getting a bit richly valued (?)....or are we late at getting to them? I do think, that since we are looking over the long-term with this approach, the timing isn't critical, it is the owning of the right companies.
Stratasys (SSYS), according to money.cnn.com, "...develops, manufactures and market prototyping devices that allow engineers and designers to create models and prototypes out of plastic and other materials directly from computer-aided design (CAD) workstations." I do not own any shares of this company. SSYS is having a GREAT day in the market, currently trading at $50.04 up $4.32 or 9.45% on the day as I write.
On July 28, 2003, SSYS reported their second quarter results for the quarter ending June 30, 2003: revenues for the second quarter were $12.1 million, a 19% increase over $10.1 million last year. Net income was $1.5 million or $.25/share compared to $.5 million or $.09/share last year.
Revenue has grown, although not consistently, from $32.4 million in 1998, $37.6 million in 1999, $35.6 million in 2000 (a hiccup), $37.6 million in 2001, $39.8 million in 2002, and extrapolating the current quarter would get us to about $48 million for 2003.
Free cash flow has also improved nicely the last few years from $0 in 2000, $2 million in 2001, $6 million in 2002, and $9 million in the trailing twelve months per Morningstar.com.
Looking at the balance sheet we find $17.5 million in cash, more than enough to cover the $9.0 million in current liabilities and $2.1 million in long-term debt. In addition, Morningstar reports that SSYS has $17.1 million of other current assets. This company is financially very sound imho.
This is a pretty SMALL company overall with a market cap of $287.21 million. The trailing p/e is moderately high at 43.96 but the PEG ratio is only 0.86 suggesting a reasonable valuation and p/e in light of the growth rate. There are only 5.80 million shares outstanding and 4.90 million of them float. There are 426,000 shares out short representing 8.69% of the float or 1.13 days of trading.
Overall, I like this company and it deserves a second look. Like I usually say, I like a LOT of companies but have only so much money to invest...do you know that feeling? If this is your kind of company, then jump right in! Remember to hang on to those 8% stops so that you don't find yourself with growing losses.
Have a great weekend. I will try to update the prices on the main website http://bobsadviceforstocks.tripod.com (the URL should be on the left)...as well as the current trading portfolio (actual holdings in my Fidelity account) and gains/losses. Have a GREAT weekend everyone. I hope if you were in the path of Isabel you didn't suffer too badly....
September 19, 2003 Navigant Consulting, Inc. (NCI)
Hello Friends! Here is one that looks pretty nice. I think we skipped past Navigant because of a slight hiccup in the revenue growth...but everything else is so PRETTY it deserves a second-chance.
Navigant Consulting (NCI) is having a nice day today trading at $14.53 up $.53 on the day or 3.79%. According to money.cnn.com, NCI is "...a provider of consulting services in two main business areas, Financial and Claims Consulting and Energy and Water Consulting."
On July 22, 2003, Navigant reported their second quarter results for the quarter ending June 30, 2003: revenues for the second quarter were $81.4 million a 33% increase from $61.0 million in the second quarter of 2002 and up 10% from $73.8 million for SEQUENTIAL growth from the first quarter of 2003. Earnings (EBITDA) for the second quarter were $9.5 million up from $4.6 million the prior year. Diluted eps was $.09/share up from $.03 last year.
Morningstar shows a steady improvement in revenues from $203 million in 1998, $219 million in 1999, $245 million in 2000, $236 million in 2001 (the hiccup), $258 million in 2002 and $271 million in the trailing twleve months. If we extrapolate the current quarter revenue we would get over $320 million for 2003.
Free cash flow has improved recently from ($44) million in 2000, to $4 million in 2001, $3 million in 2002 and $7 million in the trailing twelve months.
Assets/liabilities look nice with $5.3 million in cash and $76.3 million in other current assets, enough to cover the $54.2 million in current liabilities and the small $4.6 million in long-term liabilities combined.
Looking at Yahool.com, we find a moderate market cap of $630.31 million, a trailing p/e of 48.28, a PEG ratio of 2.92 and a price/sales ratio of 2.09.
There are 43.50 million shares outstanding and of those 42.80 million float. 927,000 shares are out short representing 2.619 trading days or 2.17% of the float. No dividend is paid and the last stock split was in April, 1998.
This stock looks very nice to me. It essentially fits into our scheme and demonstrates outstanding revenue growth, free cash flow improvement, and a nice balance sheet. Also, it is a rather small market cap stock suggesting that growth potential is quite large for quite awhile. I do not own any shares but would consider some if I wasn't already up to my ears in margin! Again thanks for stopping by and do come visit again soon! Have a great weekend everyone!
September 19, 2003 IDX Systems Corporation (IDXC)
The market is a bit extended and is hesitating today after a fairly strong week into record territory for the year for the NASDAQ and DOW. However, even in the midst of this pullback, quality stocks stand out.
Interestingly, the stock that looks good to me today is ANOTHER medical records/information type stock. Fits in well with our other posts on Quality Systems and Merge Technologies. IDX Systems Corporation (IDXC) "...operates two business segments: healthcare information systems and solutions, which includes software, hardware and related services, and medical transcription services" according to money.cnn.com.
After being upgraded by W.R. Hambrecht today, IDXC is currently trading at $26.20 up $3.46 or 15.22% on the day. I do not own any shares of this stock.
On July 22, 2003, IDXC reported their 2003 second quarter results: revenues increased to $98.3 million compared to $85.1 million in the second quarter of 2002. Net income from continuing operations was $5.4 million or $.18/share compared to $3.2 million or $.11/share last year.
Morningstar.com shows a fairly nice growth in revenue although not as steady as some we have covered. In 1998, IDXC had $350 million in revenue which through 200 was fairly unchanged when it came in at $354 million. In 2001, IDXC jumped to $391 million, and $460 million in revenue in 2002. Trailing twelve months revenue figure is $473 million.
Free cash flow has improved recently from ($46) million in 2000, ($30) million in 2001, ($1) million in 2002 and into the black with $8 million in the trailing twelve months.
Assets and liabilities are very healthy with $56 million in cash and $125.5 million in other current assets vs $97.0 million in current liabilities and NO long-term liabilities reported per Morningstar.
Per Yahoo, the Market Cap is a moderate $768.58 million. The trailing p/e is a little pricey at 52.88 while PEG ratio isn't too bad at 1.51. Price/sales also reasonable at 1.55. 29.38 million shares are reported outstanding and of those 17.60 million of them float. Only 681,000 shares are reported out short as of 8/8/03...representing 3.87% of the float or 5.922 days of trading. No dividend is paid.
This is an interesting stock although a bit pricey value-wise with a fairly high p/e...the growth is pretty compelling. Might fit in well with a triad of investments the MRGE, QSII and now IDXC.
Thanks for stopping by. I hope these posts are helpful and if you have any questions or comments, please feel free to leave them here or email me at email@example.com
Thursday, 18 September 2003
September 18, 2003 Merge Technologies Inc. (MRGE)
Hello Friends. It was nice chatting with you on Yahoo Stock Watch #1 the other night. I use the handle Reddyorknot when I am there so be sure to say hello! If you can believe it, I was actually busy with my real JOB today and didn't get a chance to post a pick. I saw this one earlier today and it looks like a winner to me: Merge Technologies (MRGE).
MRGE closed today at $18.99 up $2.38 or 14.33% on the day. Interestingly, it was up another $.46 or 2.42% after hours since the close...as I write. I do not own any shares of this stock and sure wish I could find some money. I may switch some things around tomorrow to purchase some....maybe. According to money.cnn.com, Merge "...provides software, hardware and systems integration products and services that enable health care organizations to network incompatible medical image- producing and image-using devices." We have another stock in our stock picks as well in my trading portfolio (and my stock club!)...Quality Systems (QSII) that is in this same general area. These particular issues are important in medical practice because they are problems faced in the conversion of hard copy medical records and results into the Electronic Medical Record (EMR).
On July 30, 2003, as reported on the NYTimes on the Web, this Milwaukee-based company reported their second quarter 2003 results: revenues for the quarter were $6,434,000 an increase of 54% over revenues of $4,183,000 for the quarter ended June 30, 2002. Net income for the quarter was $1,400,000, an increase of 133% over net income of $600,000 for the quarter ended June 30, 2002. Diluted EPS was $.12 for the 2003 quarter vs $.06 for the same quarter in 2002.
Morningstar.com also shows a beautiful (if not perfect) record of revenue growth...$10 million in 1998, $13.3 million in 1999, $12.6 million in 2000 (the hiccough), $15.7 million in 2001, $20.8 million in 2002, and extrapolating the latest quarter would get us about $26 million in revenue for 2003.
Free cash flow also looks nice: ($2) million in 2000, $2 million in 2001, $3 million in 2002, and $5 million in the trailing twelve months.
According to Morningstar.com, cash on hand is $6.6 million, more than enough to cover BOTH current liabilities of $4.9 million and the small $0.8 milllion of long-term debt. In addition, MRGE has $7.5 million of other current assets. What is there NOT to like?
This is a fairly SMALL company with a market cap of $230.77 million. The trailing p/e is moderately high at 37.75, the PEG ratio isn't bad at 1.32 (lower the better!), Price to sales is steep at 8.20. 12.15 million shares are outstanding with 9.90 million of them that float. Currently 4.34% of the float is out short or 430,000 shares...representing 2.671 trading days. No dividend is paid.
I like this stock a LOT. I guess a lot of other people do too as it is quite strong! Have a great evening and be sure to stop by again. Happy to have you let your friends know about this site....the more the merrier. If you have any comments or questions, please try to post them right here or email me at firstname.lastname@example.org!
Wednesday, 17 September 2003
September 17, 2003 Gen-Probe Incorporated (GPRO)
The market couldn't really hold up the rally today. Seemed like Isabel was making the traders nervous and the costs associated with clean-up and the possible losses was riding on the market. Or am I just reading into things?
Meant to list GPRO today but was too busy to get to it. My purchase of ENDP ended up with a fractional loss but the numbers are indeed very nice. They are almost equally attractive with Gen-Probe....and I CERTAINLY do not have any cash left...with my margin levels up pretty high in a pretty vulnerable market....
Gen-Probe had a nice day today. GPRO closed at $62.90 up $5.88 on the day or 10.31%. According to money.cnn.com, Gen-Probe (GPRO) "...is engaged in the development, manufacture and marketing of rapid, accurate and cost-effective nucleic acid probe-based products used for the clinical diagnosis of human diseases and for screening donated human blood."
On July 17, 2003, GPRO reported financial results for the second quarter ended June 30, 2003. Per PRNewswire, as reported in the NYTimes on the Web, total revenues for the 2003 quarter were $50.7 million compared to $34.9 million for the second quarter of 2002, a 45% increase. Net income for the second quarter of 2003 was $8.1 million or $.34/diluted share compared to net income of $550,000 or $.02/diluted share in 2002.
Looking at Morningstar.com, we find that revenue growth has been steady: $96 million in 1998, $118 million in 1999, $120 million in 2000, $130 million in 2001, $156 million in 2002, and extrapolating the current 2003 quarter would get us about $200 million for 2003.
Free Cash Flow has been improving nicely as well: ($11) million in 2000, $8 million in 2001, $27 million in 2002.
Financially, this is a very HEALTHY company with the balance sheet, as reported in Morningstar.com, showing $108 million in cash, way more than enough to pay off both current liabilities of $30.8 million and long-term liabilities of $11.8 million and still have over $50 million left over. In addition, GPRO has $38.1 million of other current assets.
This is NOT a small company, nor is it cheaply priced: the market cap is $1.51 billion, the trailing p/e is 50.46, and the PEG (P/E to Growth) ratio is 1.95. The price to sales ratio is steep at 7.43. Yahoo.com reports 23.95 million shares outstanding with 23.80 million of them that float. There are 1.20 million shares out short representing 5.06% of the float but only 2.125 trading days. No dividend is reported but on 9/5/03, GPRO announced a 2:1 stock split.
I like this stock a lot. Unfortunately it is not a bargain but it is not junk either. We have a stock with superb revenue growth in an area of the economy where the sky really is the limit. Free cash flow is growing and the balance sheet is superb. I suppose if I hadn't bought some of the ENDP earlier today, I would be thinking about nibbling on this stock is well. There really are many great companies to invest in that are trading in the market.
Thanks for stopping by! Please be sure to feel free to comment right here on the website or drop me a line at email@example.com
September 17, 2003 Endo Pharmaceuticals (ENDP) 'part 2'
Further details on Endo: per Morningstar.com, "ENDP is engaged in the research, development, sales & marketing of branded & generic prescription drugs used for the treatment and management of pain."
Latest quarter results: Reported 7/24/03 by PRNewswire on NYTimes on the Web: Net sales for the second quarter of 2003 increased 41% to $152.0 million from $107.9 million for the second quarter of 2002. Net income for the second quarter of 2003 increased 105% to $45.2 million from $22.0 million in the comparable quarter of 2002. Diluted earnings per share were $.34 vs $.22 last year. (And now you can see why I liked this stock enough to purchase it!)
Morningstar trends: $108 million in revenue in 1998, $139 million in 1999, $197 million in 2000, $252 million in 2001 and $399 million in 2002, $484 million in the trailing twelve months.
Free cash flow: (check out these excellent results!) $34 million in 2000, $74 million in 2001, $107 million in 2002 and $142 million in the trailing twelve months.
Balance sheet: $96.5 million in cash and $221.9 million in other current assets vs $149.6 million in current liabilities and $7.8 million in long-term liabilities. (also very pretty!)
Other stats, per Yahoo.com: Market cap of 2.77 billion, p/e ratio a bit steep at 39.94, peg nice at 0.89, price/sales high at 4.88.
There are 131.76 million shares outstanding but only 30.30 million float.
I liked this stock when I first looked at it and I still like it. You can see why.
I purchased some shares already today....use your own judgment in deciding about whether they are a good idea! Regards again!
September 17, 2003 Endo Pharmaceuticals (ENDP)
O.K. I did it again. I jumped the gun when I was looking at stocks, saw one I liked and bought 250 shares ahead of posting it here. I apologize. The stock has NOT gone higher yet...hopefully it will...so you have not missed an opportunity. I purchased them a few minutes ago at $21.19. And actually, as I write, ENDP is trading at $20.99....a little cheaper. I will post this now and fil you in on the details a little later today. Check out Morningstar.com and the last quarter's earnings report and you will see why I made this purchase.
September 17, 2003 TALX Corporation (TALX)
O.K. here is one I have NEVER heard of and needless to say I don't own any shares. The market overall is acting like it doesn't want to correct and indeed is resuming its bullish behavior this morning. TALX as I write, is trading at $26.25 up $1.91 or 7.82% on the day. According to money.cnn.com, TALX "...provides employees self-service solutions using interactive Web, interactive voice response, computer telephony integration software and services."
On July 30, 2003, per BUSINESS WIRE and reported by NYTimes on the Web, TALX reported fiscal first quarter results for the quarter ended June 30, 2003. Earnings from continuing operations were $2.8 million or $.20/diluted share vs $2.2 million or $.15/diluted share in 2002. Total revenues increased 11% year over year to $30.2 million from $27.2 million in 2002 due principally to "...a 44 percent gain in The Work Number services."
Morningstar.com shows an increasing if not steady change in revenues with $30 million in 1999, $36 million in 2000, $39 million in 2001, $45 million in 2002 and $126 million in 2003.
Free cash flow has improved nicely from $7 million in 2001, $10 million in 2002 and $24 million in 2003.
According to Morningstar, assets and liabilities are in fairly good balance with $9.4 million of cash on hand and $23.9 million of other current assets; $31.7 million of current liabilities and $17.9 million in long-term liabilities is reported. With the healthy free cash flow, I do not think this should be much of a problem. On September 4, 2003, TALX announced a 25% increase in the quarterly dividend which is certainly bullish for the stock.
This is a fairly small company with a $360.39 million market cap. The trailing p/e is moderate at 25.73, the PEG ratio is 1.61, and price/sales is 2.60. There are only 13.52 million shares outstanding with 12.60 million of them that float. 8.56% of float is out short with a short ratio of 3.503 (the # of days needed to cover the 'pre-sold' shares based on average daily trading volume.)
A small dividend (which was recently raised) is reported with a yield of 0.81%. The last stock split was a 10% stock dividend in 2001.
This is a very interesting and not too highly priced issue that is worthy of your consideration. I would certainly consider buying some shares if my margin balance was a little lower!
Thanks for stopping by and please come back and visit often. If you have any questions, you can email me at firstname.lastname@example.org
Tuesday, 16 September 2003
September 16, 2003 Lexar Media, Inc. (LEXR)
I have been watching this one for awhile. Unfortunately, I have never bought any shares...and the stock has been an OUTSTANDING performer. Perhaps there is a little more in that rocket? Let's take a look:
Lexar Media (LEXR) is having a great day today: currently, they are trading at $19.73 up $2.14 or 12.17%. According to money.cnn.com, Lexar "...designs, develops and markets digital film and connectivity products for the digital photography market. The Company offers flash cards in five primary media formats used by digital cameras and other electronic devices."
On July 17, 2003, LEXR reported outstanding results for the quarter ending June 30, 2003: Second quarter revenue increased SEQUENTIALLY by 49% to $81.5 million from $54.6 million and 140% (!!!) from $34.0 million the prior year. Net income was $7.0 million, or $.09/share vs $4.3 million or $.06/share the PRIOR quarter and $1.3 million or $.02/share the priod year.
These were PHENOMENAL results. (Am I shouting too loud?) It is clear why the stock price has EXPLODED in the last three months as it tries to catch up with the reality of this performance.
Quite frankly, the Morningstar.com revenue growth is not straight line and shows a hiccough (I think that is the spelling lol) from 2000 to 2001: Revenues of $7.6 million in 1998, $29.2 million in 1999, $88.0 million in 2000, $73.6 million in 2001 (the drop), then $174.0 million in 2002, and $199.9 million in the trailing twelve months.
Free cash flow is also not perfect: ($43) million in 2000, ($10) million in 2001, $0 in 2002, and ($19) million in the trailing twelve months. This is certainly NOTHING to write home about.
Assets and Liabilities look much better: $33.2 million in Cash and $65.0 million in other current assets vs $54.4 million in current liabilities and only $1.1 million in long-term liabilities according to Morningstar.com. This is a very health balance sheet imho.
Per Yahoo.com, the market cap of LEXR is 1.39 Billion. The trailing p/e is a pricey 65.15, the PEG is 2.44 and price/sales is 4.99. Alright, it ISN'T CHEAP...but those revenue growth numbers are amazing. Currently there are 70.24 million shares outstanding with 59.9 million of them that float. There are 3.05 million shares out short representing 5% of the float or 1.259 days of average trading volume. No dividend is paid.
I like this stock a lot. I know it is expensive but sometimes you can feel like you are on the cusp of a growth explosion and this sounds like it. However, the cash flow is negative, the p/e is very high, and maybe this is a great stock that would have been better purchased a few $'s ago....anyhow, I offer it to you for your consideration!
Thanks again for stopping by! Regards to all of my friends.
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