Stock Picks Bob's Advice
Saturday, 27 September 2003
"How are we doing?" A look back on the week of August 11, 2003
This past week that we have had has been a tumultuous one for our stocks. We have backed off of our gains in our trading account to about the level of a month ago and are nearly at 8% stops for two more stocks in the account. I hope that you too are stopping out of stocks as losses develop. Save your cash for a better market run.
It helps sometime to look back at our earlier picks to see how they are doing...help us evaluate this whole process and see what it is that seems to propel a stock higher and when is a stock TOO high already!
During the week of August 11, 2003, we had only three selections on this website: Possis Medical (POSS), Techne Corp (TECH), and Tyler Technologies (TYL).
POSS was selected on 8/11/03 at the price of $17.33. As of the close of business on Friday, 9/26/03, POSS was trading at $15.80. This is a loss of ($1.53) or (8.9%).
On August 12, 2003, we selected Techne Corporation (TECH) for Bob's Advice at $32.08. TECH closed Friday, 9/26/03, at $31.93 for a loss of ($.15) or a loss of (.5%).
The final suggestion was Tyler Technologies (TYL) at $5.75. On 9/26/03, TYL closed at $7.00 for a gain of $1.25 or a gain of 21.7%.
The average of this (8.9%), (.5%), and 21.7% is a gain of 4.1% over this approximately 6 week period. Fortunately, the outstanding performance in TYL balanced out the losses in the other two stocks.
I hope that this discussion is helpful to you in thinking about investment ideas. If you have any questions or comments, please feel free to email me at firstname.lastname@example.org or leave your messages here on the website by clicking on the "comments" or "no comments" link under each posting!
Have a great weekend and come back and visit again!
Friday, 26 September 2003
September 26, 2003 Cherokee Inc. (CHKE)
What does it all mean that in a sloppy market we are finding more of our kind of stocks? I am not sure but I suspect it means that the internal correction of this market is ending and investors are stepping back in to purchase stocks with potential...hmmm? Anyhow, this one isn't what I would call politically correct....anymore than a Pontiac car...but Cherokee Inc. (CHKE) is having a nice day and meets most of our criteria. I do not own any shares of this stock either.
CHKE is currently trading at $20.90 up $.90 or 4.92% on the day. According to money.cnn.com, Cherokeee "...is in the business of marketing & licensing the Cherokee and Sideout brands and related trademarks and other brands it owns." They are an apparel firm.
On September 10, 2003, Cherokee, according to BUSINESS WIRE as reported on the NYTimes on the Web, announced their record second quarter sales and earnings for the quarter ended August 2, 2003. (Now why can't companies have some REGULAR reporting period...is that too much to ask?) Net revenues rose 15% to $9.9 million compared to $8.6 million in the second quarter of 2003. (Here we are in the second quarter of 2004 and it is only September, 2003...this is kind of like deja vu all over again.)..Net earnings for the three months increased to $3.7 million or $.43/diluted share compared to $3.3 million or $.38/diluted share in the second quarter last year.
Morningstar.com shows a nice, steady picture of revenue growth from $19.3 million in 1999, $24.7 million in 2000, $28.3 million in 2001, $30.7 million in 2002 and $33.1 million in 2003.
Free cash flow has been steady at $14 million in 2001, (results for 2002 are not included on Morningstar), $12 million in 2003.
Assets/liabilities look pretty nice as well with $1.2 million in cash and $19.1 million in other current assets vs. $15.4 million in current liabilities and NO long-term debt reported.
As I am writing CHKE has gone to unchanged...lol...but the numbers look nice so let's continue. The market cap is $164.76 million and the trailing p/e is nice at 12.37. Price/sales a little steep at 4.70. There are only 8.27 million shares outstanding and 3.20 million of them float. 14,000 shares are sold short as of 8/8/03....representing 0.44% of the float.
This looks like an interesting low-tech stock pick for me with steady growth, nice balance sheet, low p/e, and free cash flow positive. The small # of shares outstanding and low volume (only 14,422 shares traded today)...makes the volatility high...went from up nicely to unchanged in minutes lol. If you would like something different, try out this stock...the changing room is right over there...:). Bob
September 26, 2003 Abaxis, Inc. (ABAX)
Sometimes I wonder what is the point of all of this buying and selling....what makes our approach here any different than Malkiel's (the author of Random Walk down Wall Street), is that I don't think that stock prices over the long term are random. I do think that underlying fundamentals of a stock are what determine its ultimate value. Anyhow, enough philosophizing....I just wanted to share with you some of my thoughts.
Abaxis, Inc. made the list today. This is a small company that may have a lot of room to grow. Although up stronger earlier today, it is still currently trading at $13.40, up $.39 on the day or 3.01%.
According to money.cnn.com, Abaxis (ABAX) "...develops, manufactures and markets portable blood analysis systems for use in any patient-care setting to provide clinicians with rapid blood constituent measurements." By the way, I do not own any shares of this company.
On July 31, 2003, ABAX reported results for their first quarter 2004 period ending June 30, 2003. Their quarterly revenue was $10.3 million, a 39% increase over the same period last year. Diluted earnings per share were $.04 vs a loss of $(.02) last year.
Morningstar.com shows revenue of $13.3 million in 1999, $23.4 million in 2000, $29.8 million in 2001, $30.6 million in 2002, and $34.8 million in 2003. Extrapolating the current quarter revenue (without any sequential growth) would get us to $40 million for 2004.
Free cash flow has improved from $(9.0) million in 2001, to $2 million in 2002 and 2003.
The company has an excellent balance sheet per Morningstar.com with $10.4 million in cash and $13.1 million in other current assets. This is balanced against $5.7 million in current liabilities and $7.5 million in long-term debt.
This is a small cap stock with a market cap of $231.5 million. The trailing p/e is enormous (since the company JUST turned profitable) at 162.61. Price/sales also high at 5.74. There are 17.21 million shares outstanding and 16.7 million that float. Only 109,000 shares are out short as of 8/8/03. No dividend is paid.
This is a very nice stock and might deserve a place in your stable. (I always think of stocks as sort of race horses....occasionally they break a leg and out they go.) The stock isn't cheap but it isn't easy to find these small fast growing firms with clean balance sheets. (imho).
Thanks for stopping by again. Please feel free to drop me a line at email@example.com if you have any comments or questions or leave them right here!
Posted by bobsadviceforstocks at 1:17 PM CDT
Updated: Friday, 26 September 2003 1:18 PM CDT
September 26, 2003 "Trading Transparency" - BONZ
Our stocks are taking a bit of a beating today and it makes sense in the correction because they have been the strongest up to this point. Unfortunately, I have now parted with BONZ (Interpore Int'l) as it dropped down to $15.90 where I sold it with a little over a 9% loss. We are cutting our margin levels in the face of this correction and we will refrain, hopefully, from buying more issues until we see a bit more positive market direction. Other stocks in our trading account that are near our 8% stop are MMSI and TTWO, both great companies...recently purchased....that haven't built a big enough "head of steam"...to avoid being sold in a downdraft. More later....
September 26, 2003 Research in Montion, LTD. (RIMM)
How about a bowl of blackberries for breakfast? Anyhow, terrible pun, but Research in Motion, the company behind the popular Blackberry communication device, is having a nice day. I do not own any shares of this stock. Currently Research in Motion (RIMM) is trading at $38.24 up $2.52 on the day or 7.05%. The stock is actually drifting lower this morning as the market drifts in the red.
According to money.cnn.com, RIMM "...is a designer, manufacturer and marketer of wireless solutions for the mobile communication market."
RIMM reported yesterday their second quarter results: Revenue for the quarter ending August 30, 2003, was $125.7 million up 20% from $104.5 million the PRIOR quarter (SEQUENTIALLY) and up 70% (!) from $73.4 million in the same quarter last year.
Net income for the quarter was $2.1 million or $.03 per share compared to a net loss of ($8.2) million or ($.11)/share the prior quarter. Unfortunately, the news report did not include the prior year's result.
Morningstar.com shows a beautiful growth in revenue from $20.9 million in 1998, $47.3 million in 1999, $85.0 million in 2000, $221.3 million in 2001, $294.1 million in 2002, and extrapolating the current quarter would get us to about $500 million (!) in 2003.
Unfortunately, the latest *'s on free cash flow are NOT as pretty: ($37) million in 2000, ($75) million in 2001, ($56) million in 2002, and no numbers in 2003. I expect that with this profitable quarter, the free cash flow has also improved but this is not a strength for this firm.
This company is FLUSH with cash with $644.6 million of cash and $92.8 million of other current assets compared to a mere $59.5 million of current liabilities, and $11.9 million of long-term liabilities. Certainly, we can wait awhile for the cash flow to improve, but would rather see this neutral or improving than continuing the present 'burn'.
This company has a market cap of $2.95 Billion, with a forward (!) p/e of 61.59, a PEG ratio of 4.38 and a price/sales of 7.05...this is NO BARGAIN. There are 77.37 million shares outstanding and 57.30 million of them that float. I am not alone in my skepticism of the price here as there are 7.82 million shares out short representing 13.66% of the float or 3.047 days of trading (as of 8/8/03).
This is a fabulous company. However, you will pay top dollar to purchase these shares. That doesn't mean the stock cannot go higher...and I am not going to start being a value investor just yet....but all things being considered try to buy the best growth at the most reasonable price....(GARP). I would like to see the cash flow turn profitable...and the earnings pick up to get us a bit better price.
Thursday, 25 September 2003
September 25, 2003 WD-40 Company (WDFC)
I try to be eclectic here (lol). This is kind of a Peter Lynch sort of stock. Who DOESN'T have a can of WD-40 to take care 'of what ails you'? Anyhow, this stock showed up today on the lists...and it looks like a pretty good fit. (If we cannot fit it in, we could just spray a bit of WD-40 and push...yuk yuk).
Enough of my humor, money.cnn.com reports that "WD-40 manufactures a line of both lubricant and heavy-duty hand cleaning products aimed at the hardware, do-it-yourself, automotive and other retail and industrial markets. Products include WD-40, 3 IN-ONE and Lava." The stock trading under WDFC is doing well today; as I write, WDFC is trading at $31.20, up $2.45 or 8.52%.
Yesterday, WDFC reported results for the fourth quarter and the 2003 fiscal year. As reported on the NYTimes on the web, net sales for the fourth quarter ending August 31, 2003 (why do all of these companies have all of these unique fiscal years?), were $73.4 million, an increase of 11.4% over sales of $65.9 million in the fourth quarter of last year. Net income for the quarter was $10.3 million or $.61/share, compared to $8.6 million, or $.52/share last year...an increase of 19.8%.
Morningstar.com shows a steady, and accelerating revenue growth trend: $144 million in revenue in 1998, $146 million in 1999, $146 million in 2000, $164 million in 2001, $217 million in 2002, $238 million in 2003 (just reported yesterday!).
Free cash flow has been nice and improving: $18 million in 2000, $18 million in 2001, $34 million in 2002, and $40 million in the trailing twelve months per Morningstar.
The financial condition is healthy: $32.3 million in cash, $42.9 million in other current assets with $35.6 million in current liabilities and $86.9 million in long-term debt. This is slightly more debt than some of our other companies we have looked at but with the increasing free cash flow, this should not be a problem imho.
This company has a market cap of $516.1 million with a reasonable trailing p/e of 16. The PEG ratio is reported at 2.49...but with latest growth this appears to be overstated. This stock DOES have a dividend (a nice added bonus), currently yielding, per Yahoo, 2.78%. The last stock split was 2:1 in 1997. There are 16.64 million shares outstanding and 15.30 million of them float. 50.5% of the float is held by institutions. There are only 520,000 shares out short but this represents, as of 8/8/03, 9.63 days of trading with average volume so we could be witnessing a 'short squeeze'.
This is a nice company and you might wish to pick up a few shares in here. I do not own any shares....there are so many issues that I like...and I don't want to repeat that "M" word (shhhh margin)....so I cannot buy everything. Shucks. Anyhow, I hope you enjoyed this review and please excure my irreverant humor...did you notice?
September 25, 2003 Cree, Inc. (CREE)
Lo and behold, I now have a semiconductor stock for you. First we had a few dot.com's which actually have done quite well....dabbled in the China internet frenzy with SOHU, and yes...a chip stock! The stock isn't perfect with a hiccup (I checked on that spelling and 'hiccup' is preferred over the older 'hiccough'!)..in revenue growth...but I believe we should look at those that have had interruptions in their steady revenue growth AS LONG AS they are BACK ON TRACK. (excuse my shouting).
According to money.cnn.com, Cree, Inc. (CREE) "...develops, manufactures, and markets silicon carbide-based semiconductor materials and electronic devices." CREE is having a nice day in a sloppy market today trading as I write at $22.16 up $2.80 on the day or 14.46%. (better than most money market accounts after 7 years lol)
This Durham, North Carolina company reported their fourth quarter results on July 29, 2003, on PRNewswire-FirstCall, as reported by the NYTimes on the Web: for the first quarter of fiscal 2003, record revenue of $64,061,000 a 69% increase (!) over the $37,800,000 reported for the same quarter in 2002. Net income was $11.4 million or $.15/diluted share compared to a loss of ($22.5) million or ($.31) per diluted share last year.
Morningstar.com shows an almost linear growth in revenue from $44.0 million in 1998, $62.4 million in 1999, $108.6 million in 2000, $177.2 million in 2001, $155.4 million in 2002 (the HICCUP), $203.6 million in 2003 and now, if you extrapolate the current quarter would get us over $240 million for 2004.
Free cash flow is also looking up: ($15) million in 2000, ($31) million in 2001, ($3) million in 2002 and $13 million in the trailing twelve months per Morningstar.
The financial condition of this company per Morningstar looks FABULOUS...with $121.7 million in CASH and $67.8 million in other current assets vs. $29.4 million in current liabilities and NO long-term liabilities.
CREE is not a small cap stock with a Market Cap of $1.62 Billion. The trailing p/e is 42.09 which isn't too bad considering recent return to profitability and explosive growth. The PEG ratio supports this at 1.05.
There are 73.3 million shares outstanding, per Yahoo, with 70.10 million of them that float. There are a LOT of shares out short...which suggests somebody thinks this is overpriced...but also sets us up for a 'short squeeze' as all those short sellers try to cover their borrowed shares...this represents 7.933 days of trading or 30.25% of the float as of 8/8/03.
No dividend is paid and the last split was a 2:1 split in December, 2000.
I do like this stock a lot. I think I need to be less rigid on the linear revenue growth...but this hiccup has been overcome and company appears to be on track to a dynamite year. I do not own any shares of this but would certainly think of buying some...it meets my criteria...but as you know....it is the margin. the margin, the margin...that holds me back lol.
Thanks for stopping by!
Wednesday, 24 September 2003
September 24, 2003 America's Car-Mart, Inc. (CRMT)
You know we have so many stocks posted here we are starting to repeat themes. One of our earlier posts was CarMax (KMX)that has been a good performer for us. This stock, I happened to notice yesterday, and I am not sure WHY I didn't post it, except it was a busy day....lol. Anyhow, the stock showed up AGAIN today in the lists, and it looks pretty nice to me.
I do not own any shares of this company. According to money.cnn.com, America's Car-Mart (CRMT) "...sells and finances the sale of used automobiles and trucks principally to consumers with limited or damaged credit histories." A little like NCEN as well it seems. Currently as I write, CRMT is trading at $29.61 up $1.75 or 6.28% on the day.
Morningstar.com shows a beautiful growth in revenue from $30 million in 1999, $91 million in 2000, $107 million in 2001, $128 million in 2002 and $155 million in 2003.
On September 10, 2003, CRMT reported its first quarter results for the quarter ending July 31, 2003. Importantly, at the same time, they also raised their earnings 'guidance' for 2004. This optimism is critically important to the subsequent price rise experienced by this equity. The results were reported on Business Wire on yahoo.com: Revenue grew 20% to $43.3 million compared to $36.1 million in 2002. Income increased 27% to $4.4 million or $.55 per diluted share compared to $3.4 million of $.43 per diluted share in 2002. Sales increased 15% to 6,066 vehicles in the current quarter compared to 5,273 vehicles in the prior year.
Looking at Morningstar.com, we find steady revenue growth from $30.0 million in 1999, $91.0 million in 2000, $106.8 million in 2001, $127.9 million in 2002, and $154.9 million in 2003.
Recently, free cash flow has been improving with ($8) million reported in 2001, ($1) million in 2002, $6 million in 2003.
Assets/Liabilities appear favorably balanced with only $0.8 million in cash reported but $96.2 million in other current assets vs. $8.7 million in current liabilities and $27.1 milion in long-term liabilities.
Looking at Yahoo, we find this to be a small company with a market cap of $222.5 million. The trailing p/e is quite reasonable at 15.06. Price/sales good at 1.29. (I think anything close to 1 is reasonably priced for retail...imho)
There are only 7.51 million shares outstanding and 5.50 million of them that float. Only 181,000 shares are out short as of 8/8/03.
Actually, for a used car company, I like the numbers. This business is executing well with growing revenue and earnings, free cash flow, and a price that is down to earth. I don't own any shares but wouldn't hesitate to pick up some....would rather buy though in the midst of a stronger market.
Thanks again for stopping by! Please visit again and feel free to share this 'URL' with your friends!
September 24, 2003 Multimedia Games, Inc. (MGAM)
Hello friends! This is our second gaming stock I believe on this site. The list gets so long it is hard for ME to remember all of our posts. I hope you enjoy reading them. Anyhow, yesterday I didn't find much that met my criteria on the movers....but this morning came across Multimedia Games, Inc. (MGAM) even though the rest of the market is a bit anemic and is pulling back as I write.
Multimedia Games, according to money.cnn.com, "...designs and develops interactive Class II bingo and Class III video lottery games and related electronic player stations and equipment that are marketed to Native American bingo halls located throughout the U.S." If MGAM does anything like the performance of IGT the past twelve months, this could be a real winner! In any case, some people are 'hitting the jackpot' today with MGAM, for as I write, the stock is trading at $34.30 up $4.35 on the day or 14.52%.
On July 30, 2003, according to the NYTimes on the Web from Business Wire, MGAM reported their third quarter results for the quarter ending June 30 2003. Listen to these results(!): net revenue jumped 46.7% to $37,9 million from $25.8 million last year, and Net Income was up 29.5% from $6.8 million to $8.9 million this year..or diluted eps was $.60 vs $.47 last year, a 27.7% increase.
Looking at Morningstar.com, we find revenue of $70.5 million in 1998, $88.9 million in 1999, $96.8 million in 2000, $131.8 million in 2001, $291.0 million in 2002, and $330 million in the trailing twelve months.
Free cash flow has been improving: $4 million in 2000, ($1) million in 2001, $2 million in 2002, and $3 million in trailing twelve months.
Assets/liabilities look excellent with $25.1 million in cash and $13.5 million in other current assets vs. $22.3 million in current liabilities and $8.5 million in long-term liabilities.
This stock actually looks CHEAP with a trailing p/e of 14.06, a price to sales of 1.13, and a PEG ratio of 0.66. The market cap. is $447.7 million with 13.12 million shares outstanding and 11.30 million of them floating. There are LOTS of shares out SHORT, with 2.18 million of them reported as of 8/8/03. Beats me why they sold short but now they are going to have to COVER THEM...yippee..if you are long!
I don't own any shares of this issue but certainly will look later at picking up some. I will give you a headstart on this....but things do look interesting!
Thanks for stopping by!
Tuesday, 23 September 2003
September 23, 2003 "Trading Transparency" DRS
The market is acting a bit 'ill' and I didn't like coughing up $500 for the margin account to keep it above water....so in the face of continued weakness in the defense sector, I sold the 150 shares of DRS Technologies (DRS)...and will add to my margin reserve. No new purchases right now until we see a healthier stock market. Bob
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