Stock Picks Bob's Advice
Sunday, 5 October 2003
October 5, 2003
Hello friends! I hope you are all enjoying your weekend. Before we get to the week of August 18, 2003, I would like to say I am pretty impressed at the strength of the market last week. Our stocks bounced right back and if you look at the trading portfolio, you will see that our overall profits are pretty volatile and we undid the damage of the prior week, putting our total gains (realized and unrealized) up to about $22k for the year. However, the margin level is pretty high and we will need to look at pruning gains when they become available and holding tight to our 8% stops.
During the week of August 18, 2003, I listed six stocks on this site. It was indeed a mixed bag. A couple did well and a couple have done poorly. Remember, that in real life we would be holding to our 8% stops...and selling the weak ones quickly, hopefully hanging on tightly to those that are rising.
The six selections were: Measurement Specialties (MSS) at $12.31 on August 18, 2003; Polymedica Corporation (PLMD) at $46.06 on August 18, 2003; Dynacq Int'l (DYII) at $24.50 on August 19, 2003; LifeWay Foods (LWAY) at $14.51 on August 21, 2003; Electronics Boutique (ELBO) at $32.30 on August 22, 2003; and DJ Orthopedics (DJO) at $10.89 on August 22, 2003.
Measurement Specialties (MSS) closed at $13.23 on October 3, 2003. This was a gain of $.92 or 7.5%.
Polymedica split 2:1 on September 29, 2003, and closed on October 3, 2003, at $26.54 (equivalent to $53.08 on a pre-split basis). This is a gain of $7.02/share (pre-split) or $15.2%.
Dynacq Int'l wasn't as lucky when it came under fire in Barron's. DYII closed October 3, 2003 at $19.18, down from the selection price of $24.50 by ($5.32) or (21.7%).
LifeWay Foods (LWAY) was selected on August 21, 2003, at $14.51. LWAY closed October 3, 2003, at $13.86, a loss of ($.65) or (4.5%). We actually had LifeWay in our trading account and sold it at a loss as well before accumulating too much of a deficit.
Electronic Boutique (ELBO) was selected on August 22, 2003, at $32.30. ELBO closed at $30.55 on October 3, 2003 for a loss of ($1.75) or (5.4%).
Finally, DJ Orthopedics (DJO) was selected on August 22, 2003, for $10.89. DJO, one of our stronger stocks from the week, closed October 3, 2003, at $13.90, for a gain of $3.01 or 27.6%.
The performance of the six stocks were +7.5%, +15.2%, -21.7%, -4.5%, -5.4%, and +27.6%. The average of that performance is +3.1%, not terribly exciting, but not too bad considering that this evaluation allows our losses to run up without stopping them, and the time period was only about 6 weeks.
Thanks again for visiting. Please drop me a line at firstname.lastname@example.org if you have any questions, comments, or words of encouragement!
Friday, 3 October 2003
October 3, 2003 Genesis Microchip Inc. (GNSS)
Hello friends! It is late Friday and I certainly have better something better to do than posting another entry....but a fellow has got to do what he has got to do...and I cannot leave an entry unentered! So here we go with Genesis. Sounds like a book in the Bible don't you think?
Genesis Microchip (GNSS) had a great day in the market today....along with LOTS of other stocks. Thank goodness the market held the bulk of the rally. GNSS closed today at $13.28 up $1.59 for the day or 13.60%. That sure beats those money market returns!
According to money.cnn.com, Genesis Michochip "...designs, develops and markets integrated circuits that manipulate and process digital video and graphic images." Apparently, they are addressing chip needs of the flat panel display market and flat panel television market.
The most recent quarter results were posted on July 29, 2003, when GNSS reported on Business Wire as related on Yahoo.com, their first quarter Fiscal 2004 results. (Doesn't it get confusing when some people are still posting 3rd quarter fiscal 2003 results, other companies are posting their 2004 first quarter results?) Total revenues for the quarter were $53.9 million, up 30% from last year's $41.6 million quarterly result. Net income for the quarter was $1.4 million or $.04/share compared to a loss of ($4.0) million or ($.13)/share last year.
Morningstar.com shows steady revenue growth with $37.7 million reported in 1999, $53.3 million in 2000, $63.6 million in 2001, $163.4 million in 2002, and $194 million in 2003.
Free cash flow has improved from ($16) million in 2001, to $13 million in 2002 and $10 million in 2003.
This company is flush with cash with $113.1 million in cash, way more than enough to cover the current liabilities of $27.9 million and $1.0 million in long-term debt. In addition, they have $46.7 million in other current assets. (all per Morningstar.com).
Yahoo.com showsthis company with a market cap of $417.60 million, no trailing p/e as they just turned profitable, a PEG ratio of 1.73 and price/sales of 1.78.
There are 31.45 million shares outstanding and 30.50 million that float.
I like this company a lot...but it is a bit speculative as it is just turning profitable...would rather have a longer record of profitability. Certainly the balance sheet is excellent, and they are positioned well in the fast growing field of flat panel displays. If this is your cup of tea, this might indeed be an excellent pick! I do not own any shares of this issue. Have a great weekend and come visit again soon.
October 3, 2003 Bentley Pharmaceuticals, Inc. (BNT)`
TGIF. No, not the restaurant silly. FRIDAY. I am ready for a weekend...and what a GREAT close to the week. The Feds report that 57,000 new jobs are created and the market EXPLODES. IMHO, there must be a lot of pent-up buying demand out there...maybe some of those Billions of dollars sitting in money market accounts paying less than 1% are moving into the market!
Anyhow, actually NOT too many of our kind of stocks on the lists of biggest movers. I guess in a BIG rally, there is INDISCRIMINATE buying of stocks....just go into that retail joint and buy some stocks....ANYTHING. (Am I shouting too much?)
Bentley (BNT), on the AMEX, does pretty much fit into our scheme but not perfectly. But I am lately willing to overlook a blemish or two on an otherwise drop-dead gorgeous investment.
BNT is having a nice day...trading at $15.69 as I write, up $.71 or 4.74%. According to money.cnn.com, BNT "...is engaged in the manufacturing, marketing and distribution of pharmaceutical products in Spain, with limited product distribution in the U.S."
On July 30, 2003, per PRNewswire-FirstCall as reported on NYTimes on the web, Bentley reported their second quarter results for the period ended June 30, 2003. Total revenues were up 38% when adjusted for exchange rates to $16.8 million compared to $9.9 million last year (70% when not adjusting exchange rates). Net income for the 2003 second quarter grew to $1.5 million or $.07/diluted share compared to $519,000 or $.03/diluted share last year. Approximately $500,000 (or a third) of the net income this year was favorably impacted by exchange rates...but still would be up nearly 100%...$1 million vs. $.5 million last year.
Morningstar.com shows a fairly steady improvement over the last 5 years...although further out the company had been shrinking its revenue...revenue increased from $15.2 million in 1998, $20.2 million in 1999, dipped to $18.6 million in 2000, back up to $26.4 million in 2001, $39.1 million in 2002, and extrapolating the current quarter would get us to over $60 million in 2003.
The company turned profitable in 2001 and has been improving the profit picture since then. Free cash flow is still negative, although a small figure at best: ($4) million in 2000, ($1) million in 2001, ($2) million in 2002, and ($1) million in trailing twelve months.
Assets and liabilities look good with $25.3 million in cash reported per Morningstar.com, more than enough to cover both the current liabilities of $19.7 million and the $2.8 million in long-term liabilities. In addition, BNT has $24.2 million in other current assets.
Market cap, per Yahoo.com, is a small $278.18 million. The trailing p/e is a bit steep at 74.90, but the company is JUST turning profitable and the PEG ratio is low at 0.80. The price/sales is also a bit steep at 5.13. There are 17.76 million shares outstanding with 17.10 million of them that float. There are 1.07 million shares out short as of 9/8/03, representing 7.4 days of trading or 6.28% of the float. If the stock continues strong, this may result (?) in a short squeeze.
In 1995 the company had a reverse split of 1:10. Clearly their fortunes have been improving recently!
I do like this stock. It is small enough to continue its remarkable growth and the revenue picture is nice. I would like to see the cash flow a little positive....and I am a little leary at its 'prior life' when the company was doing so poorly it needed to implement a reverse split.
I do not own any shares of this company, nor am I planning to jump right in but if you are interested, this might be a good one for you!
If you have any questions, comments, or words of encouragement, please let me know at email@example.com
Thursday, 2 October 2003
October 2, 2003 UTStarcom, Inc. (UTSI)
Here is a stock that I like a lot...although the numbers are not perfect. This company is an American firm that is run by Chinese-Americans who apparently culturally and language-wise understand the China market better than some traditional American telecom firms. I hope I said that better than Rush Limbaugh who lost his job recently on ESPN due to a racial remark. But seriously, these guys really seem to get it. I have owned shares of UTSI sometime in the past but do not own any shares at this time.
UTSI is having a GREAT day today trading at $35.23, up $3.32 on the day or 10.40% as it announces again renewed optimism about 2003 results.
According to money.cnn.com, UTSI "...provides communications equipment for service providers that operate wireless and wireline networks in rapidly growing communications markets." Most of their contracts are in China, but they have been looking outside this region as well.
On July 17, 2003, UTSI announced their second quarter results for the quarter ended June 30, 2003, per PRNewswire-FirstCall as reported on Yahoo: Net sales grew 23% sequentially to $330.5 million from the PREVIOUS quarter and year-over-year increased 75% over the $231.5 million in net sales in the second quarter of 2002. (these numbers are pretty incredible!) Net income for the second quarter increased 53% year over year to $39.4 million or $.33/share compared to net income of $25.7 million or $.22/share for the second quarter of 2002.
Morningstar.com shows a rapid growth in revenue from $100 million in 1998, $200 million in 1999, $400 million in 2000, $600 million in 2001, $1.0 billion in 2002, and $1.3 billion in the trailing twelve months.
The hiccup is the free cash flow which as been positive and improving from ($66) million in 2000, $10 million in 2001, $82 million in 2002, and here is the hiccup: ($160) million in trailing twelve months. I am not sure how significant this change is but should be noted and considered.
Assets and liabilities are adequately balanced with $281.3 million in cash and $1.6 billion in other current assets with $1.1 billion in current liabilities and $402 million in long-term liabilities.
Looking at Yahoo.com, we find that the trailing p/e is in my opinion, very reasonable at 17.06, resulting in a PEG ratio of 0.88. The price/sales a little high at 2.52. There are currently 102.9 million shares outstanding and 73.50 million of them float. There are 9.69 million shares out short as of 9/8/03 representing 2.238 trading days or 13.18% of the float.
As you may note, I like this stock a lot and would like to have it in my portfolio...you know the margin question...I am a bit concerned about the recent turn to the negative in free cash flow and would watch that closely. However, with the fabulous growth and past history of nice cash flow, this does not concern me much. As of yesterday, the company was raising already aggressive 3rd quarter and year results. There is a lot of work to do in China, and UTSI appears to be an important player.
Wednesday, 1 October 2003
October 1, 2003 TASER International, Inc. (TASR)
O.K. sports-fans, the bulls are running (Does it sound like Pamplona?). The Dow is up about 130 or so points and the NASDAQ up 30 or so. I have a Buck Rogers stock for you...or is it more like a stock out of a Tom Clancey novel? Anyhow, take a look at TASER International (TASR). This stock has had a couple of hiccups in the last five years but it is doing quite well overall....currently, as I write TASR is trading at $29.25 up $2.97 or 11.30% on the day.
According to money.cnn.com, TASR "...develops, assembles and markets less-lethal, conducted energy weapons primarily for use in the law enforcement and corrections market." Now is this a COOL stock or what?
On July 21, 2003, TASR reported results for the second quarter of 2003, for the period ending June 30, 2003. The results were not shocking (yuck yuck), but they generated some punch: Net sales were $4.2 million a 53% increase over the $2.7 million reported in the second quarter of 2002. Net income increased 330% to $347,000 as compared to $81,000 reported last year.
Morningstar.com shows a rapid increase in revenue from nil in 1998, $2 million in 1999, $3 million in 2000, $7 million in 2001, $10 million in 2002 and extrapolating the current quarter should get us somewhere north of $16 million for 2003.
Unfortunately, free cash flow has NOT turned positive with $0 in 2000, and ($1) million in 2001 and 2002.
This small company has a clean balance sheet per Morningstar with $2.8 million in cash, more than enough to cover the $1.4 million in current liabilities and $100,000 in long-term debt. In addition, Morningstar reports $4.0 million in other current assets.
This is NOT a cheap stock. As the company is just becoming profitable, the p/e is steep at 61.1, the PEG ratio is at 2.24 and price/sales is 6.04. The market cap of this Micro-cap company is only $81.65 million. There are only 2.84 million shares outstanding and 2.00 million of them that float. Of the float there are 944,000 shares out short as of 8/8/03 representing 47.20% of the float (!) or 6.695 trading days. This is a set-up for a short-squeeze and we may be witnessing this in motion today.
No dividend is paid.
If you are looking for a fast-growing, yet profitable company, this may be it for you. If I wasn't back up to my ears in margin (lol), then I might be buying a few shares as well. So zap your portfolio with this stock...."Ka-POWWW"...as they would say in those old Batman T.V. shows....
P.S. I edited this post on 10/4/03, corrected title which read September 1, 2003...(oops) Nothing else changed.
Posted by bobsadviceforstocks at 3:26 PM CDT
Updated: Saturday, 4 October 2003 10:24 PM CDT
October 1, 2003 "Trading Transparency" ANN
With the market up nicely out of the gate, I defied my normal October anxiety and purchased 200 of ANN at the market this morning. We reviewed ANN yesterday and AnnTaylor has consistent revenue growth, PEG of 1.0, price/sales under 1.0, p/e under 20 and same store sales growth in 8% range last month. Looked good to me and I made the plunge! Will look for picks later today.
Tuesday, 30 September 2003
September 30, 2003 AnnTaylor Stores Corp. (ANN)
I was away from the computer and thus the market for most of the day. This afternoon, looking through the tables, I did not think I would find any new stocks to post...but like most days, if I look carefully enough, I usually can fine one new one. Today I noticed AnnTaylor Stores (ANN). I do not own any shares of ANN but did like what I saw today. ANN closed today at $32.14, up $1.15 or 3.71%.
According to Money.cnn.com, AnnTaylor Stores "..is a specialty retailer of women's apparel, shoes and accessories."
About a month ago, on August 13, 2003, per PRNewswire as reported on NYTimes on the Web, ANN reported their second quarter, 2003, results for the period ending August 2, 2003. Total net sales for the quarter were $390 million up 13.7% from $343 million last year. Comparable store sales for the quarter increased 5.3% compared to a (0.2%) decrease for comparable store sales in the same quarter of 2002. Net income for the quarter was $21.2 million or $.45/diluted share vs. $18.2 million or $.39/diluted share in the second quarter of fiscal 2002.
One of my key indicators for retail stocks is the so called same store sales figure. This number reports the sales results for stores or retail outlets open at least a year. This is important because this gives you a more accurate picture on the sustainability of revenue growth, that is, whether the sales growth is due to just opening more NEW stores or whether the old stores (open at least a year) are showing gains when compared to their prior year sales. Anyhow, looking through the news we find the latest results on ANN, reported on 9/4/03, through PRNewswire-FirstCall on NYTimes on the Web: same store sales for the four wee period ended 8/30/03 increase 18.0%, while comparable store sales were up a solid 8.2% (even better than the results reported above for the preceding second quarter!).
Reviewing the tables in Morningstar.com, we find that revenue growth has been steady the past 5 years from $.9 Billion in 1999, $1.1 billion in 2000, $1.2 billion in 2001, $1.3 billion in 2002, and $1.38 billion in 2003.
Free cash flow has improved recently from ($6) million in 2001, ($5) million in 2002 and $114 million in 2003 with $74 million in the trailing twelve months.
ANN, per Morningstar.com, has $188.3 million in cash and $270.8 million in other current assets easily covering both the $141.2 million in current liabilities and $148.6 million in long-term liabilities combined.
Ann Taylor has a market cap of $1.45 Billion. the trailing p/e is reasonable at 18.02. The PEG ratio is right at 1.00, and the price/sales is also reasonable at 0.97. There are 45.09 million shares outstanding and 44.60 million of them that float. 2.14 million of shares are out short representing 2.444 days of trading. No dividend is paid. the last stock split was a 3 for 2 split on 5/21/02.
I do like this stock a lot. This company has a steady track record with a lot of GARP. (Growth at a reasonable price). Recently, their same store sales figures have been strong and this often precedes a nice price appreciation (vis a vis URBN). The p/e is under 20, the PEG ratio is right at 1.0 and the price/sales is under 1.0. The assets outweight the liabilities. What is there NOT to like. If I just had a little cash, this would be where I would put it to work!
Thanks for stopping by!
Monday, 29 September 2003
September 29, 2003 SFBC International, Inc. (SFCC)
Hello friends! Thanks again for stopping by. I hope that some of my thoughts are contagious (and not the cold I am fighting off)....and that all of our understanding of investing improves. Anyhow, today was not a day for our kind of investing...our trading portfolio was flat on the day while the market moved ahead....and there weren't too many of our kind of stocks on the highest %-gainers list. This evening, scanning the NASDAQ again, I came across SFBC International (SFCC). I do not own any shares and in fact have not heard of this stock before today.
According to money.cnn.com, SFCC "...is a contract research organizatin that conducts clinical trials and provides related services to pharmaceutical and biotechnology companies and other contract research organizations." SFCC had a GREAT day today, closing at $30.25 up $3.35 or 12.45% on the day.
On August 4, 2003, per BUSINESS WIRE, as reported on the NYTimes on the Web, SFBC International reported their second quarter results for the quarter ended June 30, 2003. Revenue for the second quarter was $22.5 million an increase of 53% compared to $14.7 million in the prior year. Net earnings for the quarter increased 49% to $2.0 million compared to $1.36 million for 2002. Per diluted share, this came in at $.27, a 50% increase over the $.18 reported in the same quarter last year.
Morningstar.com shows SFCC with steady growth from $5.9 million in revenue in 1998, $8.3 million in revenue in 1999, $19.7 million in 2000, $31.5 million in 2001, $64.7 million in 2002, and extrapolating the current quarter would get us over $80 million in revenue for 2003.
Free cash flow, while unexciting, has been improving with ($1) million reported in 2000, $1 million in 2001, and $0 million in 2002. The assets/liabilities reported in Morningstar shows $8.8 million in cash and $26.6 million in other current assets, easily covering the $14.6 million in current liabilities and $2.8 million in long-term liabilities.
SFCC is a small company with a market cap of $234.92 million. The trailing p/e is reasonable at 22.23, the PEG ratio is cheap at .71, and the price/sales is moderate at 2.56. There are only 7.77 million shares outstanding ant only 6.00 million of them that float. There are 351,000 shares out short, representing 5.85% of the float or 1.773 trading days.
There are a lot of things I like about this stock. We have had good luck with small cap stocks like this with reasonable valuation (low p/e), good balance sheet, steady revenue growth, and low # of shares that float. If I find some cash tomorrow, I might consider picking up some shares. If so, they will show up in the trading account. I would prefer to make sure the correction is over before adding to our equity positions.
Regards to all of my friends!
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
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