Stock Picks Bob's Advice
Friday, 6 August 2004
"Trading Transparency" SAFM
Hello Friends! Just wanted to update you on a recent transaction. I just sold 135 shares of SAFM at $44.92. These shares were purchased at $35.86 on 2/3/04. Thus they were sold with about a 25% gain. I sold these shares as my new sell point on this issue was at a 30% level...I had sold twice at gains and allowing the stock to retrace 50% gives me a new sell point at around 30%.
Thanks so much for stopping by. If you have any questions, or comments, please feel free to email me at email@example.com
Tuesday, 3 August 2004
August 3, 2004 Mentor Corp (MNT)
Hello Friends! Thanks very much for stopping by. I have grown discouraged about the NASDAQ recently. Who wouldn't?
It appears that the NASDAQ rolled over sometime in late January, 2004, and since then we have had a series of lower highs and lower lows. I really would like to see this reversed on the next rally. As always, please remember that I am an amateur investor so please do your own investigation into all stock market ideas discussed here and please consult with your professional investment advisors prior to making any investment decisions.
Mentor (MNT) was at the top of the list of top % gainers on the NYSE. MNT closed today at $34.45, up $3.10 or 9.89% on the day. I do not own any shares nor do I have any leveraged position in this stock. According to the Yahoo "Profile", Mentor "...manufacturers and markets products serving the medical specialties market." Some of their more notable products include breast implants, implantable prostheses, and impotence and incontinence devices.
As I have pointed out many times on this blog, what often drives stocks higher over the short-term is announcements of good news or favorable earnings reports. Yesterday, after the close, Mentor announced 1st quarter 2005 results. Sales jumped 16% to $122.4 million compared to the prior year sales figure of $105.1 million. Diluted earnings per share for the quarter came in at $.39, up 18% from last year's $.33/share. At the same time, Mentor reaffirmed that it expected fiscal year 2005 sales to grow at a low double-digit growth rate with sales over sales of $422.2 million in the 2004 fiscal year. This was a nice announcement for Mentor, and the stock responded positively, even on a very weak day otherwise.
How about longer-term? If we review a "5-Yr Restated" financial statement from Morningstar.com, we can see that revenue has grown steadily from $249.3 million in 2000 to $422.2 million in 2004. Earnings have not been as consistent but have grown from $.73/share in 2000 to $1.15 in the trailing twelve months.
MNT even pays a small dividend and has increased it from $.05/share in 2000, to $.85/share in the trailing twelve months.
Free cash flow has been positive, increasing from $43 million in 2002 to $56 million in the trailing twelve months.
The balance sheet, as reported on Morningstar, appears solid to me. MNT has $118.4 million in cash and $209.6 million in other current assets as compared to liabilities of $129.9 million in short-term debt, and $170.5 million in long-term liabilities.
What about valuation? If we look at Yahoo "Key Statistics", we can see that this is a Mid-Cap stock with a market cap of $1.45 billion. The trailing p/e isn't bad at 28.38, with a forward (fye 31-Mar-06) p/e of 22.08. Thus, the PEG is reasonable at 1.53.
Yahoo reports 42.21 million shares outstanding with 40.50 million of them that float. There are 2.96 million shares out short as of 7/8/04, representing 13.436 trading days. This level of shorts might well explain the bit of a panic today of some buyers (?). As noted above, MNT does pay a small dividend of $.60/share yielding 1.91% return. The last stock split was a 2:1 on 1/21/03.
And what does the chart look like? Well, if we look at a nice Point and Figure Chart,
Per the chart, MNT last showed significant weakness through late 2000 when it dropped from $17.50 to a low of $6.50. Since that time, MNT has headed steadily higher.
Well, in conclusion, the stock actually looks nice to me. The recent earnings report was strong, the Morningstar 5-Yr record looks quite good, although earnings were NOT that consistent, they have been strong recently. The free cash flow is attractive and the technicals imho look fine. There is even a large level of short-sellers, poised to drive the stock even higher if the news on this company pushes the stock higher in the short-term.
Thanks so much for stopping by! If you have any comments, questions, or words of encouragement, pleae feel free to email me at firstname.lastname@example.org.
Monday, 2 August 2004
August 2, 2004 DHB Industries (DHB)
Hello Friends! Thanks so much for stopping by. I am trying to do my posting of stocks in the evening. My days just get busier and busier! As always, please remember that I am an amateur investor and that all information on this website should be read with that in mind. Please consult with your professional investment advisors and do your own investigation on all stocks discussed here prior to making any investment decisions.
Looking through the lists of top percentage gainers, I came across DHB Industries (DHB) on the AMEX that closed today at $17.05, up $1.84 on the day or 12.10%. This is a security/armor company, and the recent announcements of Orange terror alert drove this stock higher. According to the Yahoo "Profile"
, DHB "...is a holding company consisting of two divisions: DHB Armor Group (Armor Group) and DHB Sports Group (Sports Group)." I do not own any shares nor do I have any leveraged positions in this company.
On May 6, 2004, DHB announced 1st quarter 2004 results
. For the first quarter ended March 31, 2004, revenues came in at $74.4 million, a 61% increase over the prior year's $46.2 million. First quarter income available to common stockholders was $6.269 million, or $.14/diluted share, as compared to $4.929 million or $.12/diluted share in the first quarter of 2003. On a bullish note, the company raised its previous guidance on revenue and "...now expects revenues of at least $275 million for the full 2004 year."
As many of you will realize, at this point in the investigation of a stock, I like to look at a longer-term picture. For this I turn to the "5-Yr Restated" financials
on Morningstar.com. Here we can see a steady and impressive growth in revenue from $35.1 million in 1999 to $258.3 million in the trailing twelve months. Generally, earnings have gradually improved from $(1.24) in 1999 the $.36 in the trailing twelve months. Free cash flow which was $(3) million in 2001, $(16) million in 2002, improved to $2 million in 2003 and $6 million in the trailing twelve months.
The balance sheet on Morningstar.com shows only $500,000 in cash but $103 million in other current assets. This easily covers BOTH the $27.8 million in current liabilities and the $25.9 million in long-term liabilities. This looks very strong!
How about "valuation"? Looking at "Key Statistics"
on Yahoo, we can see that this is a small cap stock with only $695.84 million in market capitalization. The trailing p/e is a bit rich at 47.23, but the stock is growing so fast that the PEG is reasonable at 1.19. Yahoo reports 40.81 million shares outstanding with 24.20 million that float. There were 3.84 million shares out short, representing only 2.085 trading days of activity.
No cash dividend and no stock dividends are reported on Yahoo.
How about "technicals"? If we look at a Point & Figure chart from stockcharts.com:
we can see that this stock rallied from $.75/share in 2000 to a level of $8.50 in March, 2002. It then pulled back to the $1.50 level in November, 2002, then charged ahead not looking back to its current level in the $18.00 region. The chart looks quite strong to me!
So what do I think? This is the third Armor type company I have reviewed here including Ceradyne (CRDN), and Armor Holdings (AH). Certainly, this "terror problem" does not appear to be disappearing anytime soon. This company has a great track record of revenue and earnings growth. They are spinning off increasing free cash flow on top of an already healthy balance sheet. The p/e is a bit steep, but the growth rate anticipated over the next five years is such that the PEG is just a little over 1.0. Thus, the value isn't bad. Technically, the stock chart looks just fine to me as well. Overall, I like this stock, but simply cannot buy any shares in my portfolio until I have once again confirmed the market's strength with a sale of one of my existing holdings at a gain!
Thanks so much for stopping by! If you have any questions, comments, or words of encouragement, please feel free to email me at email@example.com .
Posted by bobsadviceforstocks at 9:02 PM CDT
Updated: Monday, 2 August 2004 9:08 PM CDT
Friday, 30 July 2004
"Looking Back One Year" A review of stock picks from the week of July 21, 2003
Hello Friends! Well we made it to Friday. One political convention down and one to go. Why we even ended up the week with the indices in positive territory! I like to use the weekend to look back on this website about a year earlier and see what happened to those stock picks that were mentioned here. As always, please remember that I am an amateur investor, so please do your own investigation into all stocks discussed on this website and please consult with your professional investment advisors before taking any actions based on information here!
On July 21, 2003, I posted IDEXX (IDXX)
on Stock Picks Bob's Advice
at $38.29. IDXX closed on 7/30/04 at $50.39 for a gain of $12.10 or 31.6%.
On July 23, 2004, IDXX announced 2nd quarter 2004 results
. Revenue rose 13% to $137.4 million from $121.8 million the prior year. Quarterly income rose to $23.9 million or $.66/share from $16.7 million, or $.47/share last year. Excluding one-time gains, this still worked out to $.57/share while analysts were looking for $.52. The company also raised estimates of 2004 and 2005 results. All in all, a very nice earnings report for IDXX!
Also on July 21, 2003, I posted DSP Group (DSPG)
on my blog at $25.23. DSPG closed at $19.71 on 7/30/04 for a loss of $(5.52) or (21.9)%.
On July 19, 2004, DSPG reported 2nd quarter 2004 results
. Revenue for the quarter came in at $44 million, up 14% from $38.6 million the prior year. Net income for the quarter increased 71% to $9.4 million, compared to $5.5 million last year. On a diluted earnings per share basis the earnings increased 58% top $.30/share compared to $.19/share last year. However, on the very next day, DSPG reduced guidance for the second half of 2004
by $.06-$.07 due to lowered revenue expectations. Negative guidance is never helpful in boosting a stock price!
On July 21, 2003, I also posted Simpson Mfg (SSD)
on this blog at $40.75. SSD closed 7/30/04 at $56.01 for a gain of $15.26 or 37.4%.
On July 20, 2004, SSD announced 2nd quarter 2004 results
. Net sales increased 24.2% to $181.8 million compared to $146.5 million in 2003. Net income increased 23% to $21.8 million for the second quarter of 2004 compared to net income of $17.7 million in 2003. Dilued net income per share came in at $.89 this year compared to $.71/share last year. These look like nice results to me!
On July 22, 2003, I posted Vital Images (VTAL)
on my blog at $21.66. VTAL closed on 7/30/04 at $11.49 for a loss of $(10.17) or (47)%.
On April 29, 2004, VTAL announced 1st quarter results
. Revenue came at $7.7 million, a 14% over last year's results. They reported a loss of $(1.1) million or $(.09)/share compared to net income of $654,000 or $.07/share the prior year. Clearly the stock has suffered from this earnings deterioration.
On July 22, 2003, I posted Cognizant Technology Solutions (CTSH)
here on Stock Picks at $30.22. CTSH split 2:1 on 6/18/04, thus our selection price was effectively $15.11. CTSH closed on 7/30/04 at $27.55 for a gain of $12.44 or 82.3%.
On July 26, 2004, Cognizant announced 2nd quarter earnings results
and raised full-year guidance. For the second quarter, revenue increased 59% to $138.7 million from $87.4 million last year. Earnings were $23.8 million or $.17/share up from $13.5 million or $.10/share last year. These were great results!
QLT Inc. (QLTI) was posted on Stock Picks
on July 23, 2003, at a price of $15.39. QLTI closed on 7/30/04 at $17.95 for a gain of $2.56 or 16.6%.
On July 22, 2004, QLTI announced 2nd quarter results
. Sales of Visudyne were $109.3 million, a 23% increase over sales in the second quarter of 2003. Earnings for the second quarter of 2004 came in at $.20/share, up $.04 from the prior year's second quarter of $.16/share. A satisfactory earnings performance and a subsequent satisfactory price appreciation followed!
Fair Isaac (FIC) was posted on Stock Picks
on July 24, 2004, at $55.42. FIC had a 3:2 split in March, 2004, making our selection price effectively $36.95. FIC closed on 7/30/04 at $28.58 for a net loss of $(8.37)/share or (22.7)%.
On July 28, 2004, FIC announced 3rd quarter 2004 results
. Revenue was up 6% to $173.2 million from $163.0 million the prior year. Net income totaled $28.8 million or $.39/share on 73.1 million diluted shares, vs net income of $30.0 million or $.40/share on 79.4 million diluted shares. Thus revenue was up only slightly, and net income was actually DOWN. Thus, we have the price pull-back!
On July 24, 2003, I posted Sierra Health Services (SIE)
on Stock Picks Bob's Advice at a price of $27.09. SIE closed at $44.20 on 7/30/04 for a gain of $17.11 or 63.2%.
On July 21, 2004, SIE announced 2nd quarter results
. Revenues grew to $441 million from $370 million a year ago. Earnings came in at $38.2 million, or $1.10/share up from $20.3 million, or $.67/share last year. These are GREAT results! In addition, the company BOOSTED ESTIMATES for 2004 to between $3.35 and $3.45 from the prior guidance of $2.90 to $3.00. Clearly this company is "firing on all cylinders"!
Finally, on July 24, 2003, I posted Columbia Sportswear (COLM)
on Stock Picks Bob's Advice
at $52.00/share. COLM closed at $54.75/share on 7/30/04 for a gain of $2.75/share or 5.3%.
On July 21, 2004, Columbia Sportswear announced 2nd quarter results
. Global sales increased 12.5% to $171.1 million. Net income rose to $10.7 million or $.26/share compared with $9.4 million or $.23/share the prior year. In addition, COLM also raised its net income outlook to between 10 to 11% growth over 2003. They also announced that 3rd quarter net income to show a 3-5% growth with revenue up 9-10%.
So overall how did we do? We had results ranging from a loss of (47)% with Vital Images (VTAL), to a gain of 82.3% with Cognizant (CTSH). In summary, during the past year, this week's selections had six positive returns and four negative returns with an average gain of 16.1% for all nine stocks posted that week!
Thanks again for stopping by! I hope the rest of your weekend goes well. Remember, as always that I am an amateur investor so please consult with your professional investment advisors. If you have any questions, comments, or words of encouragement, please feel free to email me at firstname.lastname@example.org .
Posted by bobsadviceforstocks at 8:29 PM CDT
Updated: Saturday, 31 July 2004 11:10 PM CDT
Thursday, 29 July 2004
July 29, 2004 Flowserve (FLS)
Hello Friends! Thanks so much for stopping by! Your visits are indeed appreciated and in fact I look forward to hearing from you at email@example.com . Please do remember that I am an amateur investor, so please consult with your professional investment advisors prior to making any decisions based on information on this website.
Taking a look at the USAToday list of top % gainers on the NYSE
, I came across Flowserve Cp (FLS) which closed today at $23.90, up $2.07 on the day or 9.48%. I do not own any shares nor do I have any options or leveraged positions in this company. According to the Yahoo "Profile"
, FLS "...develops and manufactures precision-engineered flow control equipment for critical service applications that require high reliability, including pumps, valves and mechanical seals."
As I have noted on many occasions on this website, what often drives a stock higher on any given trading day is often the release of good news, especially earnings news. Today, just before the opening of trading, FLS announced 2nd quarter 2004 results
. Second quarter sales increased 7% to $654.6 million. Net income came in at $18.4 million or $.33/share compared with $15.3 million or $.28/share the prior year.
Taking a look at a longer-term view, we can see with Morningstar's "5-Yr Restated" financials
, that revenue has grown nicely from $1.1 billion in 1999 to $2.4 billion in 2003. Earnings have been less consistent dropping from $.32/share in 1999 to a loss of $(.27)/share in 2001, and increasing sequentially to the latest report.
Free cash flow, which was a negative $(83) million in 2001, has improved to $155 million in 2003. The balance sheet looks good with $53.5 million in cash and $1.04 billion in other current assets, as opposed to $632.7 million in current liabilities and $1.35 billion in long-term liabilities.
What about valuation? If we take a look at "Key Statistics" from Yahoo
, we see that the market cap is a mid-cap $1.32 Billion. The trailing p/e is a moderate 23.76 with a forwards p/e (fye 31-Dec-05) of 15.42. Thus, the PEG is a very nice 1.14, and the Price/Sales is 0.49.
Yahoo reports that there are 55.27 million shares outstanding and of these, 54.60 million of them float. There is a modest 997,000 shares out short as of 7/8/04 representing 2.724 trading days. No cash dividend is paid per Yahoo, and the last stock split was a 3:2 in March, 1994.
How does the chart look? If we look at a Point & Figure chart from Stockcharts.com:
we can see that this stock initially traded higher from $12.50 in May, 2001, and peaked at $36.00 in May, 2002. From that point it traded lower, bottoming at $8.00 in October, 2002, and since that time has traded steadily higher above its current support level. The stock looks good but not over-valued chartwise, in my amateur humble opinion. Again, I am not a technician, so if anyone else has a different opinion on this, please let me know.
Overall, I like this particular stock just fine. The latest earnings report is solid if not spectacular, the recent earnings growth has been steady the last few years. Free cash flow is solidly positive. The balance sheet looks just fine. And the valuation is great with a PEG just over 1.0 and a price/sales under 1.0. The chart looks fine and not at a point that the price has gotten way ahead of itself.
Now, if only I could sell one of my existing positions at a gain! Then I could BUY something new! Currently in my Trading Portfolio, I am down to about 19 positions, so I have room for six more.
Again, thanks for stopping by! If you have any questions, comments, or words of encouragement, please feel free to email me at firstname.lastname@example.org .
Wednesday, 28 July 2004
July 28, 2004 National Instruments (NATI)
Hello Friends! Thanks so much for stopping by! I took a break from the Democratic Convention (I am a total political junkie and love to watch all of the politicians from both parties speak!), and decided I had better take care of my blog! Please remember, as always, that I am an amateur investor, so please consult with your professional investment advisors before taking any action based on information on Stock Picks Bob's Advice
National Instruments (NATI) had a very nice day today, closing at $27.89, up $3.13 or 12.64%. According to the Yahoo "Profile"
, NATI "...is a supplier of measurement and automation products. Its products consist of application software, and hardware components together with industry-standard computers, networks and the Internet to create measurement and automation systems." If THAT is less than clear to YOU, well, you are not alone. Clearly this is a high-tech manufacturing firm....but THAT is not what attracted me in some Peter Lynch style, but the NUMBERS...which I will review for you!
Yesterday, after the close of trading, NATI announced 2nd quarter results
. In a nutshell they were terrific: second quarter revenue was up 27% to $127 million, operating income was up 70% from last year, fully diluted earnings were $.14/share, up 56% from $.09/share the prior year. In addition, the company released guidance for the next two quarters anticipating continued growth in earnings and revenue. As always, these actions and results are very helpful in pushing a stock price higher, and NATI obliged!
How about longer-term? Looking at "5-Yr Restated" financials
from Morningstar.com, we can see that revenue, although slightly erratic, has grown from $329.6 million in 1999 to $451.4 million in the TTM.
Earnings, while improving the last couple years, have been inconsistent, peaking at $.69/share in 2000, dropping to $.39/share in 2002, and then improving steadily since. Free cash flow looks nice with $(8) million reported in 2001, improving the $41 million in the TTM.
Looking at the balance sheet on Morningstar, we find a superb set of numbers starting with $198.8 million in cash compared to $83.1 million in current liabilities and only $10.3 million in long-term debt. In addition, NATI has $156.2 million in other current assets. This looks very nice!
How about "valuation"? Looking at "Key Statistics"
on Yahoo, we can see that this is a Mid-Cap stock with a market cap of $2.20 billion. The trailing p/e is steep at 52.33, with a forward p/e (fye 31-Dec-05) of 28.46. The PEG is also a bit rich at 2.09, and the Price/Sales is 4.08.
Yahoo reports 78.84 million shares outstanding with 48.10 million of them that float. There are a LOT of shares out short. As of 7/8/04, there were 3.31 million shares out short representing 13.127 trading days. The move today 'might' be a bit of a squeeze of the short-sellers as they scrambled to buy back pre-sold shares. This short interest is most likely due to the steep valuation (p/e), but with the latest quarterly results, I would be hard pressed defending anyone who was interested in selling this company short. (just my opinion.)
The company does pay a small dividend which it initiated in 2003, paying $.20/share yielding 0.81%. The last stock split was a 3:2 in February of this year.
How about the chart? Taking a look at a stockcharts.com Point & Figure Chart:
looking at the chart, and I am NOT a technician by any means, but you can see that this stock was trading lower between February, 2001 through October 2002, when it bottomed at $13.50. Since then it has been trading higher. The chart looks nice to me as the stock is currently heading higher and doesn't appear over-extended. Then again, take a look yourself at the graph and see what you think!
Well, what do I think? Well, I like the recent quarterly report a lot. I like the fact that NATI is predicting a continued growth in revenue and earnings for the next two quarters. I wish I had a better feel for their products....but the numbers aren't bad. The "valuation" is a bit steep both with a high p/e and a PEG just over 2.0, however, if the current explosive earnings growth continues, these numbers will be adjusted in a positive fashion. NATI is generating loads of cash and the balance sheet is superb. In addition, the recent initiation of cash dividends is always a plus as this will add additional investors who are looking for dividends as well as growth. Technically, the graph looks just fine and I like the fact that there are a LOT of short sellers out there. That is bullish imho. I would even consider buying some shares, but you know the story....I have to wait to sell something at a gain from my current portfolio!
Thanks so much for bearing with me! I hope that my discussion and links were helpful to you. If you have any questions, comments, or words of encouragement, please feel free to email me at email@example.com .
Tuesday, 27 July 2004
July 27, 2004 L-3 Comms Hldgs (LLL)
Hello Friends! Thanks so much for stopping by Stock Picks Bob's Advice
. I try real hard to polish up my posts, but please remember that I am an amateur investor so please check with your own professional investment advisors before taking any action based on information on this website. Also, do your own investigations on all investment ideas you see here as well as anywhere on the internet!
I was scanning the lists of Price % Gainers on the NYSE
and saw that L-3 Communications (LLL) was doing quite well, currently trading at $59.24/share as I write, up $2.74 on the day or 4.85%. I do not own any shares of this nor do I have any options or leveraged positions.
According to the Yahoo "Profile"
, L-3 "...is a supplier of a range of products used in a number of aerospace and defense platforms. It is also a supplier of subsystems on platforms, including those for secure communications networks; mobile satellite communications; information security systems; shipboard communications; naval power systems; fuses and safety and arming devices for missiles and munitions; microwave assemblies for radars and missiles; telemetry and instrumentation, and airport security systems."
As is commonly seen on this website, what drove the stock higher today was an earnings report; specifically LLL reported Second Quarter 2004 results
. Sales increased by 36.9% to $1.68 billion from $1.23 billion last year during the same quarter. Net income for the second quarter increased by 65.0% to $88.1 million compared to $53.4 million in the second quarter 2003. Diluted earnings per share rose by 52.8% to $.81/share compared to $.53/share last year. In addition, the company raised expectations saying they expected sales for 2004 compared to 2003 to "...grow in excess of 30% to more than $6.6 billion". Operating income was estimated to "...grow by more than 26% resulting in diluted earnings per share of approximately $3.40." The street liked what it heard and the share price took off accordingly!
How about longer-term? Looking at a "5-Yr Restated" financials
from Morningstar.com, we can see a very nice growth picture with $1.4 billion in revenue in 1999, $1.9 billion in 2000, $2.3 billion in 2001, $4.0 billion in 2002, $5.1 billion in 2003 and $5.5 billion in the trailing twelve months (TTM). You can see from the recent announcement, that L-3 expects $6.6 billion in revenue for 2004!
Earnings have also increased in an uninterrupted fashion from $.88/share in 1999 to $2.88 in the TTM. Free cash flow has also been increasing from $125 million in 2001 to $373 million in the TTM. The balance sheet on Morningstar, shows $205.5 million in cash and $1.9 billion in other current assets, plenty to cover the $994.6 million in current liabilities and make a big dent in the $2.7 billion in long-term debt.
What about other parameters of valuation? Looking at "Key Statistics"
on Yahoo for LLL, we see that the market cap is a large $6.27 billion. The trailing p/e isn't bad at 20.62 with a forward p/e (fye 30-Dec-05) of 15.53. The PEG is reasonable at 1.11, and the Price/Sales is also downright cheap at 1.11. The company is selling for just over 2x book.
Yahoo reports 105.99 million shares outstanding with 99.30 million of them that float. Of these, 3.28 million shares are out short, but with the high trading volume, this represents only 3.531 trading days. The short interest is down from the previous month's 4.83 million. (short interest is as of 7/8/04). Thus, some of the shorts are taking their "bets" off the table. Who would want to bet against THESE numbers?
A nice touch is that the company DOES pay a small dividend of $.40, yielding 0.71%. The last stock split was a 2:1 in May, 2002. It appears from Morningstar, that this dividend is a new plus to this stock and again indicates the confidence (imho) of the management in the reliability of future earnings.
How about some technicals? If we look at a point and figure chart from stockcharts.com:
we can see that this stock was actually trading lower from May, 2002, until March, 2003, when it bottomed at around $35/share. Since then it has traded strongly higher above its support level and in my simple view of the graph, well it looks strong to me and heading higher! Again, I am not a technician, but what do you think?
So, in summary, what do I think of this stock? Well, if I had available cash it would be a stock that I might buy in my portfolio. (I don't need to go over my trading strategy AGAIN do I? But if you haven't read it, I am personally waiting to sell a portion of one of my EXISTING holdings in my "Trading Portfolio" before I add a new position.) That being said, I LOVE the recent quarterly report that came out today, both for the STRONG current revenue growth (even excluding growth attributed to acquisitions, the organic growth in revenue was in the mid-teens), STRONG current earnings growth, and the RAISED expectations. The STEADY growth in revenue and earnings the past 5 years looks nice. I don't mind that it now pays a dividend making it more attractive to investors looking for a little income, and the GROWING free cash flow along with a solid balance sheet is nice. Valuation looks pretty with a relatively LOW p/e, with an EXCELLENT PEG, and Price/Sales ratio, why we even have some short sellers out there that would need over 3 days to cover. EVERYTHING looks nice to me, except that it is a defense contractor...and some people might just want to avoid this group, knowing the possible volatility in defense contracting issues as the political winds change. Other than that, looks great to me.
Again, thanks for stopping by! If you have any questions, comments, or words of encouragement, please feel free to email me at firstname.lastname@example.org .
Sunday, 25 July 2004
"Looking Back One Year" A review of stock picks from the week of July 14, 2003
Hello Friends! The weekend is almost over and I haven't done my homework. Well here it is, so let's take a look at the week of July 14, 2003, and see how the stock selected would have performed if we had employed a "buy and hold" strategy. Of course, our results would have been affected by 8% loss stops and sales on gains, but for simplicity, let's just see what has happened to the stock prices since posting. As always, please remember that I am an amateur investor, so please consult with your professional investment advisors before taking any action based on information on this website.
On July 14, 2003, I posted Echelon (ELON)
on Stock Picks at a price of $17.05. ELON closed at $7.39 on 7/23/04, for a loss of $(9.66) or (56.7)%.
Echelon reported 2nd quarter 2004 results
on July 15, 2004. Revenues for the quarter ended June 30, 2004, were $28.3 million, compared to revenues of $31.3 million for the same period in 2003, a decline of about 10%. Earnings came in at $1.5 million or $.04/share for the quarter ended June 30, 2003, compared to a loss of $(6.3) million, or $(.16)/share last year. The improving earnings picture is encouraging (did I pick this stock last year with a loss?), but the declining revenue is of some concern, as is the stock price!
On July 14, 2003, I posted Fidelity National Financial (FNF)
on July 14, 2003, when it was trading at $33.66. FNF closed at $36.29 on 7/23/04 for a gain of $2.63 or 7.8%.
FNF reported 2nd quarter 2004 results
on 7/22/04. Net earnings for the quarter ended June 30, 2004, came in at $222.1 million or $1.26/diluted share down from $248.3 million or $1.62/diluted share last year. These are not the kind of results I would like to see in stocks picked on this blog!Capital One Financial (COF) was posted
on Stock Picks Bob's Advice
on 7/14/03 at $55.00. COF closed at $67.97 on 7/23/04 for a gain of $12.97 or 23.6%.
On July 21, 2004, COF reported 2nd quarter 2004 results
. Revenues for the quarter rose to $2.11 billion from $1.99 billion last year. Quarterly earnings came in at $407.4 million or $1.65/share up from $286.2 million or $1.23/share a year ago. In addition, they exceeded the $1.50/share that analysts were looking for, so this was a nice result for COF!
On July 15, 2003, I posted Harley Davidson (HDI)
on Stock Picks at $43.68. HDI at $59.75 on 7/23/04 for a gain of $16.07 or 36.8%.
HDI reported 2nd quarter results
on July 14, 2004. Revenue in the quarter grew 8.9% to $1.33 billion from last year's $1.22 billion. Net income came in at $247.2 million or $.83/share up from $202.2 million or $.66/share last year. These were solid results for Harley-Davidson.
I posted EPIQ Systems (EPIQ)
on Stock Picks at $19.62 on 7/15/03. EPIQ closed at $14.33 on 7/23/04 for a loss of $(5.29) or (27)%.
On April 27, 2004, EPIQ announced 1st quarter results
. For the quarter ended March 31, 2004, revenue increased 85% to $26.0 million from $14.1 million. Net income, however, dropped to $2.0 million from $2.7 million with diluted earnings per share coming in at $.11 vs. $.15/share. Would rather see robust earnings to go along with the strong revenue growth!
On May 26, 2004, Pharmaceutical Resouces was renamed
Par Pharmaceutical Companies, Inc. (PRX). PRX was selected for Stock Picks
on 7/16/03 at a price of $52.83. PRX closed on 7/23/04 at $33.19 for a loss of $(19.64) or (37.2)%.
On April 29, 2004, PRX announced 1st quarter 2004 results
. Revenues grew 99% to $211.8 million and net income rose 35% to $30.2 million with diluted earnings per share rising 27% to $.85. These were great results. However, on July 7, 2004, PRX announced an adverse court decision
that it lost against Pfizer (PFE) on the issue of Latanaprost. Latanaprost is the #1 medication world-wide for the treatment of glaucoma.
On July 17, 2003, I picked Closure (CLSR)
for Stock Picks at $23.40. CLSR closed at $17.90 on 7/23/04 for a loss of $(5.50) or (23.5)%.
On July 22, 2004, CLSR announced 2nd quarter 2004 results
. For the quarter ended June 30, 2004, revenue increased 33% to $11.3 million from $8.5 million the prior year. Net income jumped 52% to $2.5 million or $.17/share vs. $.12/share the prior year. Within this apparently GREAT news story, was a comment that the next quarter should see revenue in the range of $9.5-$10.5 million, and per share diluted earnings of $.12-$.15. This is a decrease from the current quarter and the "streeet" didn't like what it heard!
Hang in there! Just three more to go!
ITT Educational Services (ESI) was posted on Stock Picks
on 7/17/03 at $36.13. ESI closed at $33.43 on 7/23/04 for a loss of $(2.70) or (7.5)%.
On July 21, 2004, ESI reported 2nd quarter 2004 results
. Revenues increased 20.9% to $150.9 million from $124.8 million in 2003. This was done with an 18.4% increase in student enrollment. Net income increased 42% to $14.0 million from $9.8 million. Fully diluted Earnings per share increased 42.9% to $.30 from $.21 the prior year. Unfortunately, ESI continues to be subject to a Department of Justice and SEC investigation. This is depressing the stock price!
On July 18, 2003, I selected Hansen Natural (HANS)
for Stock Picks at $5.38. On 7/23/04, HANS closed at $18.71, for a gain of $13.33 or 248%. (This one selection SAVED the week for me for this review!).
On May 6, 2004, HANS reported 1st quarter 2004 results
. Gross sales increased 39.9% to $38.7 million from $27.7 million a year earlier. Net income for the quarter ended March 31, 2004, increased 244.9% to $2.2 million from $633,000 last year, or on a per share basis $.19/share vs. $.06/diluted share last year.
These were GREAT results!
On July 18, 2003, I selected Bio-Rad Laboratories (BIO)
for Stock Picks at $60.15. BIO closed at $53.00 on 7/23/04 for a loss of $(7.15) or (11.9)%.
On May 6, 2004, BIO reported 1st quarter 2004 results
. For the quarter ended March 31, 2004, net sales were $266.6 million, up 8.4% compared to $246.0 million the prior year. This was largely due to currency effects, so sales were actually flat. Net income for the quarter was $22.0 million, compared to $26.4 million the prior year. On a fully diluted basis, earnings came in at $.83/share this year compared to $1.01/share last year. These are not very exciting results and the stock price reflects this.
So how did we do during this week a little over a year ago? Of these ten stocks, there were 6 stocks declining and four rising over the one-year period. The HUGE gain of 248% of HANS pulled up the averages for an average gain of 15.2%.
Thanks so much for stopping by! If you have any questions, comments, or words of encouragement, please feel free to email me at email@example.com .
A Reader Writes, "I'm still struggling with stock selections and exits."
I have my review to look forward to this afternoon, but first I went and checked my mailbox, and was delighted to find that there was mail on Sunday! I love getting letters. I figure it shows that those statistics on "hits" on my counter are real people and not just robots wandering by. Please DO remember that I am an amateur investor, so please check with your professional investment advisors before acting on any information on this website.
Gus writes,Hi Bob,
I'm still struggling with stock selections and exits. Nearly all my stocks have blown up on me for every reason you can name. I have lost confidence in holding a stocks and take profits on a 5-10% gain , thereby losing the real winners. Your comments would be appreciated.
Do you use any technical analysis for entry or exits, If so which ones?
When do you enter as soon as you identify a stock that meets your criteria or next day open?
Do you use market orders?
stocks that you have sold after a huge gain would you be buying them back after they base on another breakout.?
All your stocks meet IBD rating system. Do you use IBD in your stock selections?
Do you select only from strong groups?
I feel that you must have a very good knowledge of market trends and cycles to be able to hold your stocks through several pullbacks. How do you manage to hold on? Do you use a market timing method/service?
Is there a way to screen/prequalify a list of stocks and place on a watch list to buy on break out?
You have the best stocks in your portfolio. There are many choices it still comes down to picking the one. What has the final say when several that meet your criteria are breaking out daily?
So many break outs that I entered on have been the high even on stocks that had a good base.
Do you buy all the stocks in your picks list?
Do you short?
Any time you carry to spare in answering these questions is appreciated,
Now THAT was a lot of questions. I will try to answer all of them or at least comment on your questions. Please remember that I am NOT a professional investment advisor so am not qualified to give you individual advice, but I can give you my opinions on the questions you raise.
1) "Do you use any technical analysis for entry or exits, if so which ones?"
There are two things I do when picking an actual stock to purchase that might be described as technical analysis, including looking at stocks with strong price momentum that day....I scan the lists of top percentage gainers for candidates, and I like to look at a point & figure chart from stockcharts.com. Quite frankly, I am not much of a technician. I would just rather purchase stock simply in a company which has a stock price which appears to be moving higher. I do not use moving averages or trading bands to time purchases or sales.
2. "When do you enter as soon as you identify a stock that meets your criteria or next day open?"
When I identify a stock I wish to purchase I generally enter the order as a market order online with Fidelity. I do not use limit orders.
3. "Stocks that you have sold after a huge gain would you be buying them back after they base on another breakout?"
Fortunately, I do own some stocks that have made huge gains (although they have been giving back much of their gains lately). I do not have a plan of ever unloading a stock on a big gain. That is not my strategy. I sell small portions of a stock on pre-set sell-points as the stock rises. Like so many investors, I try to pull the cost of my initial investment out of a swiftly climbing stock, but I do this very slowly so as not to penalize a stock that is performing for me. I like to sell 1/4 on a 1/3 gain....(1/4 of 4/3 is 1/3, leaving 3/3..or original investment $'s still invested), and sell 1/4 again for four consecutive times at each 30% gain (30, 60, 90, 120). After that I plan to sell 1/4 on 60% gain sites allowing the investment to start growing. If I do sell a stock on fundamental bad news or on a decline (again I have sell-points on the downside, (8)% if I have never sold any at a gain, 0% if I have sold once, 30% if have sold at 60%, and then selling points would be at 1/2 of the highest % gain point. This allows a 50% retracement, giving greater lee-way for the strongest performing stocks in the portfolio.
I certainly would consider rebuying a stock if I sold it on some bad news or a pull back if it hit the top percentage gainers list, I was in the market for a new purchase, and it made sense. But generally, I have been buying new stocks that I have not owned before.
4. "All your stocks meet IBD rating system. Do you use IBD in your stock selections?"
As I have mentioned elsewhere in this blog, I have been greatly influenced by IBD and William O'Neill's CANSLIM techniques. I have adapted some of these ideas to what I am doing. I use the 8% loss limit that O'Neill discusses. However, O'Neill generally recommends adding to existing positions to concentrate your holdings when you identify a performing stock. I tend to be a bit more conservative and like to sell a little bit as it rises. I share O'Neill's views that stocks that will perform the best ultimately are a function of their underlying earnings performance. I do subscribe to IBD and enjoy reading some of their articles, but my lists of stocks come from my own investigations. I have been pleased to see that many of the stocks discussed have shown up on the IBD list of 100 top stocks each Monday. I think I am doing something right!
5. "Do you select only from strong groups?"
Not intentionally :). That is, when I am in a position to purchase a new stock for my portfolio, which occurs after I have sold a portion of an existing position at a gain, I apply my criteria to the lists of stocks making nice moves THAT day. After I have found a couple of candidates, I use my "seat of the pants" judgment to pick my stock to purchase. I may be using groups strength intuitively, but I do NOT check group strength when selecting a stock to purchase.
6. "How do you manage to hold on? Do you use a market timing method/service?" This Market Timing thing concerns me greatly. One of the books I have read, was "How to Make $1,000,000 in the Stock Market Automatically!" by Robert Lichello. I am sure you can find a copy cheap on Amazon. Mr. Lichello started me thinking about market timing. I do NOT use any service but am trying to have my portfolio direct me how to behave in relation to the market.
Mr. Lichello thought it wise to have two funds, equity and cash, and to move funds back and forth between these two accounts automatically as a function of the market activity. Now I don't do that. But I very much want to avoid compounding my losses as much as possible. If the market is declining I would like to have a system in place which will gradually reduce my exposure to equities. At the same time, if the market is improving, I want to do the opposite.
What I do is very simple and is actually far too slow to respond adequately. I think I might be able to do better (?).
Simply put, I have a portfolio of stocks. You can see what I own on my trading portfolio. I need to update it. My profits have SHRUNK these past two weeks...and my paper gain is down to $20,000 from $30,000 just a few weeks ago...so I am not immune to the market action. Now what I do is try to LISTEN to my portfolio. That is something O'Neill points out in his book. Your portfolio is talking to you :). When I sell a stock at a loss, I do NOT replace the stock (I used to jump right back in with another issue). I WAIT, I sit on my hands, until another stock in my portfolio has had a portion sold at a GAIN. Thus, as the market declines, I gradually sell off positions, and wait until the market is strong enough to provide me with gains.
I have been using margin which is just TERRIBLE in a declining market and WONDERFUL in a climbing market. If I use 50% equity as fully invested (50% margin), then I would consider 50% cash to be my fully "dis-invested" level. That is, continuing to reduce exposure 'automatically' until down to 50% cash and 50% equity. I figure that will mean a portfolio of 6 positions as a MINIMUM. At that point, I WILL replace issues if they are sold at a loss.
7. "Is there a way to screen/prequalify a list of stocks and place on a watch list to buy on a break out?"
That is a good question. I am sure there is a way....and I do review LOTS of stocks on my blog. What these review do is to familiarize myself with these "players" in the market. When I AM in the market to purchase a new position, and one of them shows up on the top % gainers lists, I tend to buy what I am familiar with. It doesn't always work out as my recent experience with DJ Orthopedics shows... But this pre-screened list and break-out technique is simply not what I do. It doesn't mean it isn't a good idea...it might be. I just don't do it.
8. "You have the best stocks in your portfolio."
Thank you. I consider this a form of "investment natural selection", or survival of the fittest :). I sell LOTS of stocks from my portfolio. Just look at all the footnotes on my trading portfolio. Thus, for a stock to stay, it cannot decline much after the purchase. That they may have a large gain, is indicative that the homework I did before making a purchase was on the mark.
9. "There are many choices it still comes down to picking the one. What has the final say when several that meet your criteria are breaking out daily?"
Now THAT is an excellent question. First of all I don't buy ANYTHING no matter how pretty it looks unless my "market timing system" tells me it is ok to purchase a stock. (Meaning I just recently sold a portion at a gain!). When there are several, I tend to try to buy the stock that I have heard of before, or perhaps have posted before on the blog. I like stocks over $10, I like the MOST CONSISTENT earnings and revenue grower. If they have INCREASING free cash flow, and have an excellent balance sheet all the better. If they pay a dividend too why not. And I would like to see a nice point & figure graph. I go through all of these things, but when it comes right down to it, I have to be "intuitive". Sometimes I make a good pick, but I don't worry too much, if it pulls back EVEN THE NEXT DAY....out if goes.
10. "So many break outs that I entered on have been the high even on stocks that had a good base."
The failure of the market to follow through on stock moves recently is indicative of a poor investment climate right now. Do not fight the market. Sit on your hands. Wait. Increase you cash and maintain some level of equity until the market tells you to add positions.
11. "Do you buy all the stocks in your picks list?"
Absolutely not. I wish I had bought TASER when I listed it...but I literally have reviewed hundreds of stocks and only purchased a handful of them for my trading portfolio.
12. "Do you short?"
There have been many brilliant people that have made fortunes going short on issues. However, I do not short. I go long. I have invested in options in the past and lost my shirt. I am concentrating on what I think I know, identifying strong stocks for potential capital gains.
Good luck Gus, I hope this answers your questions. If you have any other questions, please feel free to email me at firstname.lastname@example.org .
Friday, 23 July 2004
"Trading Transparency" GPRO
Hello Friends! The BEAR is growling and I can feel it gnawing on my portfolio!
A few moments ago, my shares of Gen-Probe (GPRO) hit and went past the 8% loss limit and out the shares went. I had purchased 300 shares of GPRO at $41.30 on 5/27/04, and now just sold my 300 at $37.567 for a loss of $(3.733) or (9)%. That puts me down to 20 positions...down 2 in the last 2 days. I will not be purchasing any new positions until I sell a portion of my existing holdings at a gain.
How many positions will I go down to in the worst scenario. I was thinking about this today. Since my goal is 25 positions, and currently am using margin, in the current situation, I would go down to about 12 positions to eliminate margin and to 6 positions to go to 50% cash. Thus, 6 will be the bottom limit. Hopefully, I will not get there! However, if I do, I will replace my positions to maintain a 50% exposure to equities.
Thanks so much for stopping by! If you have any comments or questions please feel free to email me at email@example.com and please remember that I am an amateur investor and you should consult with your professional investment advisors prior to taking any action based on information on this website.
Newer | Latest | Older