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Stock Picks Bob's Advice
Saturday, 30 April 2005
"Looking Back One Year" A review of stock picks from the week of March 8, 2004

Hello Friends! Thanks so much for visiting my blog, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor sharing with you my observations on the market and stocks in particular. Please consult with a professional investment advisor prior to making any decisions based on information on this website. I shall not ask for any credit for your profits earned through stock picks on this site, nor can I accept any blame for your own decisions using similar information!

One thing that I do like to do on weekends, is to review past stock selections. In that way, hopefully, I can tell whether my philosophy even works! And how it does or doesn't succeed in picking stock winners.

These reviews assume a "buy and hold" strategy for assessing returns. In practice, I actually use a far more disciplined system of selling my losing stocks quickly and selling portions of my winning stocks slowly. Also, when I review selections, I have been using a "thumbs-up" and a "thumbs-down" on latest earnings reports. Stocks only get a "thumbs-up" when both earnings and revenue are growing. This should not be construed as a comprehensive buy or sell recommendation on this or any stock, just my take on whether the report would still fit into my own philosophy of picking stocks!

I posted Total System Services (TSS) on Stock Picks on March 8, 2004, when it was trading at $22.30. TSS closed at $24.58 on 4/29/05, for a gain of $2.28 or 10.2%.

On April 19, 2005, TSS reported 1st quarter 2005 results. l For the quarter ended March 31, 2005, total revenue came in at $350.0 million, up 22.7% from $285.2 million in the same quarter in 2004. Net income grew 41.7% to $46.1 million from $32.6 million the prior year. On a diluted eps basis this was up 41.7% to $.23/share up from $.17/share in 2004. TSS went on to raise guidance for 2005 with net income growth to be in the range of 22-25%, and revenue growth in the 30-33% range.

On 3/9/04, I posted ResCare (RSCR) on Stock Picks when it was trading at $11.01. RSCR closed at $14.29 on 4/29/05, for a gain of $3.28 or 29.8%.

On April 27, 2005, RSCR reported 1st quarter 2005 results. Revenue for the quarter ended March 31, 2005, grew 5% over the prior year to $258.7 million. Net income for the quarter increased 28% to $5.7 million or $.18/diluted share from $4.4 million or $.17/diluted share the prior year. In addition, the company raised guidance, another positive development, for 2005.

Finally, on March 14, 2004, I posted Somanetics (SMTS) on Stock Picks when it was trading at $11.50. SMTS closed at $13.30 on 4/29/05 for a gain of $1.80 or 15.7%.

On March 15, 2005, SMTS reported 1st quarter 2005 results. For the quarter ended February 28, 2005, net revenues jumped 51% to $4.0 million. Net income increased 192% to $854,433 from $292,744 in the first quarter 2004. A provision of $290,507 for income taxes, reduced net income down to $563,926, which was still ahead of 2004. On a diluted, per share basis, this worked out, even with the tax allocation to $.05/share, up 66% from $.03/share the prior year. The company also raised net revenue guidance in 2005 to between 47 and 52% over the 2004 results.

So how did we do that week a bit over a year ago? Assuming a buy and hold strategy, we had three picks that week (I didn't buy any of those issues), with an average gain of 18.6%. Really not too bad at all!

Thanks so much for visiting! If you have any comments or questions please feel free to leave them right here on the blog or email me at bobsadviceforstocks@lycos.com.

Bob






Posted by bobsadviceforstocks at 6:35 PM CDT | Post Comment | Permalink
Friday, 29 April 2005
A Reader Writes "HLEX, A Good Buy?"

Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor, so please consult with your professional investment advisors prior to making any investment decisions based on information on this website! I cannot ask for any credit for any gains you may accrue with your trading; nor can I share in any responsibility for any of your losses!

My good friend Scott B. dropped me a line yesterday and I thought I would take a look at HLEX and give him an answer right here! He wrote about HLEX, when I asked him if he bought any:
Yes 2 days ago.
A GOOD BUY????
Scott
(I am sure Scott never expected to get "blogged", but that is certainly the risk when you email me a question :)).

First of all, I believe I do own some shares of HLEX in a managed retirement account that I don't control, but none in my "trading account".

Healthextras (HLEX) closed at $16.55 today, down $.47 or 2.76% on the day.

1) Latest quarter: 1st quarter 2005 results showed revenues at $169 million, up 53% over 2004 results of $110.5 million. Net income came in at $5.1 million or $.13/share, a 50% increase over first quarter 2004 earnings of $3.4 million or $.10/share. This looks good to me.

2) Morningstar: "5-Yr Restated" financials show continued revenue growth, earnings growth, free cash flow is positive but not growing, balance sheet looks solid. This appears intact!

3) Valuation: Yahoo "Key Statistics" on HLEX: Market cap only $624.17 million, virtually a small cap. Trailing P/E a bit rich at 34.19, but forward p/e better at 21.49. Both PEG at 1.16, and Price/Sales at 1.11, are cheap. 37.71 million shares outstanding, 29.00 million of them that float, 1.42 million shares out short (5.492 trading days as of 4/8/05)...this is positive if anything. No cash dividend, no stock dividend reported on Yahoo. Valuation looks fine.

4) Chart:


quite frankly, this looks pretty darn good too!

So what do I think? Well Scott, you know you are on your own, but the parameters I like to look at look very nice. It is a small stock but as you know, I own some shares as well in another account. Should you buy it? Will it appreciate further? Those questions I cannot predict and am not qualified to either. Probably should consult with your own advisor for that! But numbers wise, I don't see anything too bad!...be careful with the chart...does look a tad weak, and if it doesn't hold this $16.00 level...might wait for it to appreciate past $17 to buy again.

Bob




Posted by bobsadviceforstocks at 4:52 PM CDT | Post Comment | Permalink
April 29, 2005 CNS (CNXS)

Hello Friends! Thank you very much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor and that you need to consult with your professional investment advisors prior to making any investment decisions based on information on this website. I shall not ask for any part of any gains that you may accrue using this website nor shall I be responsible for any losses that may result!

Sometimes I am afraid that some readers may use stocks posted here as indications that they may be good investments and go on to lose money. I certainly lose money on some of my picks. What I am trying to emphasize here is that the stocks listed might be useful as part of a larger portfolio of stocks that when managed responsibly might result in a successful investment plan. I will try to keep you posted on what I personally do with the different investments I have made!

As I have pointed out elsewhere, the first place I go to look for new candidates for the blog, is the list of top % gainers, for the NYSE, the NASDAQ, and the AMEX. I haven't found too many stocks on the AMEX that interest me though.

Today, while looking through the list of top % gainers on the NASDAQ, I came across CNS, Inc. (CNXS) which as I write is trading at $18.09, up $1.79 or 10.98% on the day. I do not own any shares of CNXS nor do any members of my family.

According to the Yahoo "Profile" on CNXS, this company "...is engaged in the business of developing and marketing consumer healthcare products, including Breathe Right nasal strips, Breath Right Snore Relief throat spray, Breathe Right Vapor Shot! personal vaporizer and FiberChoice chewable fiber tablets."

I strongly subscribe to the belief that there is a very strong relationship between stock price performance and underlying earnings performance for any particular stock. My evaluations are heavily biased towards this orientation.

Thus, the first place I like to go is to look at the very latest quarterly report which I believe influences the stock price the strongest. For CNXS, they reported 4th quarter 2004 results yesterday after the close of regular trading. For the three months ended March 31, 2005, net sales came in at $28.4 million, up 27% from last year's $22.5 million. Net income grew to $4.1 million or $.28/diluted share, up from $.3 million or $.02/diluted share the prior year same quarter.

Usually, this far in the analysis, if the latest quarter result was good, as it was, I am interested in seeing whether a longer trend of positive results can be found. Basically, this amounts to a belief that a past record of strong revenue and earnings growth is likely to result in continued positive results. Sometimes this philosophy has been described as "earnings momentum".

I would encourage all of you to become familiar with the Morningstar website. By entering the stock symbol in the "quotes/reports" box, you can access a lot of very good information that may help you make an investment decision. I like to review the section called "Financial Statements" along the left side of the page. In particular, I like the "5-Yr Restated" financials which for CNXS is located here.

First piece of information is the revenue growth. On this page, we can see that CNXS' revenue grew from $46.1 million in 1999 to $87.8 million in the trailing twelve months (TTM).

How about "earnings"? Has there been progression? For CNS, they reported a loss of $(1.09) in 2000, then subsequently improved earnings each year from $.01 in 2001, to $.67/share in the TTM.

Free cash flow? As I have discussed elsewhere, this, imho, gives an investor the information as to whether cash is actually being created or consumed. For CNXS, we can see that although slightly erratic, the company had a negative $(3) million in free cash flow in 2001 which basically improved to a TTM of $14 million.

Looking to the bottom of the same page on Morningstar.com, we can look at the balance sheet. Again, I am not an accountant, or an expert on this, but in my simple understanding assets are certainly better than liabilities, and current assets are the best of all!

For CNXS, this company has $58.2 million in cash which is enough to pay the current liabilities over three times over. (Current liabilities total $18 million.) The company has NO long-term liabilities. In addition, CNXS has $22.6 million in other current assets. In other words the balance sheet looks great! imho.

O.K. what next? Well, we have had a look at the latest quarter earnings, a five year review of earnings, free cash flow, revenue growth, and a balance sheet. How about "valuation", and some statistics on the company.

For this I have been turning to "Key Statistics" on CNXS from Yahoo. Here we can see that this is a SMALL cap stock with a market capitalization of only $261.87 million. The trailing p/e is reasonable at 19.85, and the forward p/e is suggested at 22.02, but with the GROWTH in earnings, I am having a hard time figuring this number out.

The PEG (5 yr expected) is 1.34. And the Price/Sales is at 2.63. Now comparing CNXS to other companies in the same industry (Medical Appliances/Equipment), we find that they are at the low of the range with companies like Zimmer (ZMH) with a P/S of 6.7, Medtronic (MDT) at 6.3, St. Jude (STJ) at 5.8 and Biomet (BMET) at 5.3.

Yahoo also shows that there are only 14.16 million shares outstanding with 11.50 million of them that float. Currently, as of 4/8/05, there are 173,000 shares out short representing 1.505 of the float or 1.50% of the float.

The company does pay a small dividend of $.24/share yielding 1.47%, and the last stock split was a 2:1 split in June, 1995.

Finally, in respect to those who like a "technical" review, I have been including "point & figure" charts with these analyses.


Again, I am not a technician, but I like to look at these graphs, especially the "point & figure" charts, which give me a feel for the "price momentum". In this case, this stock was trading sideways between February, 1999, and January, 2002, between a range of $2.75 on the low, and $8.00 on the high side. In January, 2002, the stock broke through a resistance level of $5.00 and then continued to trade higher through 2002, 2003, 2004 and now 2005, to its current level of $18.59.
The chart actually looks quite strong to me!

So what do I think? Well, the stock moved nicely today on a great earnings report. Morningstar shows earnings to be growing steadily the past five years along with revenue reported. Free cash flow is positive and growing, the balance sheet is gorgeous, and valuations appear reasonable. The chart is also quite strong.

Perhaps a downside (?) is the small number of shares and the small capitalization of this company. This could also serve as a positive if earnings results stay positive.

I hope this discussion was helpful and not too long-winded. I would be buying some shares if I had a buying signal from my own portfolio. However, I am once again sitting on my hands....and waiting!

If you have any comments or questions, please feel free to leave them right here on the blog or email me at bobsadviceforstocks@lycos.com.

Bob











Posted by bobsadviceforstocks at 2:56 PM CDT | Post Comment | Permalink
Wednesday, 27 April 2005
April 27, 2005 Hologic (HOLX)
Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please 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!

It has been a few days since I posted something new around here so I thought it would be a good idea to find another stock prospect to discuss! I just purchased 25 shares of this stock for my son in his own account, so there are some shares that are owned in my family, although I currently do not personally own any Hologic shares or options.

What I hope that you, the reader, come away from this blog is not really a list of stocks that might be good purchases. I really do want to "teach you to fish" on your own! That is, hopefully what I write will stimulate your own thinking about how to look at stocks and help you develop your own particular investing strategy and portfolio management philosophy.

My first place I look, when researching a new name is the lists of top percentage gainers that are easily available on sites like CNN or USA Today online. It may sound like a strange place to look for a stock, but I have found that these stocks that are making good percentage gainers, often have enough momentum, if there is "fuel" behind the move, to continue to appreciate in price.

Today I reviewed the list of top % gainers on the NASDAQ and came across Hologic Inc. (HOLX). As I write, HOLX is trading at $35.85, up $4.77 or 15.35% on the day.

According to the Yahoo "Profile" on HOLX, Hologic "...is a developer, manufacturer and supplier of diagnostic and medical imaging systems primarily serving the healthcare needs of women. Its core women's healthcare business units are focused on bone densitometry and mammography. In addition, Hologic develops, manufactures and supplies other x-ray based products, such as general-purpose, directo-to-digital radiography detectors and mini C-arm imaging products."

My next step is to examine the latest quarterly result. The questions I like to ask include 'did the earnings increase year over year?' and 'did the revenue increase also year over year?'. Those two questions, if not answered in the affirmative, easily lead me to screen out dozens of possibilities.

In the case of HOLX, the company announced 2nd quarter 2005 results and the results were enough to power the stock price higher! In fact, second quarter revenues came in at $69.2 million, a 24% increase over the $55.6 million reported the prior year in the same quarter. Net income came in at $6.05 million or $.27/diluted share compared with net income of $2.6 million or $.12/diluted share the prior year. These were great results!

Having confirmed the latest quarter, I want to know about "longer-term" results. It is my belief, sort of a Newtonian principle of momentum investing, that a company in motion will stay in motion! Thus, I turn to Morningstar.com for more historic information on companies.

I personally have found the "5-Yr Restated" financials on HOLX the most useful place to learn about a company. Here we can see, looking at the bar graph, that HOLX has had a very steady history of revenue growth, growing from $94 million in revenue in 2000 to $245 million in the trailing twelve months (TTM).

Earnings have also been improving, with a loss of $(1.22) and $(1.35) in 2000 and 2001, but then improving to a profit of $.01 in 2002, and improving each subsequent year to $.73/share in the TTM.

Free cash flow has also been positive and improving in the latest years. 2002 found HOLX with $1 million in free cash flow, which dropped to $(4) million in 2003, but improved to $19 million in 2004 and $22 million in the TTM.

The balance sheet on Morningstar also looks quite solid. Simply put, I want to see lots of assets and very few liabilities. In this case, HOLX has $72.7 million in cash, which by itself can easily cover both the $42.3 million in current liabilities and the relatively small $400,000 of long-term debt, almost twice over. In addition, HOLX has a significant $95.9 million in other current assets.

What about valuation questions? As well as some statistics? Looking at Yahoo "Key Statistics" on Hologic, we find that the market cap is a mid-cap $774.92 million. The trailing p/e is a bit rich at 48.97, with a forward p/e of 37.19. The "5 Yr expected" PEG is 2.49, and Price/Sales is 2.65. This stock is no bargain!

However, looking at relative price/sales values gives us a different picture. Using my Fidelity account research to get me some competitor numbers, we can see that within the "Medical Appliances/Equipment" industry, HOLX has a very LOW Price/Sales ratio at 2.6. This is compared with Zimmer (ZMH) at 6.6, Medtronic (MDT) at 6.3, St. Jude (STJ) at 5.8, and Biomet (BMET) at 5.3. Even Edwards Lifesciences (EW) is higher at 2.8. Thus, it doesn't look that expensive at all from that parameter.

Yahoo reports 20.87 million shares outstanding with 20.60 million of them that float. As of 3/8/05 there were 917,000 shares out short, representing 4.45% of the float or 3.31 trading days of volume.

Yahoo also reports no cash dividend and the last stock split noted was a 2:1 on 3/26/96.

What about "technicals"? How does the chart look? For this, I turn to the Stockcharts.com Point & Figure chart for HOLX. This chart looks strong to me, with the stock price first declining from $18 in May, 2002, dropping to a low of $7.50 in February, 2003, however, climbing steadily and strongly above its suppport levels to the current $35.65/share level.


So what do I think? Well the latest quarterly report was great, the last five years have been solid, free cash flow is positive and growing, the balance sheet is gorgeous, valuation, especially when looking at the Price/Sales ratio is very good, although P/E and PEG aren't so cheap, and the graph is solid. This company looks great to me! In fact, I purchased 25 shares for my son....but as for me, I am sitting on my hands until I get a buy signal.

Thanks again for stopping by! Please feel free to comment here but if you have any other questions, please feel free to email me at bobsadviceforstocks@lycos.com.

Bob



Posted by bobsadviceforstocks at 2:16 PM CDT | Post Comment | View Comments (2) | Permalink
Updated: Wednesday, 27 April 2005 8:27 PM CDT
Monday, 25 April 2005
"Trading Transparency" ZQK

Hello Friends! Thanks again for stopping by and visiting my blog, Stock Picks Bob's Advice. As always please remember that I am an amateur investor, so please always consult with your professional investment advisor prior to making any investment decisions based on information on this website.

A little earlier this morning I sold 55 shares of my American Healthways (AMHC) stock at a 69% gain. Under my trading "system", this was a buy signal, that my portfolio was doing well, and that since I was at less than 25 positions (21 at that time), I could look around to see if there were any candidates to add a new position.

Shortly thereafter I noted that Quiksilver (ZQK) was on the list of top % gainers. As I write, ZQK is trading at $28.47, up $1.06 or 3.87% on the day. I first posted Quiksilver (ZQK) on Stock Picks on 8/28/03 when it was trading at $18.42. I had not purchased any shares of ZQK until this point.

Checking the data, I noted that ZQK posted 1st quarter results on 3/10/05. For the quarter, net revenue grew 34% to $342.9 million from $256.1 million the prior year. Earnings came in at $14.2 million or $.23/share, up from $9.2 million or $.16/share the prior year. Also bullish, the company boosted 2005 earnings to $1.62 to $1.65 on revenue of $1.48 billion to $1.5 billion.

More recently, Quiksilver announced the acquisition of Rossignol, the French ski maker.

Anyhow, that nickel was burning a hole in my pocket, and I picked up 200 shares of Quiksilver at $28.42/share earlier this morning!

Thanks so much for stopping by! If you have any comments or questions, please feel free to leave them right here on the blog or email me at bobsadviceforstocks@lycos.com.

Bob


Posted by bobsadviceforstocks at 1:16 PM CDT | Post Comment | View Comments (2) | Permalink
"Trading Transparency" AMHC

Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always please remember that I am an amateur investor so please consult with your professional investment advisors prior to taking any action based on information on this website.

A few moments ago I sold 55 shares of my 225 share position of American Healthways (AMHC) at $39.84/share. This was my second sale, having sold 75 shares on 11/3/04. These shares were acquired 6/18/04, with a cost basis of $23.53. Thus, on my latest sale, I had a gain of $16.31 or 69.3%. My next targeted sale would be at about a 90% gain, or at 30% gain on the downside!

Thanks so much for stopping by. Since I am not yet at my 25 position portfolio, I shall be looking for another position today or tomorrow. I shall keep you posted. If you have any questions or comments, please feel free to email me at bobsadviceforstocks@lycos.com.

Bob


Posted by bobsadviceforstocks at 8:53 AM CDT | Post Comment | Permalink
Sunday, 24 April 2005
A Reader Writes "What are your current thoughts on the 2005 stock pick SGMS"

Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor and that you must check with your professional investment advisors prior to acting on any information on this website!

It is Sunday and I thought for sure that would be it for writing (or should I say blogging) this weekend. But I was pleased to find that I had a nice email from RC who wrote:
Bob, I just began reading your blog about a week ago and I find it quite
useful. You seem to "put your kneck on the line" substantially more than most
other financial blogs, which I admire. I was hoping though you could
also post
about potential setups and stocks your are watching, in addition to
your "check-
ups" on past buys.

I was wondering what your current thoughts were on your 2005 stock pick SGMS.
I bought it last year at 18.79 and sold on 1/5 this year at 22.44.
Honestly, I
haven't really been following it since then, as it seems a bit expensive.
However, I continue to believe that lottery stocks are good picks in the long
run.

Thanks
RC
Thanks RC! I always really enjoy receiving emails from readers. It really does make it all worthwhile. And your kind words are especially appreciated.

Getting to what you wrote, I write all the time about "potential setups"...if I know what you mean. Most of my posts on stocks are not about stocks that I actually own. In retrospect, I wish I had purchased some of my picks! I even wrote up TASR several splits ago. Also, most of my "check-ups" are things like the weekend review which are not about stocks that I have purchased. The review looks at all of the stocks discussed on the blog, with about a trailing stop of about a year.

Finally, you inquired about SGMS (Scientific Games). I actually do not own any shares and have never owned any shares of that stock. It is not that I didn't 'like' the stock, it is just that I cannot own everything I write about :). However, generally, when my portfolio indicates that a purchase is possible (when I have sold a portion of a holding at a gain), I generally buy a stock from the same group that I am discussing.

I first posted SGMS on Stock Picks on 9/12/03 when it was trading at $11.55. As you correctly noted, I again posted Scientific Games (SGMS) on 1/14/05 when it was trading at $25.87...a HUGE appreciation from the original posting level! Too bad I didn't buy any shares!

SGMS closed on 4/22/05 at $22.50, so it certainly hasn't moved higher since my latest post, and is actually down $3.37, or about 13% from that date.

As far as my current view, reviewing again some of the important information on this stock, that latest earnings report, the 4th quarter 2004 report, was reported on 2/23/05. Revenues were $182.6 million, up slightly from the $176.8 million in the fourth quarter of 2003. Net income was $4.4 million or $.05/diluted share down from the $15 million or $.17/diluted share reported the prior year.

With this drop in earnings on a very small increase in earnings, I would be unable to suggest a purchase at this time. And in fact, the stock has done nothing since the time of that earnings report.


Actually, the chart looks intact, with the stock trading higher than the latest quarterly report. However, the stock did break through previous support levels first in June, 2004, and then again in July, 2004, before trading higher.

Basically, my problem with this stock is the latest quarterly result. I am sure the Morningstar.com report is still intact. I like the industry, gaming, which probably has further to run. It is just that my particular trading rules force me to stay away from stocks that have down quarters :(. I am sure I miss lots of great investments that way but there are just plenty that have great quarters to choose from.

I hope that discussion is helpful! If you or anyone else have additional questions or comments, please feel free to post them right here on the blog, or email me at bobsadviceforstocks@lycos.com.

Bob


Posted by bobsadviceforstocks at 10:24 PM CDT | Post Comment | Permalink
Saturday, 23 April 2005
Happy Passover!
For all of my friends who are celebrating Passover, I wish you a Happy Passover! And for all of you, may you have a great weekend and find the time to be with your family and friends, times which are far more important that finding that "ten-bagger"!

Will catch all of you next week...hopefully with some winning stock ideas!

Bob


Posted by bobsadviceforstocks at 5:34 PM CDT | Post Comment | Permalink
Thoughts on Investment Philosophy
Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor, so please consult with your professional investment advisors prior to making any investment decisions based on information on this website.

I just spent some time commenting up and down my good fellow-blogger and internet friend, Roger Nusbaum, on his blog, Random Roger's Big Picture. Roger is a professional and has a far broader knowledge base than I do about the broad range of investment opportunities. Drop by his blog and take a look!

What I wanted to spend just a moment or two commenting on is the entire concept of building a portfolio. Each stock I look at is just a building block in a bigger picture. Sometimes I like to refer to my stocks as if they were each race horses in a whole team of racing horses. I am merely concentrating on the strongest horses (stocks) and hoping that if they have won in the past, they shall continue to win. When a stock falters, out it goes. And my loyalty to any particular stock only goes about as far "as you could throw it."

I guess there are a few things that I base everything that I do on. First of all, that earnings are the key determinant of stock price. That earnings growth is key to price appreciation and that revenue growth is the best way to guarantee that earnings growth can continue.

This consistency in earnings growth is such a key to my entire strategy. In many ways, this is a reflection of management. Great management can result in great earnings over time. But I do not look to judge management. I just wait for the earnings to present themselves and I follow that trail.

Next thought is the "passive investor". Or you could call it the "Zen" of investing...which is most likely not a great interpretation of Zen. I am certainly no expert in Buddhism :).

But what I mean is sort of like putting your ear to the ground and listening. Letting stocks tell you what you need to do. Watching the lists of top percentage gainers to find strong stock possibilities. Watching how your own stocks are doing to give you the signals that let you know whether to be moving stock from cash to equities or vice versa. Observation is so much more important than "thinking".

Even within your portfolio, I try very hard to sell my losers quickly and my gainers slowly. That bias is critical in building a great portfolio. Also, by listening to your stocks, that is by noting whether they are acting healthy (reaching sale-points on gains), or sickly (selling at 8% losses or retracing gains), this information will let you know whether you should be adding new stocks to your portfolio, or pulling in your horns and sitting on your hands, as I like to say, and letting your cash build.

I like to be, as much as possible, a bottom-up investor. How do I do that? For me, I like to wait for the stock to present itself, inviting me to purchase it! Like watching horse racing (which I haven't done in YEARS), if I were to be buying a race horse, I would like to buy a horse that is winning some races. You don't buy 'em cheap that way. But you can buy the best.

If you are a bottom-up investor and find a stock years before other investors are talking about it, you may actually purchase it cheaper. However, my momentum style in stock selection requires other investors to be enough aware of a stock that their acquisition of shares pushes the stock higher that day!

These are just a few thoughts to ponder this weekend. Please send me your own comments and questions, either here or at bobsadviceforstocks@lycos.com. If any of you have used any of my thoughts and ideas, I would love to hear from you and hear how they worked out.

Regards to all. Especially my fellow-blogger Roger!

Bob


Posted by bobsadviceforstocks at 5:22 PM CDT | Post Comment | Permalink
Updated: Saturday, 23 April 2005 5:23 PM CDT
"Looking Back One Year" A review of stock picks from the week of March 1, 2004






Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks bob's Advice. l As always, please remember that I am an amateur investor, so please consult with your professional investment advisors prior to making any investment decisions based on information on this website.

As I like to do on weekends, I shall try to review my stock picks that I made a bit over a year ago and see how they are currently doing. Unfortunately, last weekend I got caught up in other things and didn't post the review (did anyone notice?), so I am another week behind the trailing year, and am up to the week of March 1, 2004, a little over a year ago. Please note that this review assumes a buy and hold strategy. If you follow my posts, and my explanations, you will know that I do not actually practice that strategy. I like to sell my losing stocks quickly and then sell portions of my gaining stocks slowly as they appreciate. That one difference will certainly affect performance!

On March 2, 2004, I posted Cantel Medical (CMN) on Stock Picks at a price of $18.40. I also subsequently purchased some shares and currently own some of those shares still! Cantel had a 3:2 stock split on 1/13/05 making my effective "pick price" only $12.27. CMN closed at $26.38 on 4/22/05, for a gain of $14.11 or 115%.

On March 2, 2005, CMN announced 2nd quarter 2005 results. For the quarter ended January 31, 2005, sales were $49.5 million, up 21% from the sales of $41 million the prior year. Net income was $3.9 million, up 51% from $2.6 million, or on a per share basis, $.24/diluted share, up from $.17/diluted share the prior year. These were great results!

On March 4, 2004, I posted Isco, Inc. (ISKO) on Stock Picks when it was trading at $12.12. On June 15, 2004, Teledyne (TDY) announced an acquisition of ISKO at $16.00 cash/share. This would have given us a gain of $3.88/share or 32% from the stock pick price.

Finally, on March 5, 2004, I posted Nutraceutical (NUTR) on Stock Picks at a price of $19.00. NUTR closed at $15.52 on 4/22/05, for a loss of $(3.48) or (18.3)%.

On December 3, 2004, NUTR reported 4th quarter 2004 results. Revenue was slightly higher at $36.1 million, compared with $35.3 million the prior year. Net income was flat at $3.3 million in 2004, unchanged from $3.3 million in 2003 for the same quarter. On a per share fully diluted basis, however, this came in at $.28/diluted share in 2004, down from $.29/diluted share in the same quarter in 2003.

So overall, how did I do? Well I had one TERRIFIC stock pick (CMN), one stock that was acquired, and one moderately mediocre :(. Overall, because of Cantel especially, the average performance (averaging the percentage change for each of the three stocks reviewed that week last year), was a gain of 42.9% (!). Not too shabby at all!

Thanks again for stopping by! Remember that I am an amateur investor so please consult with your professional advisors! If you have any questions or comments, please feel free to email me at bobsadviceforstocks@lycos.com.

Bob






Posted by bobsadviceforstocks at 2:18 PM CDT | Post Comment | Permalink

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