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Sunday, 8 May 2005
"Looking Back One Year" A review of stock picks from the week of March 15, 2004






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.

It is the weekend and for me, that means a time to stop looking for new stock picks and instead a chance to review past selections. This analysis assumes a buy and hold approach to investing which is not what I employ in my own investment portfolio. In fact, I sell stocks that decline (which is NOT infrequent) quickly, and sell stocks that gain (also NOT infrequent!) slowly. But for the sake of reviewing what happened to these stocks, "buy and hold" works just fine. Also, some people think that I am reviewing stocks that I actually have purchased. In fact, most of the stocks that I review, the great majority in fact, I have never purchased! You can view my current "Trading Portfolio" elsewhere on this website. I am a bit behind updating the list, but those are stocks that I have actually purchased!

On March 15, 2004, I posted Toro (TTC) on Stock Picks at a price of $58.96. TTC had a 2:1 split on 4/13/05, with a resultant adjusted stock pick price of $29.48. TTC closed at $42.86 on 5/6/5 for a gain of $13.38 or 45.4%.

On February 22, 2005, Toro reported 1st quarter 2005 results. Sales jumped 10.6% to $346.9 million from $313.6 million the prior year. Net earnings came in at $11.2 million, up from $9.3 million, or $.47/diluted share this year, compared with $.36/diluted share the prior year.

On March 17, 2004, I posted Autobytel (ABTL) on Stock Picks at a price of $12.93. Autobytel (now listed as ABTLE), closed at $4.79 on 5/6/05 for a loss of $(8.14) or (63.0)%.

On April 1, 2005, ABTLE announced a request for an extension on filings of financial statements. The company is busy restating results, many officers have resigned, litigation is pending, and it will take a lot to clear this one up! An unfortunate pick for the blog!

Finally, on March 17, 2004, I selected VCA Antech (WOOF) for Stock Picks at $34.69. WOOF had a 2:1 stock split on 8/26/04 making my effective "pick price" only $17.35. WOOF closed at $23.55 on 5/6/05, for a gain of $6.20 or 35.7%.

On April 26, 2005, WOOF announced 1st quarter 2005 results. Revenue increased 30% to $186.9 million from $144.4 million the prior year same quarter. The company earned $17.5 million or $.21/share in the quarter, up from $14.7 million or $.18/share the prior year. In addition, the company raised outlook for the remainder of 2005!

So how did we do for that week a year ago? Well, of the three stocks "picked", two had solid gains and one just fell apart! Averaging the three selections still gives us an average gain of 6.03%. Not too bad, and would have been even better if we were stopping out that ABTLE at the (8)% loss level!

Thanks again for stopping by! Remember that I AM an amateur, so please consult with your professional investment advisors prior to using this website for investment decisions. If you have any questions or comments, please feel free to leave them here on the blog or email me at bobsadviceforstocks@lycos.com.

Bob


Posted by bobsadviceforstocks at 4:04 PM CDT | Post Comment | Permalink
Friday, 6 May 2005
May 6, 2005 Multi-Color Corporation (LABL)

Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice! Needless to say, I am an amateur investor, I am not a financial analyst but I love to look and talk about stocks. Thus, it is of utmost importance that you refer to your professional investment advisors prior to making any investment decisions based on information on this website. Only a professional can assist you in these decisions, making sure the investments are appropriate, timely, and likely to be profitable for you!

I had a little time today and wanted to see if I could find something interesting for all of the readers here. As you probably know, if you read my entries (and I hope you read the others as well!), I like to start my "search" by looking at the top % gainers on the NASDAQ. Today I came across Multi-Color Corporation (LABL) which, as I write, is trading at $23.60, up $2.25 or 10.54% on the day. I do not own any shares or options on this stock, nor do any members of my family.

According to the Yahoo "Profile" on LABL, this company "...is a supplier of decorative label solutions and packaging services to consumer product and food and beverage companies, national retailers and container manufacturers worldwide."

What drove the stock higher today, as is so common with stocks on this blog, was the announcement of 4th quarter 2005 results this morning. For the quarter ended March 31, 2005, revenue increased 36% to $45.3 million from $33.3 million the prior year. Much of that increase was from an acquisition. Net income rose 80% to $2.9 million or $.43/diluted share, up from $1.6 million or $.24/diluted share the prior year. The "street" liked these numbers and has bid up the price of this stock today!

How about "longer-term"? Looking at the Morningstar.com "5-Yr Restated" financials, we can see a beautiful ramp-up of revenue from $53.3 million in 2000 to $127.0 million in the trailing twelve months (TTM).

Earnings, however, have been a bit more erratic, dipping from $.89 in 2000 to $.76 in 2002, but increasing since then to $1.01 in the TTM.

Free cash flow has also been a bit erratic, but has stayed positive the last few years with $8 million reported in the TTM.

The balance sheet looks just fine to me with $6.8 million in cash and $24.0 million in other current assets balanced against $15.2 million in current liabilities and $23.0 million in long-term liabilities.

What about some "valuation" questions on this stock?Taking a look at Yahoo "Key Statistics" on LABL, we can see that this is a very small company with a market capitalization of $156.35 million. The trailing p/e isn't bad at 24.26, and apparently no estimates are available to calculate a PEG.

The Price/Sales ratio is rather cheap (imho) at 1.06. However, all of the stocks in the "Packaging and Containers" industry group (according to Fidelity information), are rather cheap including Sealed Air (SEE) at 1.1, Tupperware (TUP) at 1.1, Bemis (BMS) at 1.0, Pactive (PTV) at 0.9, and Ball (BLL) at 0.8. Thus, I would just say that it appears that LABL is reasonably priced, and certainly not the "cheapest" in its industry.

Other facts on Yahoo include the # of shares outstanding at only 6.34 million, with 5.70 million that float. There were NO short shares reported as of 4/8/05. In addition, the company DOES pay a small dividend of $.20/share yielding .95%. The last stock split was a 3:2 split in December, 2003.

What about "technicals"? What does the chart look like? Taking a look at a Multi-Color "point & figure" chart from Stockcharts.com, we can see what looks to me as a very strong chart.


Since late 1999 (!), when the stock was trading as low as $2.50/share, the stock has steadily moved higher, only occasionally consolidating, but following its support line rather well. As you know, I am not a professional technician, but the pattern looks pretty straightforward with a gradual price appreciation of the stock!

So what do I think? Well, I am not in the market to buy anything, but except that this is a very small company that would thus be fairly thinly traded, everything else looks just fine. The latest quarterly report is solid, the company is growing its earnings, spinning off positive free cash flow, the balance sheet is nice, valuation isn't bad at all (imho), and the chart looks nice!

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

Bob




Posted by bobsadviceforstocks at 1:21 PM CDT | Post Comment | View Comments (1) | Permalink
Thursday, 5 May 2005
May 5, 2005 Education Management (EDMC)

Hello Friends! Thank you once again for stopping by and visiting my blog, Stock Picks Bob's Advice. As I always remind you, please remember that I am truly an amateur investor. I like to make observations about stocks! But before you make any investment decisions based on information on this website, PLEASE consult with your professional investment advisors to make sure that your decisions are appropriate, timely, and likely to be profitable for you!

Looking throught the list of top % gainers on the NASDAQ today, I came across Education Management Corporation (EDMC) which, as I write, is trading at $27.97, up $3.13 or 12.60% on the day. I do not own any shares or have any options on this stock. Nor do any members of my family.

According to the Yahoo "Profile" on EDMC, this company "...is engaged in the business of providing private post-secondary education in North America."

Yesterday, after the close of trading, EDMC reported 3rd quarter 2005 results. Revenue increased 16.8% to $274.6 million compared to $235.2 million the prior year. Net income grew 34.5% to $34.2 million or $.45/diluted share, compared to $25.4 million or $.34/diluted share in the same quarter in fiscal year 2004. The street liked these numbers, and the stock has moved higher today.

How about 'longer-term'? For that I like to turn to Morningstar for some more in depth financials, in particular, I like to review the page with the "5-Yr Restated" financials for EDMC.

First of all, the revenue growth is demonstrated by the beautiful ramp-up of "blue bars" on the graph, with revenue growing from $307.2 million in 2000, increasing steadily to $940.5 million in the trailing twelve months (TTM).

Earnings have also been extremely consistent, growing from $.38/share in 2000 to $1.18 in the TTM.

Free cash flow has not been quite as steady, with $47 million in 2002, dropping to a negative $(1) million in 2003, but then continuing to grow to $83 million in 2004 and $101 million in the TTM.

What about the balance sheet? This is probably a weak spot for EDMC with a bit more debt than I would prefer to see. Morningstar reports $34 million in cash and $82.8 million in other current assets, balanced against a larger $147.5 million in current liabilities. Long-term liabilities are not as bad at $20.1 million. I almost always insist on seeing current assets at least covering current liabilities, but with the growing free cash flow this shouldn't be a problem imho.

What about "valuation" questions? What about some statistics on the company?

For that I turn to the Yahoo "Key Statistics" on EDMC. Here we can see that this is a large cap stock with a market capitalization of $2.07 billion. The trailing p/e is nice at 21.74, and the forward p/e is noted to be at 18.04 (fye 30-Jun-06). Thus, the PEG is under 1.0, at 0.96, suggesting a pretty good value for a share of stock.

Price/sales comes in at 1.96. This is somewhere in the middle of the industry group of "Education & Training Svcs.", with Apollo (APOL) at 6.1, and Corinthian Colleges (COCO) at the other end at 1.3. Career Education (CECO) is similar at 1.8, and DeVry (DV) is also close at 1.9. At least according to this one statistic, EDMC is fairly reasonably valued.

Other statistics on Yahoo show that EDMC has 74.04 million shares outstanding with 71.60 million of them that float. Currently, as of 4/8/05, there are 971,000 shares out short, representing 1.36% of the float, or 2.232 trading days of volume. The short situation does not appear to be a significant factor for this stock.

No cash dividend is reported, and the last stock dividend was a 2:1 split reported by Yahoo last December 23, 2003.

How about "technicals"? That is, what does the chart look like? I turn to Stockcharts.com for a "Point & Figure" chart on EDMC. The graph looks nice to me with some weakness in September, 2001, when the price dropped from $23 range down to a low of $11.50. However, the stock has been steadily appreciating since, to the current $28 range.


In summary, the stock is making a nice move higher today on the back of a solid earnings report last night. The company has been growing steadily the past five years with both revenue and earnings growing in an uninterrupted fashion. Free cash flow is positive and appears to be growing if not completely consistently. And the balance sheet is o.k. but not perfect, but with the free cash flow growing, I expect this to improve. In fact valuation is quite reasonable and the 5-Yr estimated PEG is under 1.0.

This is a bit of a different stock, a private educational firm, not just another of my medical stocks I like to evaluate, but the numbers like good, and if I were in the market to buy a stock, this one might just be on my list :).

Thanks again for visiting. I hope that my chatter is helpful to you in some fashion. Always remember, that I am an amateur investor so please get professional assistance before using any of this information for investment decisions for your own portfolio. If you have any questions, or comments, please feel free to leave them right here on the blog or email me at bobsadviceforstocks@lycos.com.

Bob




Posted by bobsadviceforstocks at 1:49 PM CDT | Post Comment | Permalink
Tuesday, 3 May 2005
"Revisiting a Stock Pick" Amedisys (AMED)
Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. Please always remember that I am an amateur investor so please, as I always suggest, consult with your professional investment advisors prior to making any investment decisions based on information on this website!

Looking through the lists of top % gainers today, I didn't see any new stocks that really fit my strategy and came across one that after checking, I realized I wrote up last year! Amedisys (AMED) had a great day today, closing at $33.84, up $3.21 or 10.48% on the day! I first posted Amedisys on Stock Picks on 6/21/04 when it was trading at $30.74. Thus, the stock really hasn't gotten away from us!

I do not own any shares of AMED or have any options, nor does any member of my family!

According to the Yahoo "Profile" on Amedisys, AMED "...is a multi-state provider of home healthcare nursing services."

As is so often the case, what drove the stock higher today was a 1st quarter 2005 earnings report which was reported just prior to the market opening today. For the quarter ended March 31, 2005, net service revenue increased by 49% to $70.4 million from $47.3 million last year. Net income came in at $7.1 million or $.45/diluted share, up from $4.2 million or $.34/diluted share last year. The company also increased guidance for 2005. This was a great stock report and the market liked what it saw!

How about longer-term? I strongly believe that it is the persistence of revenue and earnings growth that propels a stock higher....and that an extended period of prior growth is as good an indication as any of future persistence of the same results.

For this longer-term result I like to turn to Morningstar. In particular, I find the "5-Yr Restated" financials on Morningstar the most helpful. Here we can see that except for a dip in revenue from $97.4 million in 1999, to $88.2 million in 2000, revenue has grown strongly from that level to $204.8 million in the trailing twelve months (TTM).

Earnings, however, have been a bit erratic dropping from $.87 in 2000 to a low of $.08/share in 2002, but since then have been improving strongly to a level of $1.43 in the TTM.

Free cash flow has also been steadily growing from $(2) million in 2001, $12 million in 2002, $20 million in 2003 and $27 million in the trailing twelve months.

The balance sheet is very pretty with $93.2 million in cash, enough to pay both the $40 million in current liabilities and the smallish $6.9 million in long-term liabilities, approximately two times over. In addition, AMED has another $22.0 million in other current assets.

What about some "valuation" statistics and other measurements on AMED? Looking at Yahoo "Key Statistics" on Amedisys, we can see that this is a 'small' mid-cap stock with a market capitalization of $519.78 million. The trailing p/e is reasonable at 22.40 and the forward p/e (fye 31-Dec-06) is even nicer at 15.74 (based on estimates), and thus the 5-yr estimated PEG is 1.13.

Price/sales is 2.07. Although seemingly reasonable, compared to other stocks in the "Home Health Care" group, this is a bit steep. Matria Healthcare (MATR) has a price/sales ratio of 1.5, Option Care (OPTN) is at 1.1, American Healthcare Group (AHG) is at 1.0, and Hooper Holmes (HH) is at 0.7.

Yahoo shows that AMED has only 15.36 million shares outstanding with 10 million of them that float. Of these, there were 2.01 million shares out short as of 4/8/05, down from 2.06 million the prior month. However, this represents 20.10% of the float or 6.301 trading days of volume. As the stock moves higher, this relatively large short interest may well help propel the stock to even higher levels as the "short" sellers return to cover!

Finally what does the chart look like? Taking a look at the the chart,


it actually looks quite strong since February, 2003, when the stock price was bottoming at around $4.25. Since then, the price has climbed steadily to the $33.84 level.

So what do I think? Well, in summary, the stock made a nice move higher today on a strong quarterly report. As a plus, the company guided higher yet. The revenue record is solid, the earnings are more erratic, the free cash flow is attractive, and the balance sheet is solid. Valuation-wise, the p/e and PEG are reasonable. Turns out the Price/Sales ratio makes AMED appear a bit pricey. The graph looks great!

Now, if I were in the market to buy some stock I might just be picking up some shares of this one! However, since I am just sitting on my hands, waiting for a partial sale at a gain as a 'signal' to purchase another position, well, I just won't be buying anything anyhow! Thanks again for stopping by! If you have any comments or questions, please feel free to elave them right here on the blog or email me at bobsadviceforstocks@lycos.com.

Bob




Posted by bobsadviceforstocks at 10:38 PM CDT | Post Comment | Permalink
Updated: Tuesday, 3 May 2005 10:55 PM CDT
Monday, 2 May 2005
May 2, 2005 Moldflow (MFLO)
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 you need to check with your professional investment advisors prior to acting on any information on this website. I cannot be responsible for your losses any more than I shall be entitled to your gains when you trade. I make these observations for my own education and enjoy sharing them with you!

Looking through the list of top % gainers on the NASDAQ today, I came across Moldflow (MFLO) that closed at $13.93, up $1.15 or 9.00% on the day. I do not own any shares or options of this stock nor do any members of my family.

According to the Yahoo "Profile" on MFLO, Moldflow Corporation "...is a provider of software products and hardware solutions for the optimization and automation of plastics-focused manufacturing."

On April 28, 2005, Moldflow announced 3rd quarter 2005 results. For the quarter ended March 26, 2005, revenue came in at $15.9 million, a 20% increase over the $13.3 million the prior year same quarter. Net income came in at $2.05 million, up 300% from the $509 thousand the prior year. On a per diluted share basis this came in at $.17/diluted share, up over 200% from the $.05/diluted share the prior year.

How about longer-term? Has Moldflow shown persistence of earnings and revenue growth? For this, as always, I turn to Morningstar for the "5-Yr Restated" financials. Here we can see that revenue was a bit erratic, but grew from $27.4 million in 2000 to $58.8 million in the trailing twelve months.

Earnings have also been erratic, dropping from $.35/share in 2001 to a loss of $(.01)/share in 2003, but then increasing strongly since then in line with the revenue growth to $.43/share in the trailing twelve months (TTM).

How about Free Cash Flow? Also slightly erratic, this dropped from $3 million in 2002 to -0- in 2003, then increased back to $5 million in 2004.

And the balance sheet? Again solid. MFLO has $52.9 million in cash, enough to cover both the $22.5 million in current liabilities and the $1.8 million in long-term liabilities combined more than two times over. In addition, Morningstar.com reports an additional $18.9 million in other current assets!

What about "valuation" and other "key statistics"? For this, I like to refer to Yahoo "Key Statistics" on MFLO.

Some pertinent facts about this company include the fact that it is virtually a micro cap stock with a market capitalization of $149.82 million. The trailing p/e is reasonable at 24.74, and the forward p/e is listed at 20.49, with a 5-Yr PEG of 1.15. Price/sales is also moderate at 2.24.

Yahoo reports 10.76 million shares outstanding with 10 millio of them that float. There are only 12,000 shares out short representing 0.12% of the float or 0.375 trading days as of 4/8/05. There was no cash nor any stock dividends reported on Yahoo.

How about a chart? What do the technicals look like? If we look at a MFLO "point & figure" chart from Stockcharts.com, we see what looks like a very horizontal chart, with the stock going nowhere between July, 2001, and April, 2005. The stock broke down in late 2002 to the $4.25 level, and has, in fact, been trading higher, breaking through a resistance level at $13 in January, 2004, and trading steadily higher since then with the recent close at $13.93. I have certainly seen stronger-looking charts, but certainly, I would not say the stock price is over-extended!


So what do I think? Well the latest quarterly report was outstanding, the last five years has seen significant growth in earnings and revenue, especially the last three years. Free cash flow is positive, the balance sheet is quite clean, and the valuation looks reasonable.

On the downside, the stock is fairly thinly traded with a small capitalization. The chart looks just fair.

In any case, I don't have any money to buy any stocks anyhow, but this stock is an interesting company and I shall be putting it on my "back burner."

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

Bob


Posted by bobsadviceforstocks at 5:39 PM CDT | Post Comment | Permalink
Updated: Monday, 2 May 2005 9:46 PM CDT
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

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