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Saturday, 1 April 2006
"Looking Back One Year" A review of stock picks from the week of January 10, 2005








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 remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

If you are a regular visitor to this website, you will probably understand what I do with this weekend reviews: looking back at stocks I have picked with a trailing 60 week period. However, if you are new, let me explain that I like to discuss stocks of possible interest on this blog, occasionally pick from these stocks to add to my own portfolio, and like to review past selections to see how they actually turned out a year-or-so later.

My review assumes a "buy and hold" strategy which is not what I actually do or recommend in my own portfolio. In fact I recommend selling losing stocks quickly and completely and selling my gaining stocks partially and slowly.

Anyhow, last weekend I reviewed the week of January 3, 2005, and this week, I shall take a look at picks from the week of January 10, 2005.




On January 10, 2005, I posted Pilgrim's Pride (PPC) on Stock Picks Bob's Advice at a price of $32.52. PPC closed at $21.67 on 3/31/06 for a loss of $(10.85) or (33.4)%.


On January 23, 2006, Pilgrim's Pride announced 1st quarter 2006 results. Sales for the quarter dropped 2% to $1.34 billion from $1.37 billion last year. Earnings were down sharply to $25.7 million, from $48.5 million or $.39/share down from $.73/share last year.

On January 11, 2005, I posted Plantronics (PLT) on Stock Picks Bob's Advice when it was trading at $40.05. PLT closed at $35.43 on 3/31/06 for a loss of $(4.62) or (11.5)%.

On January 24, 2006, Plantronics reported 3rd quarter 2006 results. Revenue for the quarter ended December 31, 2005, climbed nicely to $222 million from $150 million the prior year. However, net income dropped to $22 million or $.42/share from $24 million or $.48/share the prior year.

On January 13, 2005, I posted Ventana Medical Systems (VMSI) on Stock Picks Bob's Advice when it was trading at $64.36. VMSI had a 2:1 stock split on 3/15/05, giving me an effective pick price of $32.18. VMSI closed at $41.77 on 3/31/06 for a gain of $9.59 or 29.8%.

On February 10, 2006, Ventana reported 4th quarter 2005 results. For the quarter ended December 31, 2005, sales rose 13% to $54.3 million from $48.0 million the prior year. GAAP Net Income was also up nicely at $10.6 million or $.29/diluted share, up from $8.6 million or $.24/diluted share in the fourth quarter of 2004.

On January 14, 2005 I posted Ask Jeeves (ASKJ) on Stock Picks Bob's Advice when the stock was trading at $29.59. On March 21, 2005, the acquisition of Ask Jeeves by InterActive Corp (IACI) was reported. ASKJ shareholders received 1.2668 shares of IACI for each share of Ask Jeeves they owned. Interactive closed at $29.60 on 3/31/06. Thus, the current value of these 1.2668 shares = $37.50. Thus, the shares, based on a pick price of $29.59, have appreciated $7.91 or 26.7%.

Finally, on January 14, 2005, I selected Scientific Games (SGMS) for Stock Picks Bob's Advice at a price of $25.87. SGMS closed at $35.13 on 3/31/06, for a gain of $9.26 or 35.8%.

On February 28, 2006, Scientific Games reported 4th quarter 2005 resultsRevenues for the quarter ended December 31, 2005, rose 11% to $202.9 million from $182.6 million the prior year same period. Net income was $10.4 million or $.11/diluted share, up from $4.4 million or $.05/diluted share in the prior year same period. This was a solid report imho.

So how did I do with these five stocks?

Two stocks declined and three gained. The average performance of these five was a gain of 9.48%.

Thanks so much for stopping by and visiting! If you have any comments or questions, please feel free to leave them in the blog or email me at bobsdviceforstocks@lycos.com.

Bob





Posted by bobsadviceforstocks at 4:06 PM CST | Post Comment | Permalink
Friday, 31 March 2006
March 31, 2006 Kendle International (KNDL)
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 remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

I was looking through the list of top % gainers on the NASDAQ today and came across Kendle International (KNDL) a stock that I have been meaning to write-up on this blog but just haven't gotten around to it. I do not own any shares of this stock, but I purchased 30 shares of KNDL on 2/23/06 at $32.15 for my son, who if he is reading this entry, will see why I liked it then and why I still like it now. I do not have any options on this company either.

As I write, KNDL is trading at $33.20, up $2.04 or 6.55% on the day in an otherwise anemic market with both the DOW and the NASDAQ down moderately.

And what does this company do?

According to the Yahoo "Profile" on Kendle, the company is
"...a contract research organization, provides integrated clinical research services worldwide. The company’s services comprise clinical trial management, clinical data management, statistical analysis, medical writing, regulatory consultation, and organizational meeting management and publication services on a contract basis to the pharmaceutical and biotechnology industries."
And what about the latest quarterly result?

On February 14, 2006, KNDL reported 4th quarter 2005 results. Net service revenues for the quarter ended December 31, 2005, came in at $52.8 million, up 10% over net revenues of $48 million in the same quarter the prior year. Earnings per diluted share came in at $.25/share up 56% from $.16/diluted share the prior year. On the same day, the company raised earnings guidance for fiscal 2006 to $1.40 to $1.50/share up from expected $1.24, and a sharp increase from the $.88/share reported in 2005. This combined solid earnings report with raised guidance was enough to help the stock move higher!

How about longer-term?

Reviewing the Morningstar.com "5-Yr Restated" financials on KNDL, we can see a less than perfect, yet still provocative, financial record. Revenue has grown from $156.1 million in 2000 to $215.9 million in 2004 and $243.3 million in the trailing twelve months (TTM).

Earnings have been erratic, with $(.18)/share reported in 2000, turning profitable at $.33/share in 2001, then dropping to a large loss of $(4.30) in 2002. However, since 2002, earnings have improved, turning profitable again at $.27 in 2004, and coming in at $.66/share in the TTM. No dividends are reported and the number of shares has remained relatively stable at 12 million in 2000 increasing to 13 million in 2004 and up to 14 million in the TTM.

Free cash flow has been positive recently but a bit erratic as well with $20 million in 2002, dropping to $4 million in 2004, and increasing back to $19 million in the TTM.

The balance sheet looks solid with $36.1 million in cash per Morningstar and $66.4 million in other current assets. Balanced against current liabilities of $45.7 million, yields a current ratio of a bit over 2.0. In addition, the current assets can easily pay off both the $45.7 million in current liabilities and the $3.2 million in long-term liabilities combined more than 2x over!

What about some valuation numbers on this stock?

Reviewing the Yahoo "Key Statistics" on Kendle, we can see that this company is a small cap stock with a market capitalization of only $466.50 million. The trailing p/e is a bit rich at 43.66, but the forward (fye 31-Dec-07) p/e is much nicer at 19.30. No PEG is reported.

According to the Fidelity.com eResearch website, Kendle is in the "Drug Manufacturers/Other" industrial group and is very reasonably priced with a Price/Sales ratio of 1.8. Other stocks in this group include Vertex Pharmaceuticals with a Price/Sales ratio of 19.9, Millennium Pharmaceuticals with a ratio of 5.6, Forest Laboratories at 5.3 and Cephalon at 2.9. By this measure, the company appears reasonably priced.

Finishing up with Yahoo, we find that there are 14.13 million shares outstanding and 11.73 million that float. Of these, 115,550 shares are out short as of 3/10/06, representing 1% of the float or 0.5 trading days of volume (the short ratio). This doesn't look significant to me.

As previously noted, no dividends and no stock splits are reported on Yahoo.

So what about the chart?

Looking at a "Point & Figure" chart on Kendle from StockCharts.com:


We can see that the stock price traded weakly between September, 2002, when it was at $11.50/share, down to a low of $3.25 in March, 2003. Since then, the stock has been roaring higher to the current level of approximately $33/share.

So what do I think?

Well, you know I like it enough to buy a few shares for my son :). But seriously, the stock reported a strong quarter, raised guidance, and has a nice record from the past few years at least on Morningstar.com. The company is free cash flow positive, has reasonable valuation going forward especially, and a solid balance sheet. On top of this the chart looks terrific. Simply put, I like this stock!

Anyhow, that's my Friday pick! Thanks so much for stopping by and visiting. If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Bob


Posted by bobsadviceforstocks at 2:03 PM CST | Post Comment | Permalink
Thursday, 30 March 2006
March 30, 2006 NS Group (NSS)
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 remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

The market appears to be taking a pause after yesterday's euphoric rise! However, that doesn't mean we can't keep looking for those stocks we like to discuss on this website. Reviewing the list of top % gainers on the NYSE today, I came across NS Group (NSS), which as I write is trading at $47.09, up $1.77 or 3.91% on the day. I do not own any shares nor any options on this stock.

According to the Yahoo "Profile" on NS Group, the company
"...engages in the manufacture and supply of the tubular products to the energy market in North America. The company’s energy related products include seamless and welded tubular products, such as drill pipe, casing, and production tubing used in oil and natural gas drilling and production operations."
Let's take a closer look at this stock.

First, the latest quarterly earnings report.

NSS reported 4th quarter 2005 results on February 14, 2006. For the quarter ended December 31, 2005, net sales came in at $154.2 million, a 10% increase over the $140.0 million reported in the same quarter the prior year. Net income was up nicely at $39.8 million or $1.76/share, from $30.8 million or $1.35/share the same quarter last year. According to this report, the company beat expectations of $1.67 on the net income, but the revenue came in a bit under expectations of $158.3 million.

How about longer-term results?

Reviewing the Morningstar.com "5-Yr Restated' financials on NSS, we can see that revenue actually dropped from $315.5 million in 2001 to a low of $192.4 million in 2002. Since then, revenue has climbed steadily and strongly to $600.9 million in 2005.

Earnings have improved steadily since 2001 when the company posted a loss of $(2.68)/share to a profit of $3.45/share in 2004 and $5.62/share in 2005.

No dividends are paid and the shares outstanding is readily constant with 21 million shares reported in 2001, increasing to 22 million in 2005.

Free cahs flow which was negative at $(15) million in 2003, turned positive at $25 million in 2004 and $111 million in 2005.

The balance sheet is quite solid with $145.1 million in cash and $93.4 million in current liabilities. Including the $215.7 million in other current assets, this gives us a current ratio of over 3.5. In fact, the company has enough cash to pay off the combined $106 million in current and long-term liabilities with another $40 million in cash left over!

And what about some valuation numbers?

Reviewing Yahoo "Key Statistics" on NS Group, we find that the market cap is a mid-cap size $1.06 billion. The trailing p/e is a downright cheap 8.40 with a forward p/e of 7.43. No PEG is rreported.

According to the Fidelity.com eResearch website, this company is in the "Steel & Iron" industrial group and is moderately priced relative to its Price/Sales ratio of 1.7. Topping this group is Precision Castparts (PCP) at 2.4, followed by NSS at 1.7, and Allegheny Technologies (ATI) at 1.7. Steel Dynamics (STLD) comes in at 1.4 and Nucor (NUE) at 1.3. At the bottom of the group is Gibraltar Industries (ROCK) with a Price/Sales ratio of 0.7.

Going back to Yahoo for a few more numbers, we find that there are 22.42 million shares outstanding with only 20.20 million that float. Currently (3/10/06) there are 1.81 million shares out short which represents 8.10% of the float or 4 trading days of volume (the short ratio). Exceeding my 3 day rule for the short ratio, this is of some significance imho.

No cash dividend is reported, and no stock splits are noted on Yahoo either.

What about a chart?

Looking at the "Point & Figure" chart on NSS from StockCharts.com:


We can see that the company traded lower from $17 to a low of $5.50 in October, 2002. The company's stock price then moved higher, breaking through resistance in March, 2003, at the $10.50 level, and has subsequently been steadily moving towards the current level of approximately $47/share. The chart looks nice to me.

So what do I think? Well this is another oil-related company on the move. They have several years of steady growth, the latest quarterly result appears solid, free cash flow is positive and growing, the number of shares is stable, the balance sheet is beautiful, valuation is nice with a p/e under 10, and the Price/Sales is satisfactory. I don't have a PEG to evaluate, but it sure looks like it would be well under 1.0. Finally, the chart is solid. What is there not to like? I suppose if the oil market collapsed, this stock would go down with it, but what do you think the chances are for that?

Anyhow, thanks so much for stopping by and visiting. If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Bob









Posted by bobsadviceforstocks at 1:43 PM CST | Post Comment | Permalink
Tuesday, 28 March 2006
TALX Corporation (TALX) Revisiting a Stock Pick
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 remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

While the rest of the market and all of the traders are anxiously awaiting the Fed and the probably 1/4% interest hike, I was out looking for new prospects and re-examining old stock picks. Looking through the list of top % gainers on the NASDAQ this afternoon, I saw an old name, almost an old 'friend'--as I like to refer to some of my old stock picks--TALX Corp (TALX) making a nice move today. As I write, TALX is trading at $28.26, up $1.84 or 6.96% on the day.

I first wrote up TALX on Stock Picks Bob's Advice on September 17, 2003, when the stock was trading at $26.25. TALX split 3:2 2/18/05, and then split again 3:2 on 1/18/06. This gives my pick an effective price of $26.25 x 2/3 x 2/3 = $11.67. With the current (as I write) price of $28.27, this gives this stock pick a gain of $16.60 or 142.2% since selected on this blog. Unfortunately, I didn't buy any shares or options on this stock then and I don't own any shares or options now.

And what exactly does this company do?

Taking a look at the Yahoo "Profile" on TALX, we find that the company
"...provides automated employment and income verification, tax management services, and other outsourced employee self-service applications. Its services use Web access, interactive voice response, fax, document imaging, and other technologies to enable mortgage lenders, pre-employment screeners, credit issuers, social service agencies, and other authorized users to obtain payroll and human resources information; and enables employees and their managers to review and modify information in payroll and human resources management information systems."
And how about the latest quarterly results?

On January 25, 2006, TALX announced 3rd quarter 2006 results. Revenue for the quarter ended December 31, 2005, climbed 31% to $52.3 million from $39.8 million in the same quarter the prior year. Earnings from continuing operations climbed 54% to $7.4 million, from the year ago $4.8 million figure. On a diluted per share basis, this worked out to $.22/share up almost 50% from the $.15/share reported the prior year.

One of the most important things, imho, that may be found in a quarterly report is new guidance. And TALX did exactly this. As reported in the report:
"Because of the favorable operating trends, as well as recent acquisitions, TALX is again raising guidance for the fiscal year ending March 31, 2006. Revenue is now estimated to be a range of $205 million to $207 million compared with previous guidance of $193 million to $196 million. On a post-split basis, the estimate for diluted earnings per share from continuing operations is now a range of $0.86 to $0.87 compared with the previous guidance of $0.80 to 0.83 ($1.20 to $1.24 on a pre-split basis)."
This looks like a nice earnings report from my perspective.

What about longer-term results? My goal for stocks is to pick companies that can consistently and persistently produce good financial reports. I cannot foretell the future, but I depend on past results to give an indication of future prospects.

Looking at the "5-Yr Restated" financials from Morningstar.com, we see that this company is relatively new, with no meaningful revenue in 2001, growing to $35.4 million in 2002, and to $158.4 million in 2005. They reported $193.3 million in the trailing twelve months (TTM).

Earnings during this same period have grown steadily from $.01/share in 2001, to $.51/share in 2005 and $.86/share in the TTM.

An added plus, imho, is the presence of dividends. While not necessary for me to like a stock, the payment of dividends makes a company more attractive to many other investors, and also helps support a stock price in a market correction. In addition, the company has a pattern of increasing its dividend each year! They paid $.03/share in 2001, increasing it annually to $.10/share in 2005 and $.12/share in the TTM.

The number of shares outstanding has grown slightly as the company has apparently been using shares for financing operations and acquisitions, increasing from 25 million shares in 2001 to 31 million in 2005 and 32 million in the TTM. This 33% increase in shares, while a bit more than I would like, did coincide with an approximately 500% increase in revenue. I view this as a satisfactory trade-off.

What about free cash flow? This has been steady but not growing with $24 million reported in 2003, $24 million in 2005 and $24 million in the TTM.

And the balance sheet?

Let me use this entry to touch on the top of "current ratio" that I have been using in this and other entries. Not being an accountant or finance person, I depend on other experts for explanations.

I found a nice explanation of the current ratio where it is explained:
"The current ratio is another test of a company's financial strength. It calculates how many dollars in assets are likely to be converted to cash within one year in order to pay debts that come due during the same year. You can find the current ratio by dividing the total current assets by the total current liabilities. For example, if a company has $10 million in current assets and $5 million in current liabilities, the current ratio would be 2 (10/5 = 2).

An acceptable current ratio varies by industry. Generally speaking, the more liquid the current assets, the smaller the current ratio can be without cause for concern. For most industrial companies, 1.5 is an acceptable current ratio. As the number approaches or falls below 1 (which means the company has a negative working capital), you will need to take a close look at the business and make sure there are no liquidity issues. Companies that have ratios around or below 1 should only be those which have inventories that can immediately be converted into cash. If this is not the case and a company's number is low, you should be seriously concerned."
On many entries, I have been referring to this "1.5" figure as a cut-off for 'good health'. This is where I got this figure.

Anyhow, looking again at the Morningstar results, we can see that TALX has $7.8 million in cash and $48.7 millin in other current assets. This $56.5 million, when balanced against the $31.3 million in current liabilities, gives us a current ratio of approximately 1.8. A healthy if not spectacular figure. In addition, the company has another $132.6 million in long-term debt. With the growth in revenue, the growth in earnings, the steady free cash flow, I suspect that this debt load will not be a problem imho.

What about some valuation numbers on this company?

Reviewing Yahoo "Key Statistics" on TALX, we find that this is a mid-cap stock with a market capitalization of $900.18 million. The trailing p/e is a moderate 32.75, with a forward p/e (fye 31-Mar-07) of 25.52. With the rapid growth in earnings expected (5 Yr expected), we are left with a PEG of .88 which is quite reasonable imho.

Insofar as the Price/Sales ratio is concerned, using the Fidelity.com eresearch website, we can see that this stock is in the "Business Software & Services" industrial group. Within this group, TALX is actually the 'priciest' or richest in valuation with a Price/Sales ratio of 4.7. This is followed by BEA Systems (BEAS) at 4.4, First Data (FDC) at 3.6, Business Objects (BOBJ) at 3.2, Automatic Data Processing (ADP) at 3.1, and Fiserv (FISV) at 2. Thus, from this perspective, TALX is fairly richly valued.

Going back to Yahoo for a few more numbers, we find that the company has only 32.07 million shares outstanding with 29.7 million that float. Of those that float, 1.60 million shares or 5.10% of the float, is out short. This represents only 2.6 average trading days of volume (the short ratio). IMHO, this is not significant, as it is under 3 days which I have arbitrarily set to distinguish those companies which have a large number of shares out short.

As noted above, the company pays a $.16/share dividend with a yield of .60%. The last stock split, as I also noted earlier, was on 1/18/06, when the stock split 3:2, the second split in as many years.

What about a chart?

Taking a look at the "Point & Figure" chart on TALX from Stockcharts.com, we can see that from a level of $10.50 in late 2001, to a bottom of $3.25 in October, 2002, the company showed considerable weakness in its stock price. However, after breaking through resistance at $8.00/share in May, 2003, the stock has moved steadily higher to the current $28 level.


So what do I think about this stock?

Well basically I like this stock a lot, even though I do not own any shares! The stock is making a nice move higher today apparently on an analyst upgrade. More importantly, the latest quarterly result was strong with growth in both earnings and revenue and the company raised guidance. The Morningstar evaluation looks nice with a steady growth in revenue, and also a steady growth in earnings which is often erratic in a small company like this. To top this off, the company pays a small dividend and has been raising (!) the dividend every year.

Valuation-wise, the p/e is a tad rich but the PEG is under 1.0. The Price/Sales ratio is the top in its group so no bargain there, but I am willing to endorse a stock with that particular ratio on the high end with everything else in line. On top of this, the chart looks strong.

Anyhow, that's a stock for you to chew on! I hope I haven't been too verbose, but if so, let me know and I will try to shorten these entries :). Thanks again for visiting! If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com. Please be sure to visit my podcast website at http://bobsadviceforstocks.podomatic.com where you can listen to me droning on and on :) about many of these same stocks!

Bob






Posted by bobsadviceforstocks at 1:29 PM CST | Post Comment | View Comments (2) | Permalink
Monday, 27 March 2006
Candela Laser (CLZR) Revisiting a Stock Pick

Click ***HERE*** for my PODCAST ON CANDELA

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 remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

I was looking through the list of top % gainers on the NASDAQ today, and came across Candela Laser (CLZR) which as I write is trading at $20.68, up $1.48 or 7.76% on the day. I do not own any shares nor do I have any options on this stock.

I first reviewed CLZR on Stock Picks Bob's Advice on January 28, 2004, a bit over two years ago, when it was trading at $26.38. CLZR split 2:1 on 3/17/04, giving my pick an effective price of $13.19. With today's price of $20.68, this represents a gain of $7.49 or 56.8% since posting on the blog.

Let's take a closer look at this company and I will share with you my thinking as to why this stock deserves a second look.

First of all, what they do:

According to the Yahoo "Profile" on Candela, the company
"...engages in the research, development, manufacture, marketing, sale, and servicing of lasers and light-based products used to perform aesthetic and cosmetic procedures worldwide. Its product line includes GentleLASE family of lasers for the treatment of unwanted hair and for the treatment of vascular lesions, pigmented lesions, and wrinkles; Vbeam for the treatment of vascular lesions, wrinkles, psoriasis, and other conditions; ALEXLAZR for the treatment of pigmented lesions and tattoos; Smoothbeam diode laser for nonablative dermal remodeling of wrinkles, and the treatment of acne and acne scars; C-beam pulsed dye laser for treatment of psoriasis and surgical scars; and Ellipse Intense Pulsed Light system for the improvement of sun-damaged skin by photo rejuvenation through removal of both vascular and dyspigmentation."
And how about the latest quarterly result?

On January 31, 2006, Candelareported 2nd quarter 2006 results. For the quarter ended December 31, 2005, revenues came in at $37.7 million, a 34% increase over the $28.2 million reported in the year-earlier figure. Income from continuing operations climbed 158% to $4.5 million, from $1.75 million the prior year same period. On a per share basis, earnings grew 171% to $.19/share from $.07/share last year.

What about longer-term results?

Reviewing the Morningstar.com "5-yr Restated" financials on CLZR, we can see that revenue actually dipped from 2001 when it was $60.9 million to $58.7 million in 2002. However, since 2002, revenue has grown steadily and strongly to $123.9 million in 2005 and $139.1 million in the trailing twelve months (TTM).

Earnings have also been a bit erratic, dropping from $.11/share in 2001 to a loss of $(.11)/share in 2002, then climbing to $.36/share in 2004, dropping to $.32/share in 2005 and to $.40 in the TTM.

Free cash flow has also bounced around a bit, dropping from $10 million in 2003 to $0 in 2004, then has climbed strongly to $18 million in 2005 and $12 million in the TTM.

Reviewing the Morningstar.com balance sheet, we find that CLZR has $52.6 million in cash and $49.5 million in other current assets. When balanced against the $32.3 million in current liabilities, this yields a current ratio of of more than 3.0. (Stocks with a current ratio of 1.5 or higher are generally considered financially health at least in the short run.) In fact, the $52.6 million in cash is enough by itself to pay off the combined $32.3 million in current liabilities and the $5.6 million in long-term liabilities.

What about some 'valuation' numbers?

Looking at the Yahoo "Key Statistics" on Candela Laser, we can see that this is a small cap stock with a market capitalization of only $484.04 million. The trailing p/e is rich at 51.71, but the forward p/e is better at 23.47 (fye 02-Jul-07). With the rapid growth anticipated (5 yr expected), we have a PEG of only 0.90. (PEG's under 1.0 are downright cheap imho.)

Checking the Fidelity.com eresearch website, for the Price/Sales ratio assessment, we can see that Fidelity has assigned Candela Laser to the "Medical Appliances/Equipment" industrial group. Within this group, CLZR is moderately priced relative to the Price/Sales ratio. Topping the group is St. Jude Medical (STJ) at a Price/Sales ratio of 5.7. This is followed by Zimmer Holdings (ZMH) at 5.2, Biomet (BMET) at 4.4, then Candela (CLZR) at 3.2, Edwards Lifesciences (EW) at 2.8 and Medtronic, with a Price/Sales ratio of 0 (?) (Yahoo actually assigns Medtronic with a Price/Sales ratio of 5.84...which makes more sense to me!).

What about some other statistics on this stock?

Going back to Yahoo, we find that there are 23.17 million shares outstanding with 22.93 million of them that float. As of 2/10/06, there were 1.14 million shares out short, representing 5% of the float or 1.14 trading days of volume. (the short ratio).

No dividends are reported, and as noted above, the stock last split 3/17/04, when it declared a 2:1 split.

How about a chart?

Reviewing a "Point & Figure" chart on Candela from StockCharts.com:


We can see that the stock traded weakly from May, 2001, when it hit $4.25, down to a low of $1.75 in February, 2002. Since then, the stock was trading strongly higher, until it hit a weak period between April, 2004, and November, 2004, when it hit an intermediate low at $7.50. After breaking through resistance in August, 2005, at around $12.50, the stock has been trading higher once again. Over-all the graph looks fine to me.

So what do I think?

Well, this is an interesting stock! I like the latest quarterly results, the Morningstar.com "5-Yr" wasn't bad, free cash flow is positive and the balance sheet is solid. The chart looks nice, and valuation-wise, we have a PEG under 1.0, and the Price/Sales in the midst of its industrial group. This stock is a very small cap company, so that imho means volatility, but also the possibility of sustained growth over the longer-haul.

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

Bob


Posted by bobsadviceforstocks at 1:32 PM CST | Post Comment | Permalink
Updated: Monday, 27 March 2006 9:41 PM CST
Sunday, 26 March 2006
Genesco (GCO) Weekend Trading Portfolio Analysis

Click ***HERE*** For my Podcast on GENESCO












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 remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

This past year, I have started reviewing the actual stocks in my own trading portfolio. I do this out of wishing to provide you with an understanding of what I actually do with stocks in practice. Not just theory. I select stocks from the universe of stocks discussed on this blog, and follow the trading rules that I have advocated here on this website. With 21 stocks in my trading portfolio, of a maximum of 25 positions, it would take me a little over 5 months if I review one stock weekly. Not liking to 'over-plug' my own holdings, I am going to try to do these review every other week, so that it will take me about a year to get back to the same stock assuming I still own it, as I review each of my holdings.

Two weeks ago, I reviewed Cytyc (CYTC) on Stock Picks Bob's Advice. Going alphabetically through my holdings, I am up to Genesco (GCO).

I currently own 200 shares of Genesco (GCO) which were acquired almost a year ago, on May 26, 2005, with a cost basis of $34.40/share. I have not sold any shares of my original purchase. GCO closed at $38.83 on 3/24/06 for a gain of $4.43 since my purchase or 12.9%. My trading goals include selling portions of holdings at pre-set appreciation targets. My first targeted sale would be for 1/6th of my holding (200/6 = 33 shares) if the stock should appreciate to a 30% gain (1.30 x $34.40 = $44.72). On the downside, not having sold any shares yet, my sale of all of my shares would occur if the stock should drop to an 8% loss from my purchas (.92 x $34.40 = $31.65).

I fist discussed Genesco (GCO) on Stock Picks Bob's Advice on November 18, 2004, when it was trading at $28.35. I also performed my first "Weekend Trading Portfolio Analysis" on Genesco on October 30, 2005, when it was trading at $35.85.

Let's take another look at this stock and see if it still fits into my investment strategy.

First, a description of the business. According to the Yahoo "Profile" on Genesco (GCO), the company:
"...ngages in the design, marketing, and distribution of footwear, headwear, and accessories. The company distributes footwear under its own Johnston & Murphy brand and under the licensed Dockers brand to retail accounts, including various department, discount, and specialty stores. It operates through five segments: Journeys, Underground Station Group, Hat World, Johnston & Murphy, and Dockers Footwear."
And what of the latest quarterly result?

On March 2, 2006, Genesco reported 4th quarter 2006 results. For the fourth quarter ended January 28, 2006, net sales increased 15% to $406 million from $353 million in the same quarter in fiscal year 2005. Earnings came in at $31.2 million or $1.15/diluted share, up from $25.4 million, or $.97/diluted share the prior year. These results are "before discontinued operations".

And how about a longer-term view?

Reviewing the latest Morningstar.com "5-Yr Restated" financials, we can see the very steady revenue growth from $700 million in 2001 to $1.1 billion in 2005 and $1.2 billion in the trailing twelve months (TTM).

Earnings have been a little erratic, increasing from $1.21 in 2001 to $1.46 in 2003, then dropping to $1.20 in 2004, but rebounding to $1.91/share in 2005 and $2.21 in the TTM. The shares outstanding has been very stable with 22 million in 2001, 22 million in 2005 and 23 million in the TTM.

Free cash flow has grown nicely from $6 million in 2003 to $60 million in 2005 and $44 million in the TTM.

The balance sheet looks solid with $33.4 million in cash and $341.5 million in other current assets, which, when compared with the $178.7 million in current liabilities, yields a current ratio of just over 2.0. Generally anything over 1.5 is 'healthy' imho.

The combined current assets is almost enough to pay off both the $178.7 million in current liabilities and the $232 million in long-term liabilities combined.

How about some statistics on this stock?

Reviewing Yahoo "Key Statistics" on GCO, we can see that this is a mid-cap stock with a market capitalization of $888.0 million. The trailing p/e is a very reasonable 16.96, with a forward p/e (fye 28-Jan-08) estimated at 13.16. The (5 yr expected) PEG comes in at a very reasonable level of 1.1.

According to the Fidelity.com eresearch website, Genesco has a very reasonable Price/Sales ratio of .9. Within its industrial group of "Apparel Stores" topping the group is Chico's (CHS) (that I just reviewed in the previous note) with a Price/Sales ratio of 5.3. This is followed by American Eagle (AEOS) at 2.0 and Abercrombie & Fitch (ANF) at 2.0), Pacific Sunwear (PSUN) at 1.2, Limited (LTD) at 1.0, and Genesco (GCO) at the bottom of the list, implying the best value, with a Price/Sales ratio of 0.9 as noted.

Yahoo reports only 22.87 million shares outstanding with 22.40 million that float. As of 3/10/06, there were 839,060 shares out short representing 3.8% of the float or 3 trading days of average volume (the short ratio).

No dividend is paid.

What about a chart?

Since I have reviewed this stock before, let's take a look at a few of the past charts I have posted.


This was the StockCharts.com chart I posted 10/28/05.


And this is the latest chart from StockCharts.com from 3/24/06.

You can see the chart, which had some weakness between March, 2002, when it was trading at $29, until October, 2002, when the stock dropped as low as $11, has been behaving steadily better since and continues to move higher. The chart looks fine to me.

So what do I think? I am happy to have this stock in my portfolio. It represents a company showing steady growth with reasonable valuationa and a nice chart 'to boot!'.

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

Bob


Posted by bobsadviceforstocks at 10:45 AM CST | Post Comment | Permalink
Updated: Sunday, 26 March 2006 11:55 AM CST
"Looking Back One Year" A review of stock picks from the week of January 3, 2005







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 remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

On as many weekends as I can, I like to review past stock investment ideas and see how they would have turned out if I had chosen to purchase those shares. Of the many stocks I discuss, only a few are actually added to my own trading portfolio. It should also be noted that my own investment strategy is to sell stocks quickly and completely at small losses and to sell my gaining stocks slowly and partially at targeted appreciation points. For the purposes of this review, I assume a buy and hold strategy to determine the performance of the picks. This strategy would necessarily result in a different performance result than would the practice I employ in reality.






On January 5, 2005, I posted Build A Bear Workshops (BBW) on Stock Picks Bob's Advice when it was trading at $34.18. BBW closed at $29.37 on 3/24/06 for a loss of $(4.81) or (14.1)%.

On February 16, 2006, BBW announced 4th quarter 2005 results. For the quarter ended December 31, 2005, revenue climbed 18.7% to $118 million, compared with $99.4 million in the same quarter the prior year. Net income for the quarter grew 68.1% to $10.6 million or $.52/diluted share, vs. $6.3 million or $.32/diluted share in the prior year.

On January 6, 2005, I "revisited" Chico's FAS (CHS) on Stock Picks Bob's Advice when it was trading at $48.98/share. Chico's split 2:1 on February 23, 2005, shortly after I picked this stock, giving me an effective pick price of $24.49/share. CHS closed at $40.81 on 3/24/06, for a gain of $16.32 or 66.6% since posting.

On March 1, 2006, Chico's announced 4th quarter results. For the quarter ended January 28, 2006, sales grew 32% to $375.7 million from $285.6 million. Earnings were up at $44.5 million or $.24/share, from $33 million, or $.18/share the prior year. As the report noted:
"Same-store sales, or sales at stores open at least one year, jumped 14.6 percent during the period. The figure is a key measure of a retailer's performance."
However, analysts were looking for $.25/share on sales of $377 million, so on that measure the company did disappoint on expectations.



Finally, on January 8, 2005, I posted Constellation Brands (STZ) on Stock Picks Bob's Advice when it was trading at $49.13. STZ split 2:1 on May 16, 2005, giving me an effective pick price of $24.57. STZ closed at $25.56 on 3/24/06 for a gain of $.99/share or 4.0% since posting.

On January 5, 2006, Constellation reported 3rd quarter 2006 results. Sales came in at $1.3 billion, up 17% from the prior year. Net income was up 12% to $109 million and diluted earnings per share climbed 10% to $.46.

So how did I do on these three stock picks? Well, basically two were unimpressive, and one, Chico's did fabulously. Thus, the average performance for the three stock selections was a gain of 18.8% since posting.

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

Bob







Posted by bobsadviceforstocks at 9:28 AM CST | Post Comment | Permalink
Thursday, 23 March 2006
March 23, 2006 National Research Corp. (NRCI)
***HERE*** for my PODCAST on National Research Corp (NRCI)

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 remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

I was reviewing the list of top % gainers on the NASDAQ today and came across National Research Corp. (NRCI). I do not own any shares or options on this company. NRCI is trading at $23.50, up $2.26 or 11.02% on the day as I write.

According to the Yahoo "Profile" on NRCI, the company
"...provides ongoing survey-based performance measurement, analysis, tracking, and improvement services to the healthcare industry. The company addresses healthcare organizations’ need to track their performance at the enterprise-wide, departmental, and physician/caregiver levels."
Let's take a closer look at this stock and I will try to show you why I believe it fits into the investing strategy I like to follow on this website.

First, the latest quarterly result.

On February 14, 2006, NRCI announced 4th quarter 2005 results. Revenues for the quarter came in at $8.6 million, compared with $6.4 million in the same quarter the prior year. This is a 34% increase in revenue year over year. Net income for the quarter came in at $1.5 million or $.22/diluted share, up from $921,000 or $.13/diluted share the year earlier. This increase represents a 69% increase on a per share basis of earnings! The company did two more things that I believe are also helpful in improving stock price performance, besides the outstanding revenue and earnings report. They increased the quarterly dividend to $.10/share (I am not sure of the previous dividend amount), and they announced a plan to repurchase up to 750,000 of the Company's common stock. Both increasing a dividend and reducing the number of shares outstanding are in general bullish developments for a stock price.

What about longer-term financial results for this company?

For this, let's review the "5-Yr Restated" financials on NRCI from Morningstar.com. First, looking at the revenue picture, except for a dip in revenue from $18.3 million in 2000 to $17.7 million in 2001, revenue has been increasing steadily to $29.7 million in 2004 and $30.3 million in the trailing twelve months (TTM).

Earnings show a similar pattern, dropping from $.39/share in 2000 to $.24/share in 2001, but then increasing to $.63/share in 2004 and $.65 in the TTM.

The Morningstar report suggests that the company started paying dividends just in the 2005 fiscal year and apparently was paying $.08/share in the first three quarters. This explains the increase to $.10/share reported in the latest earnings report. (Unless of course the Morningstar report is based on $.07/share x 2 quarters with the latest $.10/share included in the $.24 (?)). In any case, the trend is encouraging!

And free cash flow? National Research had $3 million in free cash flow in 2002, $6 million in 2004 and $8 million in the TTM. Again a solid trend.

And the balance sheet? Morningstar shows National Research with $15.7 million in cash and $7.4 million in other current assets, which, when balanced against the $8.3 million in current liabilities, yields a current ratio of almost 3. In fact, the cash alone is enough to pay off both the $8.3 million in current liabilities and the long-term liabilities of $6.8 million combined. This balance sheet looks 'just fine' to me!

What about some valuation numbers on this company?

Looking at the Yahoo "Key Statistics" on National Research, we can see that this is a small company with a market capitalization of only $164.88 million. The trailing p/e is moderate at 31.93. I don't have a forward p/e or a PEG as the company probably doesn't have many analysts out there making predictions about their financial results (?).

Examining the Price/Sales ratio, using the Fidelity.com eresearch website, we find that the company is in the "Research Services" industrial group, and sits midway in this group in regards to its Price/Sales ratio, with a ratio of 4.9. Leading this group is EXELIXIS (EXEL) with a ratio of 11.7, followed by Gen-Probe (GPRO) at 9.3, SYMYX (SMMX) at 8.8, then NRCI at 4.9, Covance (CVD) at 3, and at the bottom of the barrel with the 'best' valuation is PAREXEL (PRXL) with a Price/Sales ratio of 1.

Going back to Yahoo for some more statistics on this company, we find that there are only 7.02 million shares outstanding and 2.14 million of them that float. No shares are reported out short as of 2/10/06. The company has an estimated dividend of $.40/share yielding 2.00%. No stock splits are reported on Yahoo.

How about a chart?

Looking at the "Point & Figure" chart on NRCI from StockCharts.com:


We can actually see that this stock has what I personally would call a gorgeous chart with a very steady increase in stock price from $3.50 in March, 2001, to the current level of $23.09. The chart looks nice to me with the steady increase without appearing over-extended, which from my perspective, means getting too far ahead of the 'blue support line'. That's about as far as my technical expertise extends :).

So what do I think. Well, except for the small size of the company this is an impressive stock with great latest earnings, steady revenue and earnings growth, grossly reasonable valuation, and a wonderful chart. In addition, the company pays a small dividend which the management is increasing and they are buying back shares of their already limited float. What else could a fellow want?

Anyway, thanks again for visiting. If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Bob








Posted by bobsadviceforstocks at 1:30 PM CST | Post Comment | Permalink
Updated: Thursday, 23 March 2006 8:44 PM CST
Wednesday, 22 March 2006
A Reader Writes "...I wanted to know what you think about the stock SIRI...."
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 remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

I have to admit, that the question of what to do with SIRI (Sirius Satellite Radio), is a common concern I have addressed on this blog. Before I get into my answer to this question, let me point out that I cannot predict the direction of any stock in the stock market. Sirius may turn out to be a fabulous investment, insofar as the stock price is concerned. Or it may turn out to be a dog. All that I am able to do is to comment on whether the stock fits my own particular approach to selecting stocks. My approach does NOT in any way include all of the stocks, or even most of the stocks, that are eventually going to be appreciating in price. It is just a strategy that seems to work for me. That being said, let me first share with you an email I received earlier today. Danny K. wrote:
"Dear Bob,

I know that you do not like stocks under 10 dollars. But i wanted to
know what you think about the stock SIRI, Sirius Satelight Radio. Many
of my colleagues think that this stock will have steady continuous
growth in the next year or so. I'm not sure if it is just the hype
that they released the information that just reached 4 million
subscribers or not. Please let me know what you think.


Thanks


Danny

PS. Love your Blog. Keep up the good work."
Thank you for writing! Please let me know what you decide to do with Sirius (SIRI) and how it works out for you. I actually love satellite radio, although I have XM in my car, and not SIRI. I really believe that once consumers experience satellite radio, they will never go back to "rabbit ears" again.


If you are interested, I posted a fairly in depth Review of SIRI on Stock Picks Bob's Advice on January 21, 2005. But let's update that review with another look at the company.

First of all, the latest quarterly result.

On February 17, 2006, SIRI reported 4th quarter 2005 results. On a positive note, revenue expanded strongly to $80 million from $25.2 million, a more than tripling of last year's result. The company, however, reported a loss of $(311.4) million, a larger loss than the $(261.9) million reported in the same quarter last year. So not only is the company losing money, it is losing more money this year than last. This is not my kind of stock.

What about the Morningstar.com results?

Reviewing the "5-Yr Restated" financials on Morningstar.com on SIRI, we can see that the company had NO revenue in 2001, $800,000 in revenue in 2002 and has increased revenue rapidly to $67 million in 2004 and $187 million in the trailing twelve months (TTM). So far so good.

Earnings however, have yet to show a profit and have been generally been decreasing on a per share basis, except initially when losses grew from $(4.72)/share in 2000 to $(6.13)/share in 2002. In 2003 losses dropped to $(.38)/share but have subsequently been increasing to $(.57) in 2004 and $(.62)/share in the TTM. In fact, looking at per share results in this company is absurd. It is necessary to look at overall company results. That is, look at the earnings or losses prior to dividing out the number of shares. That is necessary because of the incredible explosion of shares outstanding (more on that later.)

Looking at profits or losses we can see that the company lost $(184) million in 2000, $(278) million in 2001, $(468) million in 2002, $(314) million in 2003, $(712) million in 2004 and $(813) million in the trailing twelve months (TTM). If losses are increasing, then why do you think the per share results look better.

This is where the number of shares outstanding is so critical. In 2000, the company had 39 million shares according to Morningstar. You may recall in other blogs how I point out the importance of finding a company that is not diluting your ownership with new shares. Watch this.

In 2001, shares grew to 52 million, in 2002 there were 76 million. By 2003, Sirius had 827 million shares, which grew to 1.25 BILLION shares in 2004 and 1.331 billion in the TTM. In spite of the growth in the number of shares, with the continued expansion of losses, the loss per share was STILL increasing the past several years!

What about free cash flow?

This figure tells you whether the company is creating cash or burning up available assets. SIRI has been continuing to consume free cash at the tune of $(362) million in 2002, $(305) million in 2003, $(363) million in 2004, and $(381) million in the TTM.

And the balance sheet?

Here we can see that the company does show $934.4 million in cash and $98.5 million in other current assets. This is enough to pay off the $380.4 million in current assets, and have a current ratio of over 2.5 to 1. The company is also saddled with $1.14 billion in long-term debt.

Is the company going to grow fast enough and turn profitable enough soon to turn this around? That is the '64,000 question'. The company itself is optimistic. As nloted in the earnings report:

"The company also said it expected to be profitable next year, and to generate about $3 billion in revenue and $1 billion in free cash flow, after expenditures, in 2010. Sanford C. Bernstein analyst Craig Moffett called the forward projection "very positive" in a note to investors."
This is certainly an encouraging note from the management of this company. Let's hope that they are successful in this endeavor, and that the many holders of the stock do well in their purchase of these shares. It may just turn out this way. I certainly love the product.

As for me, this investment is a bit too speculative. I don't like the over 1 billion in shares already outstanding, the mounting losses, the negative free cash flow, and the latest quarterly report does not change this outlook.

And the chart?

Looking at the "Point & Figure" chart on SIRI from StockCharts.com:


The chart actually looks a bit encouraging. after a decline from $13 in January, 2002, the stock hit a 'double bottom' in December, 2002 at the $.50 level, them broke through resistance in December, 2003, at $3.00, and is actually trading more or less higher since to the current $4.90 level.

So what do I think? SIRI might be a great investment that will yield untold riches to any purchaser of the stock today. Could be. Honestly. But it is not my kind of investment. I am looking for profitable companies with positive free cash flow and solid balance sheets with stable number of shares outstanding. That is just my trading requirements. You might be able to make loads of money doing something else. Good luck with whatever you decide. Please keep me posted!

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

Bob


Posted by bobsadviceforstocks at 2:41 PM CST | Post Comment | View Comments (2) | Permalink
Updated: Wednesday, 22 March 2006 2:43 PM CST
Tuesday, 21 March 2006
A New Podcast on Investing Philosophy!
Hello Friends! Thanks for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

I wanted to let you know that I have a new podcast: "Philosophy of Investing Podcast". Please listen and let me know what you think! You can reach me at bobsadviceforstocks@lycos.com or just leave your comments right here on the blog.

Bob


Posted by bobsadviceforstocks at 6:02 PM CST | Post Comment | Permalink

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