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Sunday, 7 May 2006
JLG Industries (JLG) Weekend Trading Portfolio Analysis












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.

Another of the tasks that I like to accomplish on weekends is to take a closer look at the actual stocks that I hold in my trading portfolio. I am currently up to 23 positions, and reviewing one every other week, going alphabetically, should take me almost one year.

Two weeks ago I reviewed Healthways on Stock Picks Bob's Advice. Going alphabetically, I am now up to JLG Industries (JLG). I currently own 320 shares of JLG which were purchased 1/12/06 with a cost basis of $25.81. I have yet to sell any of these shares. JLG closed at $29.54 on 5/5/06, for an unrealized gain of $3.73 or 14.5% since my purchase. Currently, planned sales would be to sell all of my shares if the stock hit an 8% loss or dropped to .92 x $25.81 = $23.75. On the upside, if the stock should appreciate 30%, I plan on selling 1/6th of my shares or 53 shares. The first targeted sale is at 1.3 x $25.81 = $33.55.

I last reviewed JLG on Stock Picks Bob's Advice when the stock was trading at $51.55/share. JLG split its stock 2:1 on March 28, 2006, giving this pick an effective price of $25.78. Let's take another look at this holding of mine and see if the numbers are still promising!

1. What does the company do?

According to the Yahoo "Profile" on JLG, this company
"...provides access equipment and highway-speed telescopic hydraulic excavators. The company operates through three segments: Machinery, Equipment Services, and Access Financial Solutions."

2. How about the latest quarterly result?

On February 22, 2006, JLG reported 2nd quarter 2006 results. Revenue in the quarter ended January 29, 2006, grew 40% to $494 million, from the prior year same period. Net income was up 265% to $27.4 million from $7.5 million, and per share this year the company reported $.52/share, up over 200% from last year's $.17/share.

3. How about longer-term results?

The Morningstar.com "5-Yr Restated" financials on JLG shows that revenue actually declined from $1.0 billion in 2001 to a low of $751 million in 2003. Since 2003, however, revenue has resumed its steep climb to $1.2 billion in 2004, $1.7 billion in 2005 and $2.0 billion in the trailing twelve months (TTM).

Earnings also have been a bit erratic dropping from $.40/share in 2001 to a loss of $(1.18)/share in 2002. However, the company turned profitable at $.15/share in 2003 and has been steadily improving this number with $.60/share reported in 2005 and $1.14/share in the TTM.

The company does pay a small dividend which was $.02/share in 2001, $.01/share in 2002 and the same since then. The company has been expanding its float somewhat with 84 million shares outstanding in 2001, growing to 93 million in 2005 and 106 million in the TTM.

Free cash flow, which was a negative $(121) million in 2003, improved to $(24) million in 2004, turned positive at $96 million in 2005 and grew to $99 million in the TTM.

The balance sheet looks solid with $183.3 million in cash and $700.4 million in other current assets, which, when balanced against the $360.4 million in current liabilities, gives us a 'current ratio' of 2.45. In addition, JLG has $325.3 million in long-term liabilities. Thus the current assets are sufficient to easily cover the current liabilities and are enough to also pay off all of the long-term liabilities as well.

4. How about some valuation numbers on this stock?

Reviewing Yahoo "Key Statistics" on JLG, we find that the company is a large cap stock with a market capitalization of $3.12 billion. The trailing p/e is a moderate 27.20, with a forward p/e even nicer at 16.50 (fye 31-Jul-07 estimated). Thus, with the steady growth, the PEG ratio (5 yr expected) comes in at 1.27.

According to the fidelity.com eresearch website, JLG is in the "Farm/Construction Machinery" industrial group. Within this group, JLG is moderately priced with a Price/Sales ratio of 1.5. Topping this group is Joy Global (JOYG) with a ratio of 3.9, next are JLG and Caterpillar (CAT) both with ratios of 1.5, Deere (DE) at 1.0, Terex (TEX) at 1.0 and AGCO (AG) at 0.5.

Returning to Yahoo, we find there are 105.51 million shares outstanding and 103.60 million that float. Currently 6.99 million shares (4/10/06) are out short representing 6.9% of the float or 5.3 trading days of volume. Using my own 3 day rule on short interest, I think this level of short sellers is significant and may add to a move higher in the stock especially if the upcoming earnings are good.

Yahoo reports the estimated forward dividend is $.02/share yielding 0.2%. The last stock split was a 2:1 split on March 28, 2006.

5. And what does the chart look like?

If we look at the "Point & Figure" chart on JLG from StockCharts.com:



We can see that the price dropped from $8.50 in April, 2002, to a low of $2.00/share in March, 2003. However, starting with a sharp rise in April, 2003, from $2.25 to $8.00 in January, 2004, the stock has been moving strongly higher to its current level of $29.54. If anything, with the stock flying high above its "blue support line" the stock looks a bit over-extended in price.

6. Summary: What do I think?

First of all, I am terribly biased about this stock as I own shares! But reviewing this analysis, the company had a terrific earnings report and has another one coming in a couple of weeks. Hopefully that report will be well-received. The Morningstar.com page looks nice for the past few years, after a couple of years of week results between 2001 and 2003. Earnings have been growing, the company pays a small dividend, and free cash flow is positive and improving. On a negative not, the company has been issuing shares, with a small amount of dilution effects. Finally, the balance sheet is solid and the chart looks strong. On a valuation basis, the forward p/e is under 20, the PEG is about 1.25, and the Price/Sales ratio looks reasonable within its group.

I still like JLG.

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 go ahead and leave your messages right on the blog. Please also remember to stop by and visit my Stock Picks Bob's Advice Podcast Website!

Bob


Posted by bobsadviceforstocks at 7:03 PM CDT | Post Comment | View Comments (1) | Permalink
"Looking Back One Year" A review of stock picks from the week of February 14, 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.

The weekend is drawing to a close and I still haven't done all of my homework :(. So hear goes!

First of all, one of the tasks I give myself each weekend is a review of past stock picks from a period about a year earlier. I am actually up to about 60 weeks out. In this review I assess what would have happened if I had purchased the stocks I mention in equal dollar amounts from that period of time and if I had held them to the present. What is called a "buy and hold" approach.

In fact, I do not follow or advocate this strategy. I have implemented a strategy in my own trading account that includes selling stocks quickly after a purchase if they drop 8%, and selling portions of my stocks at targeted appreciation levels. This strategy would definitely affect the performance of any portfolio using these stock picks. But for the sake of ease of measurement, I like to assume this "buy and hold" strategy to determine performance.

On February 15, 2005, I picked Ansys (ANSS) for Stock Picks Bob's Advice at $37.03/share. ANSS closed at $56.88 on May 5, 2006, for a gain of $19.85 or 53.6% since posting.

On April 27, 2006, Ansys reported 1st quarter 2006 results. Revenue grew nicely to $46 million from $37.6 million in the same quarter last year. Net income was up to $12.9 million or $.38/diluted share, up from $9.7 million or $.29/diluted share in the same quarter last year.

On February 18, 2005, I posted Allscripts Healthcare Solutions (MDRX) on Stock Picks Bob's Advice when it was trading at $13.16. MDRX closed at $18.35 on May 5, 2006, for a gain of $5.19 or 39.4%.

On May 2, 2006, MDRX announced quarterly results. Total revenue for the quarter ended March 31, 2006, was $42.2 million, up strongly from revenue of $26.2 million in the same period the prior year. Net Income, however, was flat at $1.3 million or $.03/diluted share, unchanged from $1.3 million or $.03/diluted share the prior year same period. Without growth in earnings, the stock gets an automatic thumbs down.

So how did these two picks do? In a word, terrific. In fact, averaging the performance of these two picks results in an average gain of 46.5%. Please remember that past performance is no guarantee for future stock appreciation. But that was pretty nice!

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. Also, be sure to visit my Stock Picks Bob's Advice Podcast Website.

Bob


Posted by bobsadviceforstocks at 5:47 PM CDT | Post Comment | Permalink
Saturday, 6 May 2006
CNS, Inc. (CNXS) 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.

Yesterday I had a "permission slip" generated when I sold a portion of my ResMed (RMD) at a gain. Thus, being under my 25 position portfolio maximum, I looked through the list of top % gainers on the NASDAQ and came across CNS (CNXS) which was having a great day, and actually closed at $24.14, up $2.65 or 12.33% on the day. Earlier in the day I purchased 240 shares for $24.395. I moved my portfolio up to 23 positions, two under the maximum.

CNS is what I call an "old favorite" of mine, meaning I have previously written up this stock on the blog. On April 29, 2005, almost exactly one year ago, I wrote up CNS on Stock Picks Bob's Advice when it was trading at $18.09. With yesterday's close at $24.14, this stock has appreciated $6.05 or 33.4% since posting.

Let's take an updated look at this company so I can explain why I picked this stock to purchase in my trading portfolio!

1. What does this company do?According to the Yahoo "Profile" on CNS Inc., the company
"...engages in developing and marketing consumer health care products, including Breathe Right branded products focused on better breathing and FiberChoice branded products focused on digestive health."
(Does anyone else see the irony of selling shares in a company treating sleep apnea machines, and buying shares in a company that makes nasal strips and sprays to treat snoring?)

2. How about their latest quarterly result?

In fact, it was the announcement of 4th quarter 2006 results Thursday, after the close of trading, that pushed the stock higher on Friday! As reported:
"Net sales for the fourth quarter of fiscal 2006 were $32.1 million, up 13% compared to $28.4 million in the same period last year. Net income for the fourth quarter grew 14% to $4.7 million, or $0.32 per diluted share, compared to $4.1 million, or $0.28 per diluted share, for the fourth quarter of fiscal 2005."
As an added plus, the company boosted the quarterly dividend 17% from $.06/share to $.07/ share for shareholders of record as of May 26, 2006.

3. What about longer-term results?

Regular readers of this blog will know that this is my critical part of an assessment of a stock. Consistent good results = quality. At least that is my perspective!

Reviewing the "5-Yr Restated" financials from Morningstar.com, there is a gap for the 2002 results (? changing fiscal years?), but the company had revenue of $84 million in 2001, dropping to $79 million in 2003, but then increasing steadily to $94 million in 2005 and $109 million in the trailing twelve months (TTM).

Likewise, earnings which were $.01/share in 2001, climbed to $.46/share in 2003, $.59/share in 2004, $.93/share in 2005 and $1.11/share in the TTM.

The company initiated dividends in 2004 at $.12/share and has raised dividends each year since. The number of shares outstanding has remained stable at 14 million.

Free cash flow, while a bit erratic, has been positive with $19 million in free cash flow in 2003, $15 million in 2005, and $13 million in the TTM.

The balance sheet is quite solid imho, with $59.7 million in cash alone, enough to cover the $18.3 million in current liabilities more than 3x over. Added to the $29.1 million in other current assets, the current ratio works out to 4.9. (over 1.5 is generally considered 'healthy'). Morningstar shows NO long-term liabilities at all!

4. What about some valuation numbers on this company?

Looking at Yahoo "Key Statistics" on CNS, we see that this is a small cap stock with a market capitalization of $341.92 million. The trailing p/e is a very moderate 21.81, with a forward p/e (fye 31-Mar-07) estimated at 18.86. Thus, the PEG (5 yr expected) is quite nice at 1.16.

According to the Fidelity.com "eresearch" website, CNXS is in the "Medical Appliances/Equipment" industrial group, and its Price/Sales ratio of 3.3 places it on the low side with St. Jude (STJ) topping the list at 5.1, Zimmer (ZMH) at 4.6, Biomet (BMET) at 4.5, followed by CNXS at 3.3, Edwards Lifesciences (EW) at 2.8.

Yahoo reports 14.16 million shares outstanding with 12.98 million that float. Interestingly, as of 4/10/06 there were 1.77 million shares out short representing 11.60% of the float or 12 trading days of volume (the short ratio). With the sharp rise yesterday on good earnings results, we may have been observing a bit of a squeeze on the short-sellers scrambling to cover their bet against the company.

As already noted, the company pays a dividend of $.28/share with a forward estimated yield of 1.3%. According to Yahoo, the last stock split was a 2:1 split on June 23, 1995.

5. What does the chart look like?

Looking at the "Point & Figure" chart on CNXS from StockCharts.com, we can see the stock consolidating between $4.75 and $3.00 between February, 2001, and September, 2001. In December, 2001, the stock broke through resistance at $4.75 and has been moving higher since. Recently the stock has pulled back from the $31 level, dropping to the $20 level. However, the stock appears well above support levels and does not appear to have broken down in terms of price momentum.


6. Summary: What do I think?

Let's try to put this all together. First of all, I do own some shares (as of yesterday) of this stock. But I first wrote this one up a year ago and it subsequently appreciated 30% in price. The stock made a good move yesterday on a solid earnings report. Nothing spectacular but just the usual steady earnings growth, steady revenue growth, and an added plus of a raised dividend. The past several years have also seen steady growth.

The valuation is quite reasonable with a p/e at 21 with a PEG just over 1.1. The Price/Sales ratio isn't too rich on what appears to be a rather arbitrary group assignment. The company is generating free cash and has a beautiful balance sheet with lots of cash and NO long-term debt. The company even pays a dividend and is raising it as well. The chart looks pretty strong. And there are lots of short-sellers that need to cover if the stock continues to move higher.

On the downside this may be a "two-hit wonder" with just two main products, the nasal strips and the fiber tablets. However, the products are well-regarded and the management appears able to continue to manage these assets in a productive fashion.

I like the stock enough to buy it :).

Thanks so much for stopping by and visiting! If you have any questions or comments, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com. Please be sure to come and visit my Stock Picks Bob's Advice Podcast Site where you can hear me discuss more about many of the same stocks in the blog!

Bob

















Posted by bobsadviceforstocks at 9:31 AM CDT | Post Comment | Permalink
Friday, 5 May 2006
CNS, Inc. (CNXS) "Trading Transparency"
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.

Earlier today I sold 30 shares (1/6th of my position) of ResMed (RMD) which hit a 60% appreciation target. Thus, with the second targeted sale of this stock at a gain, I had the "permission" to add a new position in my trading portfolio.

Looking through the list of top % gainers on the NASDAQ, I saw that an old favorite of mine, CNS (CNXS) was hitting the top % list on good earnings news. The Morningstar report looked good to me so I added this stock to my portfolio, purchasing 240 shares of CNXS at $24.40. As I write, the stock is now trading at $24.56/share, up $3.07 or 14.29% on the day.

I will try to get around to doing an updated review on this stock later today. Meanwhile, thanks again for visiting. Please feel free to leave comments here or email me at bobsadviceforstocks@lycos.com if you have any comments, questions, or any other thoughts you would like to share with me! As always, remember to also stop by and visit my Stock Picks Bob's Advice Podcast Site.

Bob


Posted by bobsadviceforstocks at 10:25 AM CDT | Post Comment | Permalink
ResMed (RMD) "Trading Transparency"
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.

A few moments ago I noticed that ResMed (RMD) was having a very nice day trading as I write at $47.58, up $4.18 or 9.63% on the day. In fact, the stock hit a 60% appreciation point for me and I sold 1/6th of my position of 180 shares or 30 shares at $47.84. These shares were originally purchased 2/4/05 with a cost basis per share of $29.87. Thus, I had a gain of $17.97/share or 60.2% since my purchase.

As is my strategy, since I am at 22 positions, under my 25 position maximum, I shall now have "permission" to add a new position to my trading account. When I get a chance I shall start scouring the top % gainers list. If anything looks good, I shall keep you posted.

Thanks so much for stopping by and visiting! If you have any questions or comments, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com. Also, please remember to stop by and visit my Stock Picks Bob's Advice Podcast Site where you can hear me discuss different stocks including a discussion or ResMed a few months ago.

Bob


Posted by bobsadviceforstocks at 9:19 AM CDT | Post Comment | Permalink
Wednesday, 3 May 2006
Garmin (GRMN) May 3, 2006
Click HERE for my PODCAST ON GARMIN

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 evening, looking through the list of top % gainers on the NASDAQ, I came across Garmin (GRMN) which deserves a place in this blog. Garmin closed at $96.43, up $8.51 or 9.68% on the day. Now the funny thing is, I am sure I have looked at this stock before, but I cannot find any entry :). (That is a sure sign I need that remodeling job that I am exploring even as I write!) I do not have any shares nor do I own any options on this stock.

Let me run you through the key points that impressed me when I was looking at this stock.

1. What does the company do?

According to the Yahoo "Profile" on Garmin, the company
"...through with its subsidiaries, engages in the design, manufacture, and marketing of navigation, communications, and information products, which are enabled by global positioning system (GPS) technology worldwide. It operates in two segments, Consumer and Aviation."

2. How about the latest quarterly result?

In fact, it was the announcement of 1st quarter 2006 results which pushed the stock higher today.

The company reported strong results with revenue climbing 67% to $322.3 million from $192.7 million in the same period a year earlier. Net income almost doubled to $87.5 million from $47.4 million the prior year same period. On a per share basis this worked out to $.80/share, up from $.43/share last year. As part of the "trifecta", exceeded analysts expectations:
"In a Thomson Financial poll, analysts forecast profit of 67 cents on sales of $256 million."
To top off the report, the company raised guidance. Analysts have been expecting 2006 profit of $3.22 on sales of $1.32 billion. The company guided higher:
"Garmin said it is looking for per-share earnings to top $3.40 this year and revenue to exceed $1.4 billion. The company projected sales growth of between 10 percent and 20 percent in its aviation, outdoor fitness and marine businesses. The automotive segment is forecast to see sales surge more than 75 percent this year."
I guess the only other thing a company can announce to push the price higher and attract interest is a stock dividend, and Garmin didn't disappoint, and announced a 2:1 stock split payable December 15th. What else could an investor want?

3. How about longer-term results?

For this information, I like to review what I consider to be an important page of information, the Morningstar.com "5-Yr Restated" financials on Garmin. Starting first with revenue growth, I am very impressed with the consistent increase from $369 million in 2001 to $1.028 billion in 2005. Earnings/share have increased steadily as well from $1.05/share in 2001 to $2.85/share in 2005. In addition, the company started paying a $.50/share dividend in 2003 and has paid this $.50/share in 2004 and 2005. An additional point from this page is the consistency in the number of shares outstanding with 108 million reported in 2001, and 108 million in 2005.

And the free cash flow? This has been positive and essentially growing from $141 million in 2003 to $131 million in 2004 and $220 million in 2005.

The balance sheet looks strong to me with $366.4 million in cash which by itself could pay off both the $195.5 million in current liabilities and the negligible $9.5 million in long-term liabilities combined more than 1.5x over. If we combine the current assets, we can calculate a current ratio of 4.1. (over 1.5 is healthy).

4. What about some valuation numbers on this stock?

reviewing the Yahoo "Key Statistics" on Garmin, we can see that this is a large cap stock with a market capitalization of $10.43 billion. The trailing p/e is 33.81, with a forward p/e (fye 31-Dec-07) of 26.56. The PEG is a bit rich as well at 1.81.

Garmin is also priced richly by the Price/Sales ratio, which is reported at 9.3 for this company by the Fidelity.com eresearch website. Topping this industrial group of "Scientific/Tech. Instruments" is SiRF Technology (SIRF) with a Price/Sales ratio of 11.5. This is followed by Garmin at 9.3, Flir Systems (FLIR) at 3.9, Fisher Scientific (FSH) at 1.7 and Beckman Coulter (BEC) at 1.4.

Finishing up with Yahoo, we can see that therer are 108.21 million shares outstanding with only 59.96 million of them that float. As of 4/10/06 there were 8.07 million shares out short representing 13.0% of the float. This is a significant short interest imho, with a short ratio of 8.3. The shares out short could well have been part of the strong price rise today on the announcement of fabulous earnings news! As noted, the company pays a $.50/share dividend yielding 0.60%. No prior stock splits are reported on Yahoo...except the current anticipated slip in December, 2006.

5. What about a chart?

Reviewing the "Point & Figure" chart on Garmin from StockCharts.com:


We can see what I would have to call a gorgeous chart with a steady increase from $35 in August, 2004, to the current level of $96.43. The chart appears quite strong to me.

6. Summary. What do I think?

Let's review, the company reported what I would call an impeccable earnings report today before the open of trading with extremely strong revenue and earnings growth. They beat expectations. They raised guidance. They are splitting the stock! WOW.

The Morningstar.com report is also gorgeous with steady and strong revenue and earnings growth, the company pays a small dividend and has been holding the line on the number of shares outstanding. The company is showing increasing free cash flow and the balance sheet is strong with loads of cash and little debt. Valuation-wise, the PEG is over 1.5 but under 2, and the Price/Sales ratio is also rich. So this isn't priced on sale...but still.... The company has a significant number of shares out short and the chart looks nice. There are a lot of things going for this company and this stock. Now, if I were only in the market to buy some shares.

You will note that I haven't been talking about the products. The fish-finders. The GPS systems. THAT is the 'story' behind the company. What makes me tick are all those fundamental stuff that imho makes the stock move. Not the story. Doesn't really matter to me!

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. Please be sure to visit my Stock Picks Bob's Advice Podcast Website where you can download an mp3 of me commenting on many of these same stocks in my blog!

Bob


Posted by bobsadviceforstocks at 10:14 PM CDT | Post Comment | View Comments (1) | Permalink
Updated: Wednesday, 3 May 2006 11:49 PM CDT
Tuesday, 2 May 2006
LoJack (LOJN) Revisiting a Stock Pick
Click HERE for my PODCAST on LoJack

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 Lojack (LOJN), an old favorite of mine, that is trading, as I write, at $23.51, up $1.50 or 6.82% on the day. I do not own any shares or options of this company.

I first posted LoJack on Stock Picks Bob's Advice on April 13, 2005, when LOJN was trading at $13.94/share. With the stock currently trading at $23.51, the stock has gained $9.63 or 69.1% since posting this stock a little over a year ago!

Let's take another look at this company and I will show you why I think it deserves mention once again on this blog.

1. What does the company do?

According to the Yahoo "Profile" on LoJack, the company
"...together with its subsidiaries, provides technology products and services for the tracking and recovery of mobile assets worldwide. Its wireless network technology offers a means for the tracking and recovery of stolen vehicles, motorcycles, and construction equipment."

2. How did the company do on the latest quarterly report?

On February 21, 2006, LoJack reported 4th quarter 2005 results. For the quarter ended December 31, 2005, revenue climbed 17% to $45.4 million from $39.6 million in the same quarter last year. Net income did even better, growing 62% to $5.02 million or $.25/diluted share, up from $3.1 million or $.18/diluted share in the year-ago same period.

3. How has the company done 'longer-term'?

Looking at the "5-Yr Restated" financials on LOJN from Morningstar.com, we find that revenue growth has been very steady with $96 million reported in 2001 growing to $191 million in 2005. Earnings have been a bit more erratic, dropping from $.45/share in 2001 to $.12/share in 2002. However, since 2002, growth has once again been steady with increases to $.96/share in 2005. The company has increased the number of shares outstanding from 16 million in 2001 to 18 milion in 2005 and 19 million in the trailing twelve months (TTM). Free cash flow has also been positive and growing with $5 million in 2003, $8 million in 2004 and $18 million in 2005.

The balance sheet looks healthy with $47.6 million in cash and $63.8 million in other current assets. When these are compared against the $44.1 million in current liabilities, we can derive a current ratio of just over 2.5. The company also has another $43.5 million in long-term liabilities.

4. How about some valuation numbers on this company?

Reviewing Yahoo "Key Statistics" on LoJack, we can see that this is a small cap stock with a market capitalization of $447.9 million. The trailing p/e isn't too bad at 24.46 and the forward p/e (fye 31-Dec-07) is even nicer at 18.81. We don't have a PEG on this company.

According to the Fidelity.com eresearch website, LoJack is in the "Security/Protection Services" industrial group. Within this particular group, the Price/Sales ratio is relatively rich for LOJN at 2.2, the highest in its group. this is followed by Armor Holdings (AH) with a Price/Sales ratio of 1.3, Checkpoint Systems (CKP) with a ratio of 1.3, Brinks (BCO) with a ratio of 0.6, and Compudyne (CDCY) at 0.4.

Finishing up with Yahoo, we find that there are 19.05 million shares outstanding with 18.36 million that float. As of 4/10/06, there were 877,800 shares out short, representing 4.80% of the float or 3 trading days of volume.

5. What does the chart look like?

Reviewing the "Point & Figure" chart on LOJN from StockCharts.com, we can see that the stock which traded lower from $7.50 in February, 2001, to a low of $3.50 in June, 2002, literally hit a 'triple bottom', and in August, 2003, broke into new high territory at around $7.50 again, and since that time has been trading steadily higher to the current level of $23.56. This chart looks quite strong to me!



6. Summary

So what do I think? The stock moved higher today with the initiation of analyst coverage at J.P. Morgan at "overweight". The last quarter was strong. The five year Morningstar report also looks nice with steady revenue growth and almost as steady earnings improvement. Free cash flow is positive and growing and the balance sheet is solid. Valuation-wise, the p/e is a tad rich and the Price/Sales ratio is also no bargain, being at the top of its group. Finally the chart looks very strong.

I like this stock not so much for the business it is in, the story behind the company, but rather for the consistency of its results. This imho is the best reflection of good management.

Thanks again for visiting! If you have any comments or questions, please feel free to email me at bobsadviceforstocks@lycos.com or just leave them here on the blog. Also, be sure to visit my Stock Picks Bob's Advice Podcast Site.

Bob














Posted by bobsadviceforstocks at 3:33 PM CDT | Post Comment | Permalink
Updated: Tuesday, 2 May 2006 9:57 PM CDT
Saturday, 29 April 2006
A Reader Writes: "...a couple of stocks that I would love to get your opinion..."
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 received a nice email from Bret M., who is a friend of my son Ben.Bret wrote:
"Ben told me about your blog a few weeks ago and Ive been enjoying reading it.
Your strategy is very interesting and I really like the way it automatically
keeps you in a bull market and pulls you out of a bear.

I've got a couple of stocks that I would love to get your opinion on.
My dad is
an optometrist and he owns a little stake in Advanced Medical Optics (EYE). It
has done very well and I know you would say to peel off a small chunk of it. Have you heard anything about it posibly
being bought
out by J&J? Do you suspect that would that be good for EYE stock?

Another stock that my dad and I have been in and out of a little is DXPE. We
found it on a Yahoo "top 10 stocks under 10 bucks" list last summer
and it then
shot up after Katrina. We rode it from like 10 to 18. It is extremely
volitile,
but has made its way up to 38. What do you think about its fundementals? Is it
too late or too expensive now to get back in?

Thanks for the help. I look forward to hearing back from you. Thanks.

Bret M."
Brett, thanks so much for writing. First of all, I am not privy to any inside information. I do not know if EYE might be an acquisition target. It is a general rule that acquisitions are favorable for the acquired company which generally sees a significant increase in its stock price. Should you be selling a little bit of your holding as the company's stock price rises? You of course know my answer. If it is wise to sell your losing stocks quickly, it is also wise to sell your gaining stock slowly. It is often hard to both sell a stock that has dropped and it is equally hard to justify selling a stock when you are in the midst of feeling so good about it. I am sure you understand this.

This past Thursday, April 27, 2006, EYE announced 1st quarter 2006 results. Sales increased nicely to $238.2 million for the quarter, a 23.7% increase over the prior year same quarter. However, first quarter net income came in at $2.6 million or $.04/share, down sharply from $13.8 million or $.35/share last year. The company had a lot of excellent reasons and did provide reasonably strong guidance for future results, but I am always looking at the 'bottom line'.

I also have a tough time with the EYE Morningstar.com "5-Yr Restated" financials, which, while showing strong revenue growth show that the company dropped from $.35/share in 2003 to a loss of $(3.89)/share in 2004 and $(8.28)/share in 2005. In addition, free cash flow which was $22 million in 2004, dropped to a negative $(2) million in 2005.

The balance sheet as reported on Morningstar.com shows the company with a bit of a heavy debt load with a current ratio of 1.84, which isn't bad, but also a $710.5 million in long-term liabilities.

And the "Point & Figure" chart on EYE from StockCharts.com:


Clearly this stock looks very strong on the chart-side of things. All the more reason to take some small profits. I do not invest based on stories or hypotheses. I did at one time in the past.

I like to look hard at actual corporate performance, with the limited tools at my disposal. I am not looking for what 'could be' but what is actually occurring. Basic stuff like earnings, free cash flow, valuation numbers, and balance sheets. This is how I approach my investments. That, along with careful tending of my holdings with partial sales of stocks as they approeciate and quick sales of stock posting losses. I have had several of my stocks acquired....most recently Sybron Dental (SYD) that I wrote up a month or so ago. But I believe they are getting acquired because others are examining these companies with the same perspective I am applying.

Now for that other stock you mentioned: DXPE....a stock that I don't think I am familiar with...so let's take a look.

According to the Yahoo "Profile" on DXPE, the company

"...distributes maintenance, repair, and operating (MRO) products, equipment, and service to industrial customers in the United States. It operates in two segments, MRO and Electrical Contractor."

What about the latest quarter? On April 26, 2006, DXPE announced 1st quarter 2006 results. Sales grew 49.6% to $62.5 million from $41.8 million in the same quarter the prior year. For this quarter that ended March 31, 2006, net income came in at $2.5 million or $.44/share, up 193% from $854,000 or .15/share in the prior year same period. I would have to admit that this was a fabulous report!

What about longer-term?

Except for a dip in revenue from $174.4 million in 2001 to $148.1 million in 2002, the company has been growing its revenue to $185.4 million in 2005.

Earnings have grown steadily during the past five years from $.21/share in 2001 to $.94/share in 2005. This is a very small company with 4 million shares in 2001, increasing to 5 million in the trailing twelve months (TTM).

Free cash flow has been deteriorating recently, dropping from $7 million in 2003, $3 million in 2004, and $(2) million in 2005.

The balance sheet is fine with $.6 million in cash and $55.6 million in other current assets, balanced against $28.1 million in current liabilities (giving us a 'current ratio' of 2.0) and $25.3 million in long-term liabilities.

And the chart: looking at the "Point & Figure" chart on DXPE from StockCharts.com:


Basically, this chart looks quite strong as well.

What about DXPE 'valuation'? Looking at the Yahoo "Key Statistics" on DXPE, we can see that this is a small company with a market cap of only $198.49 million. The trailing p/e is a bit rich at 42.48, but with the rapid growth in earnings, the forward p/e is much nicer at 21.68. There is no PEG available (probably no analyst with 5 yr results estimated). The Price/Sales is 1.03. According to the Fidelity.com eresearch website, DXP is in the "Industrial Equipment Wholesale" industrial group, and is priced midway between MSC Industrial with a Price/Sales ratio of 3 and CE Franklin (CFK) at 0.7. Thus, by this measure the stock isn't really overpriced.

So what do I think? I am a bit concerned about some of the things I have found and mentioned on EYE. However, the company remains optimistic. Being more concerned about actual results, I wouldn't be entering EYE at this point, but waiting for those results to happen. DXPE is a bit of a different story. The results in the latest quarter were fabulous.

Your question about "getting back in" is the problem of doing stocks "for a trade". Although I did the same in BOOM with 300 shares just yesterday :). But my core holding wasn't affected. It is better to just sell portions of stocks on large gains and sell ALL of your shares when stocks do poorly, not when they do WELL. Do you follow?

Should you enter now? I would if the stock hit the new high list and met my own criteria. I might pass on DXPE and miss a great company with their reported negative cash flow. There are just too many stocks to choose from and I go for perfect :). As for you, it is your call. I don't think this particular stock is so big it doesn't have any room to grow further. I would, however, establish sale points on any position you take, both on the upside and the downside. Forget the trades (except occasionally) imho. Generally think about managing your holdings instead.

Just my call.

Thanks so much for writing. Let me know if what I wrote was helpful and what you decided to do!

Regards.

Bob


Posted by bobsadviceforstocks at 12:19 PM CDT | Post Comment | View Comments (2) | Permalink
A Reader Writes "I just wanted to get some advice from you..."
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 received a nice letter a few days ago from Isaac N. who wrote:
"I just wanted to get some advice from you concerning a stock I own.
I know you advise to sell partially after 30% gain is attained. I
bought ADM at 22.65 (44 shares) and now is at 36.67, a 61.9% gain.
Is it wrong for me to hold this stock as it has crossed the 30% gain
value? This is one of three stocks I own. I am also looking into
buying one more stock. Which sectors do you think will be hot in the
future. I'm very patient so I'm not necessarily looking for a stock
that will have immediate gains.

Thanks,

Isaac N"
Isaac, thanks so much for writing!

I want to try to take a look at several of the points that you raise in your comments. First of all, is ADM a good stock to own? And should you sell some shares now that you have 60% gain? And what sector do I think will be hot in the future?

Let me comment briefly on these things.

First of all Archer-Daniels-Midland (ADM). The stock closed at $36.34 on 4/28/06, up $.15 or .41% on the day. Currently ADM appears to be riding the ethanol bandwagon.

Latest quarter:

On January 31, 2006, ADM reported 2nd quarter 2006 results. Sales grew 3% to $9.3 billion from $9.06 billion the year earlier. Net income for the quarter ended December 31, 2005, increased 17% to $367.7 million or $.56/share, up from $313.5 million or $.48/share the prior year. So far so good. Better yet than the results themselves was the fact that the company exceeded estimates:
"Analysts surveyed by Thomson Financial had expected the company to post earnings of 42 cents per share on sales of $9.18 billion."
So this was a nice report!

How about longer-term? Looking at the Morningstar.com "5-Yr Restated" financials, we can see that revenue grew strongly between 2001 and 2004, then flattened out in 2005 and the trailing twelve months (TTM). Meanwhile, earnings have skyrocketed between 2004 when they were $.76/share and 2005 when earnings came in at $1.59. Dividends have also been increasing steadily throughout this period. In addition the number of shares outstanding has been shrinking from 661 million in 2001 to 653 million in 2005 and 654 million in the TTM.

Free cash flow has been a bit erratic, but overall appears to be strongly positive (except for a negative $(476) million in 2004). The balance sheet also looks reasonable with a current ratio of about 1.5. The company does have a bit of a debt load with $5.2 billion in long-term liabilities. But the finances overall look just fine.

Reviewing Yahoo "Key Statistics" on ADM, this is a large company with a market cap of $23.76 billion. The trailing p/e isn't bad at 17.73, but the PEG is a bit rich at 2.11. However, with the latest strong earnings, this may well be adjusted downward. The Price/Sales at 0.66 appears reasonable as well. There are a lot of shares out at 653.8 millio outstanding with 633.22 million that float. Only 5.65 million shares are out short, representing 0.9% of the float or 1.3 trading days of volume. As noted, the company pays a 1.1% dividend and last declared a 5% stock split in August, 2001.

The chart? Taking a look at the "Point & Figure" chart on ADM from StockCharts.com:


Clearly, this stock has been 'on a tear' recently. The stock broke through resistance at $14 in August, 2004, and has skyrocketed to its current level of $36.34. If anything, the stock price appears a bit over-extended. This is something that I describe when the price elevates far above the "blue" arbitrary support line. Overall the chart looks very strong.

Anyhow, insofar as ADM is concerned it is an interesting play especially on the Ethanol business. The numbers basically look fine except for the relatively stagnant growth in revenue. Earnings, however, have climbed.

Should you sell 1/6th? You probably know my answer. But that is just what I do. Doesn't mean you need to do it. I believe in selling my gaining stocks slowly and partially and my losing stocks completely and quickly. It is this bias that will keep your overall performance maximized imho.

What stock or industry should you consider? I am biased towards the medical technology firms but I still depend on what I call my "zen" approach on investing. I buy stocks that are climbing strongly on the day that I have my "permission" to add a new position. So my choice of industry, although I do have my own bias, depends on which stocks show up on the top % gainers list and also meet my own criteria.

I will refrain from naming a particular stock as I am sure you are more than capable of selecting a stock for consideration. If you would like, scan through my past entries, take a look at current information, and you will have hundreds of stocks to choose from!

Good luck and keep me posted. Thanks so much for taking the time to write.

Bob


Posted by bobsadviceforstocks at 11:04 AM CDT | Post Comment | Permalink
Updated: Saturday, 29 April 2006 11:06 AM CDT
"Looking Back One Year" A review of stock picks from the week of February 7, 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.

As I like to remind readers, the weekend is a time for reflection for me here on this blog. I like to review both past stock picks as well as actual holdings in my trading portfolio. The review of my past picks assumes a "buy and hold" strategy. In fact, I employ and recommend using an investment approach that involves selling losers quickly and completely and gaining stocks slowly and partially. However, for the sake of this blog, the "buy and hold" strategy is easier to evaluate and this is what I am doing in these reviews each weekend.

On February 7, 2005, I posted Manor Care (HCR) on Stock Picks Bob's Advice when in was trading at $34.90. HCR closed at $43.85 on April 28, 2006, for a gain of $8.95 or 25.6% since posting.

On April 26, 2006, HCR reported 1st quarter 2006 results. Revenues for the quarter came in at $869 million, down from $879 million in the same quarter last year. Net income was $25 million, down from $40 million or $.30/diluted share, down from $.46/diluted share the prior year same period. The company offered several good explanations within the report for this change in performance, however, I am stuck on the bottom line and for my purposes this stock gets a "thumbs-down" on this quarterly report.

On February 11, 2005, I posted Trex (TWP) on Stock Picks Bob's Advice when Trex was trading at $48.46. Trex closed at $29.88 on April 28, 2006, for a loss of $(18.58) or (38.3)% since posting.

On April 27, 2006, TWP announced 1st quarter 2006 results. For the quarter ended March 31, 2006, sales came in at $105.3 million, up from $89.9 million in the year-ago same period. Net income, however, came in at $4.2 million or $.29/diluted share compared with net income of $8.4 million or $.56/diluted share in the same quarter last year. Apparently, this is one company that is suffering from the increased cost of plastic raw materials.

So how did I do with these two stocks for that week a little over a year ago? Well, HCR showed a 25.6% gain and TWP showed a loss of (38.3)%. Thus, the average performance for these two was a loss of (6.35)%.

A couple of comments. First of all, this shows how seemingly strong companies can lose money over time! And that I am completely capable of posting a stock that can lose money! And how it is important imho to establish loss limits on your stocks. If I had in fact actually purchased these two stocks in my portfolio, I would have sold my TWP quickly and it would have been gone long before this particular loss, and my HCR would have been still in my portfolio biasing my performance to the gain. (I do NOT own either of these stocks in my trading portfolio....I believe I did have some shares of TWP in the near past in a managed account....I am not sure if it is still there.)

Anyhow, thanks so much for stopping by! If you have any comments or questions, please feel free to drop me a line at bobsadviceforstocks@lycos.com or feel free to leave your comments right here on the blog. Also, please be sure and drop by my Stock Picks Bob's Advice Podcast Website wehre you can hear me talk about many of the same stocks I write about in my blog!

Bob


Posted by bobsadviceforstocks at 9:58 AM CDT | Post Comment | Permalink

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