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Sunday, 9 September 2007
Air Methods (AIRM) "A Reader Suggests a Stock"

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 advisers prior to making any investment decisions based on information on this website.

One of the great things about writing this blog is receiving emails and comments from readers and fellow investors.  There are a lot of bright and observant people out there.  Many with ideas and thinking ahead of my own.  It is just perhaps that I like to write better than they do :).  They are probably too busy making money!

Anyhow, one of my most loyal readers and letter writers is Doug S. who has peppered me with frequent emails.   And he has LOTS of great ideas an comments.  And I promise you Doug that I read them all.  I just cannot write up all of your comments :).  Doug did find an interesting company which I cannot tell you whether he owns any shares or not because I just don't know.  Let's always assume that whenever somebody writes about a stock, they own shares.  

Anyhow Doug wrote:

"Check out AIRM as this is definitely
your kind of stock."

Let's take a brief look at Air Methods, and I think you will see that Doug is correct.  In light of all of this,

AIR METHODS (AIRM) IS RATED A BUY 

What do they do?

According to the Yahoo "Profile" on Air Methods, the company

"...provides air medical transportation services and systems in the United States. It operates in three segments: Community-Based Model, Hospital-Based Model, and Products."


 

Latest quarter?

On August 9, 2007, AIRM reported 2nd quarter 2007 results.  Revenue climbed 16% to $90.7 million, net income grew 105% to $7.8 million or $.63/diluted share up from $3.8 million or $.31/diluted share the prior year.

Longer-term?

The Morningstar.com "5-Yr Restated" financials on AIRM are solid from my perspective.  That means steady revenue growth, steady earnings improvement, relatively steady shares, positive free cash flow, and a solid balance sheet.

Valuation?

Looking at Yahoo "Key Statistics" on AIRM, we can see that this is a small cap stock with a market capitalization of $509.65 million.  The p/e isn't bad at 23.69, the forward p/e is better at 18.39, and the PEG is nice at 1.06.  There are 11.89 million shares outstanding with 9.18 million that float.  As of 8/10/07, there were 1.37 million shares out short representing 11.4 trading days of volume.  This is more than my '3 day rule' of significance, so this could have some bullish effects if ever there is any news reported as shorts could be squeezed.

The company doesn't pay a dividend and the last stock split was April 7, 1992, when the stock had a reverse split of 1:6. 

Valuation-wise, using the Fidelity.com eresearch website, we can see that the stock trades at a Price/Sales ratio (TTM) of 1.49, compared to an industry average of 1.80.   The company also appears to be slightly more profitable, at least as measured by the Return on Equity (TTM), coming in with a 20.06% figure, compared to the industry average of 17.04%.

And the Chart?

Looking at the "point & figure" chart on Air Methods from StockCharts.com, we can see an impressive price chart with the stock, after declining to a low of $4.25 in July, 2002, broke through resistance at $6.50 in May, 2003, and hasn't looked back yet.  The stock has had a small amount of recent consolidation in price, but clearly shows great strength trading well above the support line.  


What do I think?

I think Doug has indeed found one of 'my kind of stocks'!  The quarterly report was strong, the Morningstar page was solid, valuation is reasonable, and there are even a bunch of short-sellers betting against the company.  Finally the chart looks great as well.  Everything is there except for a signal to be buying the stock.  

For me I wait until my own portfolio generates a buy signal and the stock I am interested in appears on the top % gainers list on the day I wish to buy something.  This really does limit my choices.

But I shall be keeping this one in my "vocabulary" of stocks and wouldn't be surprised to find an opportunity to pick up shares at some future time.  If not, it still is worth a place in the blog!

Thanks  again Doug for writing in and providing me with such a great stock to examine!  I don't own any shares, but if you have indeed taken the plunge, good luck with your purchase.  I don't feel too comfortable about the investing climate at this time, but I am always on the lookout for new names and new stocks to be monitoring!

If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.  As I have been reminding everyone, if you get a chance, drop by my Stock Picks Podcast Website where you can hear me discuss some of the many stocks I have been writing about here on the blog---and maybe even hear me recite a favorite poem :).  Also, be sure and visit my Covestor Page wherre Covestor has been tracking my actual Trading Portfolio since June, 2007.  And my SocialPicks page where SocialPicks has been monitoring all of my stock picks since January, 2007, and evaluating my accuracy in picking stocks!

Wishing you all a healthy week ahead for both your financial as well as your medical well-being!

Bob 


Posted by bobsadviceforstocks at 4:22 PM CDT | Post Comment | Permalink
Updated: Sunday, 9 September 2007 8:22 PM CDT
"Looking Back One Year" A review of stock picks from the week of March 20, 2006

 

 

 

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 advisers prior to making any investment decisions based on information on this website.

Once again it is the weekend!  And that means that is time for me to review some of the past stock picks from this website.  Since I have missed some of these weekend reviews, the 'looking back a year' part, really ought to read 'looking back 1 1/2 years!'.  Because I am now about 18 months out from our reviews.  Whatever.

As I have pointed out more than once, these reviews assume a 'buy and hold' approach to investing.  I do this for the ease of analysis.  In reality I advocate and practice a disciplined portfolio management strategy that requires me to sell my losing stocks quickly and completely and my gaining stocks slowly and partially.  Certainly this difference in strategy would lead to different returns for an investor.

Last weekend I reviewed all of the stocks selected from the week of March 13, 2006.  Let's move ahead a week and look at this blog during the week of March 20, 2006.

On March 21, 2006, I posted Phillips-Van Heusen (PVH) on Stock Picks Bob's Advice when it was trading at $38.51.  PVH closed at $54.06 on September 7, 2007, for a gain of $15.55 or 40.4% since posting.

On August 22, 2007, Phillips-Van Heusen reported 2nd quarter 2007 results.  For the quarter ended  August 5, 2007, total revenue came in at $522.4 million, up from $458.9 million in the same quarter last year.  Net income was $39.1 million or $.68/share, beating its own guidance by $.07/share.  This was a 28% increase over second quarter 2006 'non-GAAP' earnings per share of $.53.  (Second quarter GAAP net income was reported at $29.0 million or $.33/share).  In the same report the company also raised guidance for 2007 earnings to a range of $3.15 to $3.17/share from the previous guidance of $3.06 to $3.10.

The Morningstar.com "5-Yr Restated" financials on PVH are intact. 

PHILLIPS-VAN HEUSEN (PVH) IS RATED A BUY

The 'point & figure' chart on PVH from StockCharts.com shows the strength of the price chart even with the recent volatility in the stock market.

On March 23, 2006, I posted National Research Corp (NRCI) on Stock Picks Bob's Advice when the stock was trading at $23.50/share.  NRCI closed at $25.20 on September 7, 2007, for a gain of $1.70 or 7.2% since posting.

On August 7, 2007, National Research Corporation reported 2nd quarter 2007 results.  For the quarter ended June 30, 2007, revenue increased 12% to $11.9 million from $10.7 million last year. Net income climbed 24% to $1.6 million from $1.3 million last year.  Diluted earnings per share were up 21% to $.23 from $.19/diluted share the prior year.

Except for a slight excess of Current Liabilities over Total Current Assets, the Morningstar.com "5-Yr Restated" financials on NRCI are intact.

NATIONAL RESEARCH CORPORATION (NRCI) IS RATED A BUY

Examining the "point & figure" chart on NRCI from StockCharts.com, we can see the rather impressive trading history of this company with little weakness evidenced since dipping to $4.25 in February, 2002.

Summary: How did I do with the stock picks from the week of March 20, 2006?  In a word, great!  Only two stocks were selected, and in spite of the recent weakness in the market, these stocks both represent appreciation from their 'pick price' for an average gain of 23.8%.  I did not buy or own shares in either of these companies.  Please remember that past performance is no guarantee of future price appreciation.

Thanks again for stopping by and visiting my blog!  If you have any comments or questions, please feel free to leave them right on the website or email me at bobsadviceforstocks@lycos.com.  If you get a chance, be sure and visit my Stock Picks Podcast website where I discuss many of the same stocks I write about here on the blog.  In addition, check out my Covestor Page where Covestor monitors my actual Trading Portfolio so you can see what I actually own and how I am doing.  Covestor has been only up and in business since about June, 2007, so there are only a few months represented on the site.

In addition, I am happy to be participating in SocialPicks and if you visit my SocialPicks page, you will see what that website says about my picking skills.  They keep track of every one of my selections (since about January, 2007), and determine my performance as well.  

There, THAT should keep you busy :).

Have a great week trading everyone.  

Bob


Posted by bobsadviceforstocks at 2:03 PM CDT | Post Comment | Permalink
Updated: Sunday, 9 September 2007 4:01 PM CDT
Thursday, 6 September 2007
Abercrombie & Fitch (ANF) "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 advisers prior to making any investment decisions based on information on this website.

It is always nice to see an 'old pick' make the lists on the top % gainers and continue to perform well.

Looking through the list of top % gainers this morning, I came across an 'old favorite' of mine, Abercrombie & Fitch (ANF) which as I write is trading at $78.49, up $1.37 or 1.79% on the day. (As sometimes is the case, the stock as the morning went on is no longer on the list as I write, but being the author of this blog, I always reserve the right to write up a stock that made the list as I was researching the stock but then dropped off the list as other stocks moved higher as well :))  I do not own any shares or options on this stock.

I first wrote-up Abercrombie & Fitch on May 28, 2003, as one of the early entries on this website.  At that time the stock was trading at $29.07.  I then 're-visited' ANF on June 2, 2005, when the stock had appreciated significantly and was trading at $65.12.  Let's take a closer look at ANF and I will explain why

ABERCROMBIE & FITCH (ANF) IS RATED A BUY

What exactly does this company do?

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

"...through its wholly owned subsidiaries, operates as a retailer of casual apparel for men, women, and kids in the United States. Its stores sell casual apparel, such as knit shirts, graphic t-shirts, jeans, and woven shirts; and personal care and other accessories under the Abercrombie & Fitch, abercrombie, Hollister, and RUEHL brands. As of March 23, 2007, the company operated 950 stores located in the United States, Canada, and the United Kingdom. Abercrombie & Fitch Co. also sells its products through Web-based stores, as well through a mail order catalogue."

Is there any news to explain today's move?

Well it is the first Thursday of the month.  And retailers usually report "same store sales" results the first Thursday. Same store sales are important because they indicate the underlying health of a retail venture.  An outfit that rapidly puts up new 'brick and mortar' locations could well cover-up a poor performance with new places to sell goods. This might work over the short run, but long-term growth depends on existing sites continuing to grow the business--thus the 'same store sales results'.

This mornings, shortly before the open of trading Abercrombie & Fitch announced same store sales for August.  They came in with terrific results (imho) of a 6% rise in same store sales with overall total sales climbing a strong 21%. It was this news that drove the stock higher in early trading this morning.

What about the latest quarterly results?

On August 22, 2007, Abercrombie & Fitch announced 2nd quarter 2007 results.   For the second quarter ended August 4, 2007, net sales increased 22% to $804.5 million, but during the quarter same store sales actually decreased 2%. (Since the latest month indicates at least a temporary change in this sales pattern, I am willing to overlook this less than satisfactory piece of news.)  Net income for the quarter was up 24% to $81.3 million and net income per diluted share increased 22% to $.88/share.  On an interesting note, the company announced plans for stores in Italy, France, Germany, Spain, Denmark and Sweden, as well as a flagship store in Tokyo in 2009.

Analysts polled by Thomson Financial had been expecting profit of $.87/share on revenue of $795 million.  Thus, while the same store sales decline for the quarter was obviously disappointing, the company did manage to beat expectations for the quarter. However, the company also reduced expectations for the second half to a per-share range of $3.63 to $3.67, with full-year results expected now to be between $5.16 to $5.20/share.  This is below analysts according to Thomson Financial who had been expecting full-year results at $5.24/share.  Certainly the quarterly report was 'mixed' to say the least.

The reduction in estimates was reported to be related to the quarter's flat same store sales results.   One could only hope that with this apparent turn-around in same store sales, if this is repeated again next month, we may well see estimates picking up once more.

What about long-term results?

Reviewing the Morningstar.com "5-Yr Restated" financials on ANF, we can see that the revenue growth has been impressive the last several years with revenue reported at $1.6 billion back in 2003 (the time of my first blog entry), increasing to $3.3 billion in 2007 and $3.4 billion in the trailing twelve months (TTM).

Earnings have also steadily increased from $1.90/share in 2003 to $4.60/share in 2007 and in the TTM.  The company is first reported to pay a dividend at $.60/share in 2006 and increased it to $.70/share in 2007.

Nicely, the outstanding shares are reported at 93 million in 2005, decreasing to 87 million in 2006 and 88 million in 2007. It isn't often that we can find relatively rapidly growing companies that manage to retire shares instead of diluting investors with additional shares issues to fuel their growth.

Free cash flow is positive, but the trend downwards is a little bit concerning.  The company is reported to have had $239 million in free cash flow in 2005, $197 million in 2006 and $179 million in 2007.  The trailing twelve months is reported to show $99 million in free cash flow.  This decrease isn't much of a concern as operating cash flow during this period showed a steady increase but the company is spending considerable amounts of money on Capital Spending, presumably for expansion of the retail line.  

The balance sheet also looks solid with $74 million in cash and $817 million in other current assets.  This total of $891 million in current assets could easily 'pay off' both the $372 million in current liabilities as well as the $368.7 million in long-term liabilities combined.  The current ratio works out to a healthy 2.40.

What about some valuation numbers?

Reviewing Yahoo "Key Statistics" on Abercrombie & Fitch (ANF) we find that this is a mid cap stock with a market capitalization of $6.86 billion. The trailing p/e is a reasonable (imho) 16.33 with a forward p/e even nicer (fye 03-Feb-09) of 13.07.  With the rapid growth and the reasonable p/e, we end up with a PEG that is also very attractive from a GARP evaluation at 0.96.  

Using the Fidelity.com eresearch website, we can see that the Price/Sales (TTM) ratio is a bit rich at 1.91, relative to the industry average of 0.97.  In terms of profitability, ANF comes out a little better with a Return on Equity (TTM) of 32.15%, ahead of the industry average of 25.59%. 

Finishing up with Yahoo, we see that there are 88.07 million shares outstanding with 80.38 million that float.  As of August 10, 2007, there were only 5.18 million shares out short which represent 6% of the float or only 2.3 trading days of volume (the short ratio).   Using my own '3 day rule' for significance, this doesn't appear to be a large number of shares out short suggesting less of a possibility of a short squeeze as good results are reported. 

As I noted above, the company pays a small dividend of $.70/share yielding 0.9%.  The last stock split was a 2:1 split back in June, 1999.

What does the chart look like?

If we review a long-term 'point and figure' chart on ANF, we can see that the stock has relatively steadily appreciated in value since dipping to a low of $15 back in September, 2002. Since last October, the stock has been trading in a relatively broad range between $67 and $85, but appears, nevertheless, to be steadily appreciating in price.


Summary:  What do I think about this stock?

Needless to say I like this stock a lot.  It has even the Peter Lynch attractiveness of being something 'your daughter found in the mall'!  In the midst of the relatively uneven consumer-driven economy, Abercrombie appears to be able to continue to grow its brand with increasing same store sales and has plans to export the brand further to Europe and Japan. 

The latest monthly report out today was very encouraging in face of a relatively pessimistic quarterly report just out a few weeks ago.  The Morningstar.com report is solid, valuation is excellent and the chart appears to be steadily appreciating without much over-extension of the price move.

Unfortunately, I still don't own any shares :(.   And I am not in the market for buying any stock today anyhow.  I don't have one of my 'signals' to purchase anything.  However, if I were buying a stock, this might well be one I would be buying today.  Meanwhile, I shall keep it in my "vocabulary" of 'investable' stocks for future reference!

Thanks so much 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.  If you get a chance, be sure and visit my Stock Picks Podcast Website.  For further information on the performance of my actual Trading Portfolio, be sure and visit my Covestor Page.  If you would like to see a third party evaluation of my stock picks since January, 2007, then drop by and visit my SocialPicks page!

There!  I have given you lots of homework already.  You too can feel like you are starting school once again.  And for all of the students who do read my blog, here is an apple for you for your teacher!


Regards!

Bob


Posted by bobsadviceforstocks at 12:34 PM CDT | Post Comment | Permalink
Updated: Thursday, 6 September 2007 1:54 PM CDT
Tuesday, 4 September 2007
Stock Picks Bob's Advice participates in more Carnivals!

Believe it or not, I am not as technologically and blog sophisticated as some of my fellow bloggers!  I am participating in a couple of "Carnivals" which you might wish to visit which consist of entries from other bloggers on similar topics.  Here is a great carnival puzzle picture I found on the net.

I am participating in the Carnival of Everything Finance which just got published and last week in the 3rd Carnival of Securities.  Drop by and let them know 'Bob sent you!'.

Have a great day trading everyone!

Bob


Posted by bobsadviceforstocks at 9:06 AM CDT | Post Comment | Permalink
Updated: Tuesday, 4 September 2007 3:00 PM CDT
Sunday, 2 September 2007
A Podcast on Micros Systems (MCRS)

Click HERE for my podcast on Micros Systems (MCRS).

Bob 


Posted by bobsadviceforstocks at 11:12 PM CDT | Post Comment | Permalink
Cerner Corp. (CERN) "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 advisers prior to making any investment decisions based on information on this website.

As one of my weekend tasks, I try to examine one of my actual holdings every few weeks.  Going alphabetically through the list of what is now 15 holdings, I am up to my holding in Cerner (CERN).  Two weeks ago I reviewed my holdings in Bolt (BTJ).  Let's review my experience with CERN and see if it still deserves a spot in my blog as well as a holding in my Trading Portfolio!

Currently I own 120 shares of Cerner which were acquired 2/2/07 at a cost basis of $49.76.   I have not sold any shares from my original purchase. Cerner closed at $57.04 on August 31, 2007.  This represents a gain of $7.28 or 14.6% since my purchase of these shares. 

At what price would I sell shares?

There are always at least two situations in which I will sell my shares.  That is if they appreciate on the upside to a targeted level then I plan on selling 1/7th of my shares.  On the downside, if they hit a targeted depreciation level, then I plan on selling all of my shares.  Since I have not sold shares yet, my first sale on the upside would be at a 30% appreciation level at which time I would sell 1/7th of my 120 shares or 17 shares if the stock hits 1.3 x $49.76 =  $64.69.  On the downside, again since I have yet to sell any shares on the upside, my 8% loss limit still applies, meaning that if the stock should decline to .92 x $49.76 = $45.78, then all of my 120 shares would be sold.

As is my plan, sales on the upside are signals to add new positions assuming under the maximum number of positions planned; sales on the downside direct me to 'sit on my hands' with the proceeds.

How did they do in the latest quarter?

On July 24, 2007, Cerner announced 2nd quarter 2007 results.  Revenue came in at $386.6 million, up from $330.6 million last year.  Earnings were $31.1 million or $.37/share, up 30% from $23.9 million or $.29/share last year.  "Adjusted" per share earnings came in at $.41 vs $.33/share last year.

The company met expectations on earnings at $.41/share.  They exceeded analysts' expectations of revenue of $376 million. 

In addition, the company raised its guidance for 2007 from $1.72/share on revenue of $1.54 to $1.57 billion up to $1.72 to $1.73/share on revenue of $1.55 to $1.57 billion.  This is in line with analysts' expectations of earnings of $1.73/share on revenue of $1.56 billion.

What about longer-term results?

Reviewing the Morningstar.com "5-Yr Restated" financials on CERN, we find that the steady revenue growth from $.8 billion in 2002 to $1.4 billion in 2006 and $1.5 billion in the trailing twelve months (TTM) remains uninterrupted.  Earnings have continued to steadily increase except for a dip in 2003, from $.70/share in 2002 (to $.60/share in 2003), $.90/share in 2004, $1.30/share in 2006 and $1.50/share in the TTM.

Free cash flow is positive albeit not especially growing at $112 million in 2004, $101 million in 2006 and $62 million in the TTM.

The balance sheet on Morningstar.com is solid with a current ratio over 2.0.

What does the chart look like? 

Looking at a "point & figure" chart on Cerner from StockCharts.com, we can see a beautiful graph of Cerner stock which dipped from $19.50 in January, 2003, to a low of $8.50 in April, 2003, before breaking through resistance at $17.50 and moving steadily higher since that time.


In light of the solid earnings report, the continued strength in the Morningstar.com evaluation, and the chart staying well above support levels,

CERNER (CERN) IS RATED A BUY

Summary:  What do I think?

Well, as the last note above recorded, I am still impressed with the consistency of this company, the steady revenue and earnings growth, the solid Morningstar.com financials and the strong chart.  I am happy to be owning this stock but of course shall be following my own sell strategy as this stock either continues to climb or corrects!

Thanks again 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. If you get a chance, be sure and visit my Stock Picks Podcast Website, my Covestor page where my trading portfolio is reviewed, and my SocialPicks page where all of my "picks" are reviewed since January, 2007.

Have a great Labor Day everyone!

Bob 


Posted by bobsadviceforstocks at 9:16 PM CDT | Post Comment | View Comments (1) | Permalink
Updated: Sunday, 2 September 2007 9:21 PM CDT
Dicks Sporting Goods (DKS) "Long-Term Review #11"

 

 

 

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 advisers prior to making any investment decisions based on information on this website.

For those of you who may be new to this blog, I try to accomplish many different task.  For me, I use this blog to refine my own thinking and develop my own discipline in investing, including buying and selling stocks, and managing my own trading portfolio.  I write about individual equities that I find attractive, share with you thoughts on portfolio management, and also write about my own stock portfolio, letting you know what I own, when I buy and sell stocks, and why I do what I do! 

This blog dates back to May 12, 2003, when I first posted about St Jude Medical.  Since that time, I have made nearly 1,600 entries about stocks, stock trades, and investing philosophy.  I hope that you take the time to look through these entries and you can find links to them along the left side of each page on my blog linked to by date.  I know that there isn't a very good index system at all here.  In fact, when I go to look for my own entries I find myself using Google, and will find a past stock pick, such as Dicks by searching the terms "Stock Picks Bob's Advice" Dicks Sporting Goods.  In that way, you will find most of my entries as well as related entries such as my Podcast and websites that carry my blog or podcasts as well.  It does get very confusing sometimes :).

With the large number of stocks I have discussed on this blog, some time back I decided to do my "Looking Back One Year" reviews which now are reviewing stocks from about 18 months earlier.  However, that still leaves an older bunch of stock picks that should be revisited.  For this I started the Long-Term Review entry, and try, as often as I can get a chance, to go sequentially through my older entries.  As you can see, I am just up to #11, Dicks Sporting Goods.  On August 18, 2007, I reviewed New Century Financial; let's take a look at a more successful stock pick, Dick Sporting Goods, that I originally wrote up on May 22, 2003

On that date I wrote:

"May 22, 2003

Dicks Sporting Goods (DKS)


When the market is strong, more of our kind of stocks come to the fore. Is that a proper word? Anyhow, DKS is a relatively recent issue...came public recently. I do NOT own any shares of this anywhere....I do have a managed account that COULD own shares of anything....but don't own this one.

DKS is trading today (10:04 am) and $29.75, up $1.62 or a 5.76% rise. The graph is beautiful...and appears to have come public in mid-October, 2002. Stock has moved up fairly steadily from about $14 to its current price of $29.75.

They are making an additional move today as they announced that they will discuss their first quarter 2003 results today after the close of the market. It appears that the 'street' thinks that there will be positive comments made.

For the last quarter ending 2/1/03, revenues rose 18% to 1.27 Billion. Net income rose 63% to $38.3 Million. This was due to solid increased comparable store sales and the opening of seven new stores. I believe the same store sales were up in the 5% range.

Looking at Morningstar we see sequential annual revenue growth from 0.6 billion in 1998, $0.6 billion in 1999, 0.7 billion in 2000, $0.9 billion in 2001, and $1.1 billion in 2002. Unfortunately, Morningstar suggests that the company is still burning through some cash and is $20 million NEGATIVE cash flow the trailing twelve months.

Anyhow, that is it for pick #2 today. Good luck and remember those 8% stops and when things get good, peel a little off each 50% gain....Bob"


This was probably one of my best stock picks from those early days in the blog.  Dicks had a 2:1 stock split on April 6, 2004, making my effective stock pick price actually $14.88.  DKS closed at $64.90 on August 31, 2007, giving that pick (I do not own any shares of DKS) a gain of $50.02 or 336.2% since posting!

DICKS SPORTING GOODS (DKS) IS RATED A BUY 

Let's take a look at a few of the things I like to review on stocks in the blog.

Is there any recent news that could affect the stock price?

Dicks is also a favorite of Motley Fool and they did a nice write-up recently on August 22, 2007.

Ryan Fuhrmann commented:

"The strong third quarter last year is expected to lead to a dip in earnings for the coming quarter, but that is not likely to qualify as a near-term hiccup. That's because Dick's is rarely caught by surprise and has informed investors of what they can expect for the balance of fiscal 2007. For the full year, it is calling for 23% earnings growth, and fiscal 2008 will bring further Golf Galaxy integration upside, as well as the customary new store openings.

With only 315 namesake stores and 77 Golf Galaxy stores, Dick's has plenty of room to expand. Management plans to grow its store base 15% annually until it reaches 800 stores, implying at least another five years of expansion before any significant market-saturation concerns. Growth investors are likely salivating at these prospects."

I always like writing up a stock that is also liked by as reputable a group of investment writers as the folks at Motley Fool.  Sometimes I think my approach is a bit of a cross between the CAN SLIM approach and the Motley Fool philosophy.  In any case, they like the stock as well.

What about the latest quarter?

On August 21, 2007, Dick's Sporting Goods reported 2nd quarter 2007 results.   Net sales for the quarter increased 38% to $1.01 billion.  More importantly, same store sales for the quarter increased 7.2% (or 5.8% adjusting for a changed retail calendar).  Net income grew 87% to $47.9 million and earnings per diluted share were up 77% to $.83 vs $25.7 million or $.47/diluted share the prior year.

The company beat expectations of analysts which had been on average expecting earnings of $.76/share.  In addition, the company raised guidance for the full year from $2.40/share to a new estimate of $2.47 to $2.50/share.  

It is difficult to read a better earnings report in which strong growth in earnings and revenue is reported, with solid same-store-sales numbers, and raised guidance.

What about longer-term results?

Reviewing the Morningstar.com "5-Yr Restated" financials on DKS, we can see that the revenue growth has been steady the last five years, earnings growth uninterrupted, and while shares have modestly increased from 35 million to 52 million beetween 2003 and 2007, during this time revenue has more than doubled as has earnings.  This is acceptable to me. 

Free cash flow is positive and recently growing and the balance sheet looks solid.

What about a chart?

Looking at the "point and figure" chart from StockCharts.com, we can see that  the steady appreciation in stock price has been almost without break since 2002.  Really an extremely strong pattern imho.

Summary:  What do I think?

This has been a phenomenal stock pick from 2003!  My biggest mistake is now owning shares!  Anyhow, the company just reported earnings which beat expectations and they raised guidance.  The Morningstar report appears intact and the chart is incredible.  

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.  Have a great weekend everyone!

Bob 


Posted by bobsadviceforstocks at 12:17 PM CDT | Post Comment | Permalink
Updated: Sunday, 2 September 2007 12:33 PM CDT
Saturday, 1 September 2007
"Looking Back One Year" A review of stock picks from the week of March 13, 2006

 

 

 

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 advisers prior to making any investment decisions based on information on this website.

I hope you all are having a good Labor Day Holiday (for those of you outside the United States, I also wish you a wonderful weekend!).

Always thinking about informing my readers nd learning more myself, I would like to share this commentary about the history of 'Labor Day' in the United States from a PBS NewsHour Production:

"In September 1892, union workers in New York City took an unpaid day off and marched around Union Square in support of the holiday. But now, protests against President Cleveland's harsh methods made the appeasement of the nation's workers a top political priority. In the immediate wake of the strike, legislation was rushed unanimously through both houses of Congress, and the bill arrived on President Cleveland's desk just six days after his troops had broken the Pullman strike.

1894 was an election year. President Cleveland seized the chance at conciliation, and Labor Day was born. He was not reelected.

In 1898, Samuel Gompers, head of the American Federation of Labor, called it "the day for which the toilers in past centuries looked forward, when their rights and their wrongs would be discussed...that the workers of our day may not only lay down their tools of labor for a holiday, but upon which they may touch shoulders in marching phalanx and feel the stronger for it."

For me, and I am sure most of the American readers, Labor Day is now just an excuse for a three day weekend, a picnic trip, or fishing expedition, or perhaps a county fair or parade.  It is important to understand the historic origins of the days we celebrate!

Well, one of my 'labors' this weekend (excuse any semblance to a pun), is to examine past stock picks from this blog and find out how they would have worked out if indeed purchased, and how the companies themselves are doing and whether they still deserve a spot on the blog, as I refer to my large 'vocabulary' of stock names.

These reviews assume a 'buy and hold' approach to investing.  In fact, I recommend and practice an extremely disciplined approach to ownership of equities that demands that I sell stocks at small losses quickly and also sell portions of appreciating stocks in a slow and deliberate fashion.  This difference in strategies would certainly affect performance; however, for the ease of analysis, this 'buy and hold' assumption is retained for this review.

On March 13, 2006, I posted Stryker (SYK) on Stock Picks Bob's Advice when the stock was trading at $48.07.  SYK closed on August 31, 2007, at $66.80, for a gain of $18.73 or 39.0%. 


On July 19, 2007, Stryker (SYK) reported 2nd quarter 2007 results.  For the quarter ended June 30, 2007, net sales grew 16.0%  $1.46 billion.  Diluted net earnings per share increased 25.0% to $.65/share.  The company beat average expectations of $.61/share on revenue of $1.44 billion.  The Morningstar.com "5-Yr Restated" financials are intact.

For all of the above reasons,

STRYKER (SYK) IS RATED A BUY

On March 15, 2006, I posted LMI Aerospace (LMIA) on Stock Picks Bob's Advice when the stock was trading at $18.01.   LMIA closed at $22.86 on August 31, 2007, for a gain of $4.85 or 26.9% since posting.

Here is the "point and figure" chart on LMIA from StockCharts.com

 

On August 7, 2007, LMI Aerospace (LMIA) announced 2nd quarter 2007 results.  Net sales increased to $33.9 million for the quarter ended June 30, 2007, up 3.6% from $32.8 million the prior year.  Net income, however, dropped to $2.9 million from $3.0 million or $.26/diluted share, unchanged from $.26/diluted share the prior year.

The company failed to meet expectations of analysts who had been looking for a profit of $.30/share.   More recently, the company lowered estimates on revenue growth for 2007 to a range of 15-19% from the previous estimate of a minimum 18% growth.  

Furthermore, examining the Morningstar.com "5-Yr Restated financials on LMI Aerospace we find that besides the dip in earnings, the company turned cash flow negative in 2006 at $(1) million and this dropped further to $(5) million in the trailing twelve months (TTM).

With this relatively weak earnings report that missed expectations, the lowered guidance, and the fundamentals that are less than stellar, I shall be reducing the rating on LMIA and even though the pick was 'profitable',

LMI AEROSPACE (LMIA) IS RATED A SELL

Finally, on March 17, 2006, I posted Clarcor (CLC) on Stock Picks Bob's Advice when the stock was trading at $35.62.   CLC closed at $38.72 on August 31, 2007, for a gain of $3.10 or 8.7% since posting.

Here is the "point & figure" chart on CLC from StockCharts.com:

On June 19, 2007, Clarcor (CLC) announced 2nd quarter 2007 results.  Net sales increased 3.5% for the quarter ended 6/2/07, to $235.1 million from $227.1 million in the same quarter last year.  Earnings grew 28.1% to $.41/diluted share, up from $.32/diluted share last year.

The company slightly missed estimates on revenue, with $235.9 million expected but beat expectations on earnings with analysts looking for $.37/share.  The company also raised 2007 guidance to $1.72 to $1.80/share.  Analysts had been expecting net income of $1.70/share.

The Morningstar.com "5-Yr Restated" financials page is intact. 

With the solid earnings report and the company beating expectations on earnings (although coming in slightly light on revenue), raising guidance, and with an intact Morningstar.com report,

CLARCOR (CLC) IS RATED A BUY

So how did I do picking these three stocks back during the week of March 13, 2006?  In a word, great!  All three stocks showed gains with the average appreciation being a gain of 24.9% since posting.

Please remember that past performance is no guarantee for future performance and that of course I am an amateur so please consult with your advisers!  

In the meantime, please feel free to drop me a line at bobsadviceforstocks@lycos.com if you have any comments or questions or simply post on the blog itself.  Also, be sure and visit my Stock Picks Podcast website, my Covestor page where my trading portfolio is monitored, and my SocialPicks page where all of my stock picks since January, 2007, are being followed.

Have a great Labor Day everyone!  And a great week trading and investing next week.

Bob 


Posted by bobsadviceforstocks at 10:18 PM CDT | Post Comment | Permalink
Updated: Saturday, 1 September 2007 10:20 PM CDT
A Reader Writes "...do you look into trying to time the purchase of your stock?"

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 advisers prior to making any investment decisions based on information on this website.

I really enjoy receiving emails and visits from readers.  I especially enjoy receiving feedback from fellow bloggers like Andrew G. who writes G. Stocks, a blog well worth visiting!

Like so many intelligent readers of my investing methods Andrew finds my timing a little bit suspect.  Couldn't there be a better way?  Quite frankly, I am sure there are better ways to time things.  I just want to try what I have described multiple times as an idiosyncratic system.  But let me first get to Andrew's letter and then comment.  Andrew wrote:

"Hi Bob, I really enjoy reading your blog.  You do a great job analyzing the companies you review.  I was wondering if you ever consider picking a stock to purchase, and then sitting on that decision until you see a valley in the stocks price?  Your choosing strategy, of picking a top gainer, is a great way to find good stocks, but big gainers tend to always have a correction of some sort.  Combine that with your -8% sell point and it seems like your strategy could cause you to sell a bit more then you'd like.

 
I recently scanned through some of your recent sells, knowing that if you picked the stock, it should be a good one.  I took off the list any stocks that had obvious reasons for dropping, and actually ended up purchasing MLAB.  I got it while it was round $20.70.  This company has good numbers, a lot of potential for growth, and just seems like a well run company.  It just seems like you had bad timing when purchasing it (at a peak).  What do you think?  Are your purchases solely based upon when you have a free pass to do so or do you look into trying to time the purchase of your stock?
 
Keep up the great blogging!
 
Andrew (aka http://www.geissonator.blogspot.com/)"
 
First of all Andrew I want to thank you for your continued support of my own blogging efforts.  As a fellow blogger, you can imagine the time it takes to write up each of my entries.  Way too much time lol.  But I love doing it just the same.  And readers like you make it all worthwhile!
 
On your question of entry points into stocks, you made a good observation on my awful timing on Mesa Laboratories (MLAB).  I really did get whipsawed on that one even though there wasn't anything fundamentally wrong with the stock.  But because of my own sale of MLAB on weakness,
 
MESA LABORATORIES (MLAB) IS RATED A HOLD
 
For me a sale of a stock when nothing seems wrong means that something is wrong somewhere else besides the stock itself.  I do not know if you follow but I use my own portfolio as a 'barometer' of the market itself.  Like the canary in the coal mine that historically was used to indicate poor air conditions, my own stock portfolio is what I use to indicate to me that something is rotten in the market itself.
 
Let's review that MLAB position.  Going back in my own portfolio history, I can see that I purchased MLAB on 5/23/07 when the stock was selling at $24.00.   I then sold my MLAB shares on 8/14/07 when the stock hit $22.20 triggering my loss limit.  I pulled the plug on my share and haven't looked back.
 
First, let's look at the "point and figure" chart on Mesa Laboratories (MLAB) from StockCharts.com:
 

On May 23, 2007, when I purchased my Mesa Labs stock, the NASDAQ closed at 2,577.05.  On August 14, 2007, the NASDAQ had dropped to close at 2,499.12.  This was about 78 points lower from the purchase price.  It wasn't exactly a rout, but the NASDAQ wasn't exactly acting healthy at that time.
 


I really don't want to overstate the significance of these charts.  I am not sure if they even make the point.  But my basic point is that I trust the actions of my stocks.  Whenever I think that I am smarter than the market then I really ought to hang it up.  I believe strongly in my ability to select what I really think are high quality companies.  Without some fundamental information to explain an unexplained drop in a stock, I have to assume there are other factors working on the stock price and I don't second guess.  I sell my shares.  

This doesn't always work.  But it works well enough for me.

Now you asked actually about entry points.  You could be right on this one.  Probably it is a bit risky to buy them on daily momentum indicators.  Many stocks sell off after making a move higher.  But then again, after screening through these names, I am only buying the shares of companies with the best characteristics that I have identified over and over again.

A lot of what this blog is about is being successful at investing.  Not at necessarily being the most successful of any technique.  If I can simply consistently or often stay ahead of the market, then I shall be successful more than a multitude of investors.  Anyhow, that's my goal.

Good luck with you MLAB stock!  I often revisit stocks after I have sold them when the circumstances are right.  However, to answer your question, if I haven't done so already, I don't buy stocks unless I have a "permission slip" and that stock is on the top % gainers list on the day that I make a purchase.  So no, I don't wait for a stock to pull back to make a purchase.  

I want my system to be easy.  I don't want to rely on my thinking and intuition.  Every time I do that I open myself up for more errors.  My portfolio talks to me loud and clear.  I just need to listen!

Thanks again for writing and reading and linking to Stock Picks!  Your support is greatly appreciated and your kind words and intelligent questions are welcomed!  

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

Bob 


Posted by bobsadviceforstocks at 8:41 PM CDT | Post Comment | View Comments (1) | Permalink
Updated: Saturday, 1 September 2007 8:50 PM CDT
Wednesday, 29 August 2007
A Reader Writes "...you think its a good time now to jump in....?" (VSEC)

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 advisers prior to making any investment decision based on this website.

I received a nice letter from Kay, asking me about my VSEC comments.  She wrote:

"Hi Bob and its great to find your blog. what do you think of vsec from now on, its around 43. you think its a good time now to jump in or to wait for a minor pullback around 37 and go long at that point.Or just buy in small quantities when it goes a bit lower?

please reply,thanks,
with best wishes n greetings,
Kay."

First of all thanks for writing and it is great to have you visiting my blog!  Please remember that I am an amateur investor.  I cannot write that up enough.  I have my own idiosyncratic system for picking stocks and determining my entry into and exit from positions.  It isn't necessarily the best way and quite frankly, I am not sure it shall be profitable long-term. I guess that is why I am writing this blog.

But to get back to your question, I don't really have an opinion on your best approach to buying VSEC if you choose to do so.  I haven't changed my 'rating' on VSEC, which is still rated a buy.  It is just that I personally choose to buy stocks only on the particular day that they are on the top % gainers list and also on that particular day that I have a 'permission slip' from my own portfolio.  This system is only a shade more scientific than Astrology (no offense to any Astrology fans intended), as I await for an alignment of all of the planets and constellations :). 

It isn't necessarily the best way, but it is my method and approach.

I know that there are many wiser minds out there who can advise you better about this particular stock and a proper entry point.  In fact, with a Google Search, I found a nice article on the Investor's Corner from Investors.com about entry points into stocks.  I am sure there are many other articles about entry into stocks that you can review as well. 

I hope that isn't a  disappointing response :).  You were very kind to write and all.  But I have to tell you that what I do might not work for you and might not be the best way to go about it at all.  But it gives me a structure to my trading, a clear set of rules that limits my actions to a very well-delineated set of actions.  And it thus far has been working better for me than my many years of 'shooting from the hip' so to speak.

Thanks again for writing.  Feel free to leave a comment here--either you Kay or any of my readers--or drop me a line at bobsadviceforstocks@lycos.com.  I cannot respond to all of the comments I receive, but I certainly read them all and shall keep working at responding to the letters one by one :).

Bob


Posted by bobsadviceforstocks at 12:16 PM CDT | Post Comment | Permalink

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