Stock Picks Bob's Advice
Wednesday, 30 July 2003
July 30, 2003 Charles River Laboratories (CRL)
That Charles River must be one heck of a water way! I mean this is the SECOND Charles River company we are posting on this site. BTW I have seen this river and it runs through Boston....beautiful area to visit near Harvard and MIT. Must be a real source of new companies! (Our other company on this site is Charles River Associates).
CRL is having a very nice day today trading at $35.60 up $2.89 or 8.84%. Like so many of our recent selections, CRL is climbing on earnings news.
The company announced today (BUSINESS WIRE on NYTimes on the Web) that second quarter revenues were $154.4 million, a 13.1% increase over the $136.5 million reported in 2002. Net income increased 25.9% to $20.6 million or $.42/diluted share compared to $16.3 million or $.34/share last year.
I do not own any shares but this company is very intriguing and it certainly is on my shopping list!
According to CNN.Money, CRL "...is a provider of research tools and integrated support services that enable drug discovery and development, including genetically and virally defined purpose-bred rats and mice."
Reviewing Morningstar.com, my usual method of evaluating the fundamentals behind this stock, we find that revenue has grown steadily from $205 million in 1998, to $231 million in 1999, $307 million in 2000, $466 million in 2001 and $555 million in 2002. A very nice progression!
Free cash flow has grown steadily as well: $18 million in 2000, $35 million in 2001, $96 million in 2002 and $97 million in the trailing twelve months.
The company has a nicely balanced financial condition (imho), with $114.0 million in cash against $103.7 million in current liabilities. In addition, Morningstar reports an additional $172.2 million of other current assets, nearly enough to cover the entire long-term liabilities of $222.1 million. There are prettier financial pictures on the website that I have posted but this one looks reasonably solid.
Reviewing some of the numbers from Yahoo.com on the financial section under 'profile' we find that the market cap is $1.48 Billion and there are 45.3 million shares outstanding with 44.8 million that float. No dividends are paid. The p/e is a reasonable 21.66. In addition, there are quite a few shares out short at 3.10 million representing nearly 7% of the float as of 7/8/03. This would require 7.62 days of average volume....quite a bit of purchasing pressure that will develop if there is a short squeeze.
I like this company a lot as it continues to crank out revenue and earnings growth. This certainly is worthy of your consideration...not as musical as the Guitar Center...but then rats and mice aren't really that sexy an investment are they?
Regards to all of my friends! Thanks for visiting and come back soon. Please feel free to post comments right here on the website or drop me a line at email@example.com if you have any questions, comments, or words of encouragement!
July 30, 2003 Guitar Center (GTRC)
Now this is a change of pace! How about a retail guitar shop? No kidding. This company looks nice to me. I don't own any shares and haven't looked closely before but let's take a gander at these numbers:
Guitar Center, Inc. "...operates a chain of retail stores that sell musical instruments primarily guitars, keyboard, percussion and pro-audio equipment." according to CNN.Money.
GTRC is strumming along nicely today trading at $33.26 up $3.56 or 11.99% on the day.
Like so many stocks making nice moves this time of year, earnings was the reason behind the price appreciation today. Our whole theory of picking stocks with long history of earnings increases is based on the premise that the price will ultimately follow the earnings...and so forth.
The earnings report showed that sales for the second quarter ending June 30, 2003, increased 14.9% to $291.6 million compared to $253.9 million in the second quarter last year. Net income increased 50.0% to $6.2 million compared to $4.1 million in the same quarter last year and on a per share basis the increase was $.25 in 2003 vs. $.18 in 2002.
Morningstar.com shows a steady growth in revenue from $400 million in 1997 to $500 million in 1998, $600 million in 1999, $800 million in 2000, $900 million in 2001 and $1.1 billion in 2002.
Free cash flow has been a bit inconsistent ranging from $17 million in 2000, ($8) million in 2001, ($14) million in 2002 and positive $7 million in the trailing twelve months.
Assets and liabilities are fairly well balanced in favor of assets (in my simplified view of the balance sheet on Morningstar.com)...with $5.5 million of cash and $324.4 million of other current assets compared to $212.8 million of current liabilities and $75.9 million in long-term liabilities. I would rather see more cash and less current liabilities...but the long term debt appears nominal and the company has significant 'other current assets.'
Looking on Yahoo we find that this company has a relatively small market cap of $682.5 million with 23.0 million shares outstanding and 17.5 million shares that float. No dividend is paid. Recently was educated regarding the price/sales ratio of a company on a Yahoo stock chat site....and I confess I am paying more attention to this.
GTRC has a price/sales ratio of 0.61 which is quite reasonable. The p/e is at 25.65 which is reasonable considering the growth...ye olde GARP concept. And good news for those long on this issue...there are LOTS of shorts out there...about 4.78 million representing 27.3% of the float as of July 8, 2003, and it would take 12.82 days of average trading volume for all of those borrowed shares to get covered.
I actually like this company a lot. At least it is not another usual tech stock or medical supply or HMO company....a little variety is nice!
Thanks for stopping by. Hope all of your investments are profitable. Please contact me at firstname.lastname@example.org if you have any questions, comments, or words of encouragement!
Tuesday, 29 July 2003
July 29, 2003 Coventry Health Care (CVH)
It is getting late and I would like to get another entry online. I do not own any shares of this company...and have not really looked at it closely before now: Coventry Health Care (CVH). This is another medical stock....scanning the lists these medical stocks and hospital groups appear to have all moved together higher today.
CVH closed today at $55.77 up $2.64 on the day, a 4.97% gain. They reported their second quarter earnings today and they looked nice: Revenues for the quarter totaled $1.1 billion a 23% increase over the second quarter of 2002. Net earnings were $63.4 million or $1.05/diluted share, a 73% (!) increase over net earnings for the second quarter of 2002. This was reported by Business Wire on NYTimes on the Web today.
According to CNNMoney, Coventry Health Care, Inc. "...is a managed health care company that provides comprehensive health benefits & services to employer- & government-funded groups in the Midwest, Mid-Atlantic & Southeastern U.S."
Morningstar.com shows that this quarter's results were NOT a fluke. Revenue has grown from $2.1 billion in 1998, $2.16 billion in 1999, $2.6 billion in 2000, $3.1 billion in 2001, $3.47 billion in 2002 and extrapolating the current quarterof $1.1 billion we would get $4.4 billion in revenue for 2003.
The company is managing this growth well as free cash flow has improved from $89 million in 2000, to $170 million in 2001, $196 million in 2002 and $234 million in the trailing twelve months.
Like the previously mentioned health care firm, this one too has a lot of debt....$297.7 million in cash with $299.4 million in other current assets. Unfortunately, Morningstar reports $844.8 million in current liabilities and $197 million in long-term liabilities. This is a bit heavy on debt but the fact that the company is growing its free cash flow suggests that they are able to manage this debt load....imho.
Yahoo.com shows a market cap of $5.13 Billion with 59 million shares outstanding at 47.8 million that float. No dividend is paid, the p/e is a reasonable (imho) 19.21. There are 1.20 million shares out short representing a bit over a day and a half of average trading volume.
Except for the debt, this is a pretty picture and an outstanding earnings report...deserving of your consideration! Regards to all of my friends and readers.
July 29, 2003 Community Health Systems (CYH)
I was busy today. Getting to work the futures were positive, the market opened up...and then when I took a look at the end of the day it all turned around. The decreasing interest rates has ignited this market from its lows....could it be that the interest rate pressure on the record bond offerings by the Treasury to pay off increasing Federal deficits will drive interest rates higher and squelch the rally? I hope not.
Anyhow, scanning the lists for something that might fit our investment style, I came up with Community Health Systems (CYH). CYH had a great day today closing at $19.79 up $1.76 on the day or 8.89%.
According to CNN.Money, Community Health Systems "...is a non-urban provider of general hospital healthcare services in the United States. CHS owns, leases or operates 63 hospitals, geographically diversified across 22 states." Another medical stock!
Morningstar shows steady growth in revenue from $855 million in 1998, $1.08 billion in 1999, $1.33 billion in 2000, $1.69 billion in 2001, $2.2 billion in 2002 and $2.32 billion in the trailing twelve months.
On July 23rd, 2003, according to NYTimes on the Web (Business Wire): CYH reported results for the second quarter ending June 30, 2003. Net operating revenues totaled $657.3 million a 23.9% increase compared with $530.6 million for the same period last year. Net income increased 26.2% to $30.6 million or $.30/share compared with $24.2 million or $.24/share in 2002.
According to Morningstar.com, free cash flow has improved from a ($33 million) deficit in 2000, to $71 million in 2001, $182 million in 2002, and $127 million in the trailing twelve months.
The balance sheet shows a lot of debt...only $19.6 million in cash and $582.3 million in current assets compared to $320 million in current liabilities and $1.36 billion in long term liabilities. Morningstar also reports $2.3 billion in long-term assets as they report it....but the long-term debt load and the large amount of current liabilities...imho....and not being an accounting whiz....is not as pretty a picture as some other stocks we have examined.
Yahoo.com 'profiles' shows that CYH has a market cap of $1.95 Billion with 98.2 million shares outstanding and 53.0 million that float.
The p/e is a reasonable 16.89 in light of the solid growth...but there is only $.26/share in cash. There are 3.35 million shares out short representing 5.01 days of average trading....a bit of a bullish statistic..(again imho).
The stock is growing strongly and certainly has been spinning off some nice free cash that can be directed at paying down debt if needed...not my favorite pick on this site but certainly we need watch this stock....maybe even buy some shares...if this is the kind of company you are looking for.
Regards to all of my friends. Please drop by soon and leave some comments here or drop me a line with any questions or comments at email@example.com
Posted by bobsadviceforstocks at 9:30 PM CDT
Updated: Saturday, 2 August 2003 3:47 PM CDT
Monday, 28 July 2003
July 28, 2003 Trading Transparency QSII for DRIV
QSII looked SO nice that I went ahead and bailed out of my DRIV at a 6% loss....not quite the 8% I like...but I always push on my rules...and picked up 300 of QSII. Let's hope it continues its strong performance. Regards again.
July 28, 2003 Quality Systems Inc. (QSII)
Hello Friends! Some of you may have bumped into me on Yahoo Stocks...love to stop by and chat and even play tunes...or some may have come by after seeing a post on Delphi. Whatever the case, WELCOME! Thanks for visiting and I hope this discussion is helpful and makes your visit worthwhile.
Was scanning the percentage gainers again today and came across Quality Systems, Inc. This company, according to Cnn.Money website, "...develops and markets proprietary healthcare information systems that automate medical and dental groups practices."
QSII is having a nice day today in the market. Currently, it is trading at $30.67 up $3.75 or 13.93% on the day. They are rising as most have recently on earnings news.
They reported today that revenues for their first quarter (ending June 30, 2003)...were $16.3 million, an increase of 33% from $12.3 million last year. Net income was $2.27 million, an increase of 40% from last year's net income of $1.6 million and on a fully diluted basis, $.35/share this year vs. $.26 last year.
Morningstar.com shows a steady growth in revenue from $31.2 million in 1998 to $33.8 million in 1999, $36.4 million in 2000, $39.9 million in 2001, $44.4 million in 2002 and extrapolating the current quarter we would get about $64 million in 2003.
Free cash flow shows steady improvement from $3 million in 2000, $5 million in 2001, $8 million in 2002 and $10 million in the trailing twelve months.
Balance sheet is very clean: $33.1 million in CASH more than enough to pay off the current liabilities of $16.9 million and $19.9 million of OTHER current assets with NO long-term liabilities reported.
This is a SMALL company with 6.16 million shares outstanding and 3.50 million that float with a market cap of $165.9 million per Yahoo.com. There are no dividends. Only 97,000 shares are out short representing less than an average trading day.
The trailing p/e is a reasonable 24.45 and considering that the company has NO debt and $5.92/share in cash, this is a beautiful picture and deserves consideration. In fact, I will review my own trading portfolio.....and think about buying some shares! I do not as I write own any shares of this company.
Regards again....and have a great week everyone!
Saturday, 26 July 2003
July 26, 2003 Zoran Corporation (ZRAN)
As I have posted earlier and elsewhere, yesterday I sold off my shares of EELN and purchased shares of Zoran in my trading account. Let me review this company with you.
Zoran closed yesterday at $27.28 up $3.78 or 16.10% on the day. According to CNN.Money, Zoran "...develops and markets software, integrated circuits and IC Intellectual Property cores for digital audio and video applications enabled by compression."
On July 24, 2003, Zoran reported record revenue for the second quarter of 2003. According to the NYTimes on the Web, revenues for the second quarter of 2003 were $44.7 million compared with $34.0 million in 2002 and $37.8 million in the PRECEDING quarter.
Net income for the quarter was $4.2 million or $.15/diluted share compared with $1.0 million or $.04/share for the same quarter in 2002, and $193,000 or $.01 per diluted share for the preceding quarter (1st quarter, 2003).
Looking at some fundamental data on Morningstar.com, we find revenue growth from $44.9 million in 1997, $44.2 million in 1998, $61.7 million in 1999, $79.7 million in 2000, $107.7 million in 2001, and $149 million in 2002. If we extrapolated the current quarter, we should get revenue over $165 million in 2003.
Free cash flow is positive with $1 million in free cash flow in 2000, $9 million in 2001, $17 million in 2002 and $6 million in the trailing twelve months.
Balance sheet is PRISTINE with $136.9 million of CASH balanced against $33.1 million of current liabilities and NO long-term liabilities. In addition, ZRAN has $61.5 million of other current assets reported.
Yahoo.com reports that ZRAN has 27.5 million shares outstanding with 27.0 million shares that float for a market cap of $645.3 million. No dividend is paid. The p/e is a bit steep at 70.78. There are 5.50 million shares out short representing 5.39 days of average trading.
Overall, I like this stock a LOT. In fact, I purchased shares yesterday!
I hope everyone has a GREAT weekend....drop me a line at firstname.lastname@example.org if you have any questions, comments, suggestions, or words of encouragement!
July 26, 2003 Trading transparency for 7/25/03
Yesterday, in the trading account, as you can see on the link to that page, we sold our 450 shares of E Loan Inc (EELN) and purchased 200 shares of Zoran Corp. (ZRAN). I will be discussing ZRAN in subsequent posts. Bob
July 26, 2003 "How are we doing?" looking back on week of June 16, 2003.
It is Saturday and it is a nice time to reflect on the first month's activity of our stock picks. Hopefully, as we maintain this site, we can give the stocks a little longer time period...and look at 6 month follow-ups!
June 16 found us recommending a stock that was soon to be acquired Whitman (WIX) that is thus no longer traded, oh well...and two interest sensitive stocks that as you know....now are under pressure as the interest rates appear to have bottomed at least temporarily.
American Home Mortgage (AHMH) was trading at $19.49 when it was posted on 6/16/03. It closed Friday at $19.10, a loss of $.39 or (2.0%) since the post.
We listed Dominion Homes (DHOM) on 6/16/03 trading at that time at $24.50. It closed Friday 6/25/03 at $24.29...down only $.21 since our post for a loss of (.9%).
Quest Diagnostic (DGX) was at $64.28 on 6/16 and is now trading at $48.78, a loss of $5.50 or (8.6%) since last month.
Factset Research (FDS) was selected on 6/17/03 at $40.39. Closing Friday at $44.00 this represents a gain of $3.61 or 8.9%.
Outback Steakhouse (OSI) was trading at $39.76 when it made our list. Friday OSI closed at $37.09, for a loss of $2.67 or (6.7%).
Tofu Time Inc. (TOF) traded at $2.82 when it was selected. TOF closed at $3.10 on 7/25/03 for a gain of $.28 or a gain of 9.9%.
LifeCell Corp (LIFC) was posted on 6/18/03 at $5.78. Currently trading at $4.99, this is a loss of $.79 or (13.7%).
Macrovision was selected on 6/18/03 at $21.15. Currently, MVSN closed at $22.69 on Friday for a gain of $1.54 or 7.3%.
Forest Labs was trading at $54.99 when we posted in on 6/20/03. Currently, FRX closed at $45.33, which was a loss of $9.46 (yikes Scott B. was right!)...representing a loss of (17.2%).
Laboratory Corp. (LH) was at $30.68 when we posted it on 6/20/03. Currently trading as of 7/25/03 at $31.20, this is a gain of $.54 or 1.8%.
Overall, a very dismal month for our picks of 6/16/03. We had 7 stocks with losses ranging from 17.2% to .9%, and 4 stocks with gains of 1.8% to 9.9%. Averaging this performance, we had an average loss of (2.73%) on the month from these stocks.
It will take longer to see how these stocks do over the intermediate future. But I have been stopped out on some of these stocks in my own trading portfolio and thus we limit our losses on issues to 8%.
Good luck investing and please stop by often and leave me a note at Bobsadviceforstocks@lycos.com or right here on the website if you have any questions, comments, or words of encouragement!
Thursday, 24 July 2003
July 24, 2003 Columbia Sportswear Company
O.K. this is the last one for the evening. Time for me to get off this computer and get some shut-eye. This is a company that most people have heard about...if only for all of their outdoors clothing and jackets. According to CNN.Money, Columbia "...is engaged in the design, manufacture, marketing and distribution of active outdoor apparel."
This stock is one of a couple of high-quality apparel stocks on this list. The other company is Coach which is in my trading portfolio and is listed elsewhere.
Columbia had a good day today, closing at $52.00 up $5.07 or 10.80% on the day. They ALSO reported their second quarter earnings results on 7/23/03. This Portland, Oregon, based company reported that global sales increased 22.5% to a record $152.1 million, adjusted for currency fluctuations, they still reported a 17.8 percent increase in sales. Net income increased 25.3 percent to $9.4 million or $.23/share vs $.19/share last year.
Most importantly, they RAISED their 2003 net income guidance to a 10-12% year-over year growth. Raising guidance is a very bullish indicator on a company.
Morningstar.com shows a pretty set of bar-graphs on the five year financials showing revenue growth from $427 million in 1998, $471 million in 1999, $615 million in 2000, $780 million in 2001, and $816 million in 2002.
Free cash flow has improved nicely from $31 million in 2000 to $29 million in 2001 and up to $131 million in 2002.
According to Morningstar website, this company is FLUSH WITH CASH...with $179.2 million in cash, way more than the current liabilities of $77.8 million and $27.3 million in long-term liabilities COMBINED. In addition....they have $261.6 million in OTHER current assets!
According to Yahoo.com 'profile', COLM has a market cap of $1.87 Billion with 39.9 million shares outstanding and ONLY 14.0 million shares that float!
The p/e is a very REASONABLE 17.14...especially with $4.50/share of cash....and as of 6/9/03, there were 1.61 million shares out short..about 3.47 days of average trading...so not that many shares to be covered in case of a short 'squeeze'.
I like this company a LOT and wear their jackets, etc. The numbers are nice, and even Peter Lynch style (God forbid!)....I know the product and like it. This would be a GREAT company to add to YOUR portfolio! I do not at this time own any shares nor do any members of my family....but I sure AM tempted!
Regards to all! Come and visit again soon!
(and tell your friends.)
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