Stock Picks Bob's Advice
Monday, 20 October 2003
October 20, 2003 Varian Medical Systems, Inc. (VAR)
Wow...this is turning out to be a good day for picks and a lousy day to get some lunch! I promise this is it until at least this afternoon....it is after 12 here so I guess that this afternoon is now....anyway, Varian Medical Systems, Inc. (VAR), has a great track record and deserves to be in our list of stocks. According to money.cnn.com, Varian "...is engaged in the design and production of equipment for treating cancer with radiation, x-ray tubes for original equipment manufacturers, replacement x-ray tubes and imaging subsystems."
VAR is having a nice day today trading at $60.78 up $2.96 on the day or 5.12% as I write. What pushed the stock up today, was a management advisory that earnings and revenue should be growing smartly in the fourth quarter. As reported by Business Wire and picked up by Yahoo.com, Varian announced that the upcoming fourth quarter earnings should be up by 26-27% over the $.48/diluted share reported in the fourth quarter of 2002. Sales for the fourth quarter are expected to grow by 16% over the corresponding period in 2002.
This announcement today is NOT an isolated event. As recorded on Morningstar.com, VAR has been producing outstanding results for some time. In 1998, revenue was $541.5 million, this grew to $590.4 million in 1999, $689.7 million in 2000, $773.6 million in 2001, $873.1 million in 2002, and $999.7 million in the trailing twelve months.
Earnings during this time have grown from $.43/share in 1998 to $1.71 in the trailing twelve months. Unfortunately, VAR stopped paying a dividend after 1999.
Free Cash Flow has also shown a significant and consistent improvement: $65 million in 2000, $102 million in 2001, $130 million in 2002, and $182 million in the trailing twelve months.
The Balance Sheet is healthy with $307.8 million in cash and $466.9 million in other current assets. This is more than enough to cover the $386.5 million in current liabilities and the only $77.7 million in long-term debt.
Looking at Yahoo.com for some value measures, we find that the market cap is $4.16 billion currently, the trailing p/e is a bit rich at 33.81, with a forward p/e based on fiscal year 2004 of 27.02. The PEG ratio is 1.40 and the price/sales is 3.95.
There are 68.28 million shares outstanding with 67.80 million of them that float. There are 1.85 million shares out short as of 9/8/03 representing 3.217 trading days. With the current price rise, we may see a bit of a 'squeeze' here of the shorts. No dividend is paid, and the last stock split was a 2:1 split in January, 2002.
This is another GREAT earnings/price momentum stock. The p/e isn't really cheap however but the PEG ratio isn't bad. The company is doing great, and if it continues its outstanding performance, I anticipate the stock price to follow along with it.
Thanks again for stopping by! I hope all of this chatter is helpful to you. If you have any questions, please feel free to post them here or email me at firstname.lastname@example.org
October 20, 2003 Renal Care Group (RCI)
It's lunchtime and I really should be heading out to get a bite to eat, but scanning the lists again I have another one for you. (It is interesting to see some of our other picks like CRDN, and BLTI make the lists today again!). Renal Care Group, Inc., (RCI), is in a business similar to another stock I have examined and have currently in my trading account...Davita (DVA). I do not have any shares of RCI. Currently, RCI is trading at $36.31, up $1.06 on the day or 3.01%. According to money.cnn.com, Renal Care Group, Inc. "...is a specialized provider of nephrology services to patients with kidney disease. The Company provides dialysis and ancillary services to approximately 20,500 patients."
On July 29, 2003, on Business Wire, as reported by Yahoo, Renal Care group announced results for the second quarter ended June 30, 2003. For the quarter, revenues increased 11.2% to $247.1 million compared to $222.2 million in the same period in 2002. Net income for the quarter rose 14% to $25.8 million from $22.6 million in 2002. On a per share basis, this was an increase of 18.2% to $.52 compared to $.44/share last year. All-in-all, this was a very nice quarter for RCI.
Morningstar.com shows a very nice picture: revenues have grown from $441.1 millin in 1998, $541.9 million in 1999, $622.6 million in 2000, $755.1 million in 2001, $903.4 million in 2002 and $963.7 million in the trailing twelve months.
During that same period, earnings per share have grown from $.79/share in 1998 to $1.92/share in the trailing twelve months.
Free cash flow has been improving nicely from $44 million in 2000, $68 million in 2001, $107 million in 2002 and $101 million in the trailing twelve months. Looking at the balance sheet, we find $83.3 million in cash and $211.5 million in other current assets, more than enough to cover the $134.0 million in current liabilities and $58.4 million in long-term liabilities.
Looking at Yahoo.com, we find that the trailing p/e is a reasonable 18.36; forward p/e...looking at fye 31-Dec-04...is even better at 14.87. The PEG ratio is nice at 1.05, and pric/sales...is very nice at 1.80. Currently there are 49.20 million shares outstanding with 48.10 million of them that float. As of 9/8/03, there were 1.32 million shares out short representing 8.449 trading days...with no apparent BAD news that I can see, this is really a lot of shares out short on a stock that is reasonably priced and may very well surprise on the upside. This short interest is BULLISH for this stock. No dividends are paid.
I like this stock a lot as well. Darn, I cannot buy EVERYTHING I like. You know, there ARE limits on Margin!
Thanks for stopping by! If you have any questions or comments, please feel free to post them right here or drop me a line at email@example.com
October 20, 2003 SFBC International (SFCC)
Hello Friends! This is another stock that I jumped the gun on and bought in my trading account earlier this morning after unloading ENDP with a 20% loss. Yikes. Anyhow, I hope this makes up for that one.
SFBC International (SFCC) is currently trading at $34.60, up $2.05 or 6.30% on the day. This stock appears to be in the same business as PPDI, another recent purchase in the trading account. According to money.cnn.com, SFCC "...is a contract research organization that conducts clinical trials and provides related services to pharmaceutical and biotechnology companies and other contract research organizations." What drove the stock up today, was an outstanding earnings report.
This morning, 10/20/03, SFCC reported results for the third quarter of 2003 ended September 30, 2003. Revenue was $29.1 million, an increase of 66.3% compared to $17.5 million for the same quarter last year. On a per share basis, this was $.42 in the third quarter of 2003 compared to $.30 in the same quarter in 2002, an increase of 40.0%.
Morningstar.com shows a beautiful picture of revenue growth from $5.9 million in 1998, $8.3 million in 1999, $19.7 million in 2000, $31.5 million in 2001 and $64.7 million in 2002. For 2003, if we extrapolate the current quarter, we would get over $100 million for the year.
Earnings per share have grown from $.21/share in 1998 to $1.05/share in the trailing twelve months.
Free cash flow has not been quite as impressive with ($1) million in 2000, $1 million in 2001, and $0 million in 2002.
Looking at the balance sheet we find $8.8 million in cash per Morningstar with $26.6 million in other current assets. Current liabilities are $14.6 million, with $2.8 million in long-term debt. Clearly the assets outweigh the liabilities.
Switching over to Yahoo for some statistics, we find that the Market Cap is $268.55 million with a trailing p/e of 26.90. The PEG ratio shows that this is a great value at 0.84. Price/sales a little rich at 3.10.
There are only 7.77 million shares outstanding with 6.00 million of them that float. There are 351,000 shares out short as of 9/8/03 representing 1.773 trading days. No dividend is paid.
I like this stock a lot. In fact I like it so much I BOUGHT it! 200 shares this morning. The growth reported is phenomenal...even though much appears to be related to acquisitions. The p/e is cheap for this growth (26.90) and the PEG ratio is under 1.0. What else could a guy want? Anyhow, have a great day and a great week.
If you have any questions, comments, or words of encouragement, please feel free to post them right HERE under "no comments"...just click and it should allow you to leave your own thoughts. Otherwise, feel free to email me at firstname.lastname@example.org!
"Trading transparency" SFCC
Scanning the stocks this morning, I came across SFCC which had a blow-out quarter. They are in a similar field to PPDI which is pharmaceutical testing. I purchased 200 shares at $34.629 in my trading account this morning. Full report to follow.
"Trading Transparency" ENDP
ENDP took a big dip today and I sold my 250 shares out of my trading account, unfortunately with a 20% loss. Stock was at about a 6% loss and then took a swoon this morning. It is now history!
Saturday, 18 October 2003
"How are we doing?" A look back on the week of September 1, 2003
The week of September 1, 2003, was a quiet one for this website. During that week we made three selections: Sohu.com (SOHU)at $32.47 on September 2, 2003, Take-two Interactive (TTWO) at $35.75 on September 3, 2003, and Interpore Int'l. (BONZ) at $17.50 (the price I paid for the 300 shares I bought the same day as I did not list a price that day on the pick!).
SOHU closed 10/17/03 at $35.20. for a gain of $2.73 or a gain of 8.4%, TTWO closed 10/17/03 at $39.34 for a gain of $3.59 or a gain of 10.0% over the period. We didn't have as much luck with BONZ which closed on 10/17/03 at $12.00 for a loss of ($5.50) or a loss of (31.4%). Averaging these three selections, we have an average loss of (4.3%) during this period. In real life, we stopped out of our actual purchase of BONZ with a 9% loss. This would also have assisted the performance of these three! Shows the importance of limiting losses doesn't it?
Have a great weekend everyone! Thanks again for stopping by and if you have any questions, comments, or words of encouragement please leave them right here (post under the comments where it says something like "no comments"...) or email me at email@example.com .
Friday, 17 October 2003
October 17, 2003 Image Sensing Systems (ISNS)
The market is down and the trading portfolio is holding up fairly well due to fairly nice performances in Merit Medical (MMSI) and Closure Medical (CLSR) which both had excellent earnings reported...or anticipated in regards to Merit.
Looking at the largest % movers today, the pickings were slim as one might say. I did come across another of those 'Twin Cities' high tech firms....Image Sensing Systems (ISNS). I never thought of the Minneapolis area as a hotbed of high tech innovators....but there are quite a few of these little firms that make our lists.
According to money.cnn.com, Image Sensing Systems (ISNS), a company that I own NO shares of, "...markets and develops products using video image processing technology for use in advanced traffic management systems and traffic data collection." This is a very small company.
On July 22, 2003, ISNS reported results for the second quarter ended June 30, 2003. They had a very nice quarter with revenue growth of 16% to $2.59 million from $2.23 million last year. Net income was $827,000 ($.24/fully diluted share), vs $336,000 ($.11/diluted share) an increase of 221% (!).
Morningstar.com shows that this small company has been experiencing steady growth with revenue growing from $3 million in 1998, $5 million in 1999, $6 million in 2000, $7 million in 2001 and $8 million in 2002.
Earnings/share have grown, with periods of losses in 2000 and 2001, from $.08 in 1998 to $.57 in the trailing twelve months.
At the same time, free cash flow which was $0 in 2000, and ($1) million in 2001, increased to $2 million in 2002 and $3 million in the trailing twelve months.
Balance-sheet-wise, ISNS has $3.3 million in cash and $2.6 million in other current assets; more than enough to cover the $1.4 million in current liabilities and $0.1 million in long-term liabilities.
The trailing p/e is reasonable at 16.79, price/sales a bit rich at 3.66. The market cap is a tiny $32.10 million, one of the SMALLEST on this website, with only 3.21 million shares outstanding and 1.90 million of them that float. There are only 3,000 shares out short, representing about .167 days of average trading volume. The last stock split was in April, 2000, when ISNS split 6 for 5.
Except for the tiny size and small daily volume, this is a BEAUTIFUL microcap stock with excellent revenue growth, earnings growth, free cash flow improvement, balance sheet, and a reasonable p/e.
If I can find some cash, I will be buying some shares...but then again there is always the nagging problem of MARGIN....:). Thanks for stopping by!
10/18/03...p.s. I just noticed I didn't post the price on this issue. The stock closed on 10/17/03 at $10.00, up $.43 on the day for a gain of 4.49%. You would think I would REMEMBER to list the price....I mean after 200 posts! Have a great weekend everyone!
Posted by bobsadviceforstocks at 10:25 AM CDT
Updated: Saturday, 18 October 2003 8:50 AM CDT
Thursday, 16 October 2003
October 16, 2003 Pharmaceutical Product Development (PPDI)
Hello Friends! Thanks for stopping by. I saw this stock earlier today and as I listed in the previous post picked up 200 shares at $29.22. Pharmaceutical Product Development (PPDI) had a nice day today closing at $29.16 ($.06 below what I paid....so in case you would like to get in...I am not ahead of you!), up $3.40 on the day or 13.20%. The stock was up today, as are so many issues, on news of an earnings release that came out yesterday after the market closed.
As reported on Yahoo.com from PRNewswire-FirstCall, PPDI reported results for its third quarter ended September 30, 2003. Net revenue for the quarter excluding "reimbursed out-of-pockets" of $12.9 million was $166.6 million, an increase of 14% over the same quarter in 2002. Net income, excluding the gain on the sale of assets was $34.8 million, an increase of 25% over the same period last year. This worked out to $.41/share, a 24% increase over the 2002 3rd quarter results.
Looking at Morningstar.com, we find overall a very nice report: Revenue growth from $246.5 million in 1998 increased each year: $302.5 million in 1999, $372.7 million in 2000, $460.6 million in 2001, $608.7 million in 2002 and $681.4 million in the trailing twelve months.
Earnings per share have also increased each year: $.44 in 1998, $.57 in 1999, $.64 in 2000, $.94 in 2001, $.72 (oops the hiccup) in 2002, and $1.37 in the trailing twelve months.
Recently, free cash flow has been on the rise: $40 million in 2000, $59 million in 2001, $69 million in 2002, and $72 million in the trailing twelve months.
And how about the balance sheet? As reported on Morningstar.com, PPDI has $198.1 million in cash, $248.0 million in other current assets which is more than enough to cover the $212.5 million in current liabilities and the small $21.5 million in long-term debt.
PPDI has a market cap of $1.63 Billion per Yahoo. The trailing p/e is a very reasonable 18.80 with the forward p/e (looking at fye 31-Dec-04) is only 13.42. The PEG ratio is downright cheap at 0.79, and price/sales isn't too bad either at 2.11.
Yahoo reports that there are 55.92 million shares outstanding and 48.10 million of them that float. As of 9/8/03, there were 1.12 million shares out short representing 2.667 days of trading volume. Last month there were 1.58 million shares out short, so a third of the short sellers have "folded." No dividend is paid. The last stock-split was a 2:1 in May of 2001.
As you can tell, I like this stock a lot. In fact I like it SO MUCH that I BOUGHT 200 shares today :). I hope it was a good move. I sure think the stock looks great on multiple fronts: recent quarter solid, last 5 years solid revenue/earnings growth, increasing free cash flow last several years, clean balance sheet with current assets easily covering both current liabilities and long-term debt, p/e at reasonable level, with PEG ratio under 1.0. Price/sales not bad at 2.11. Anyhow, that's enough of my plug. I DO own some shares of this...and am now down 6 cents.
Thanks for stopping by! If you have any questions, comments, or words of encouragement, please feel free to leave your messages right here on the BLOG or you can email me at firstname.lastname@example.org
"Trading Transparency" Sell of COH and purchase of PPDI
Seeing Coach (COH)near a sell point (I try to sell about 1/4 of shares at 30, 60, 90% stock price appreciation, essentially maintaining the original investment), I sold 40 shares of COH today at $31.22, (I had acquired my shares at a cost basis of $16.66 adjusted for a split on 2/25/03). Having again sold several portions of shares, I added a new position, 200 shares of Pharmaceutical Product Development Inc. (PPDI) at $29.22 this morning. I will try to post a full report on PPDI a little later today!
Posted by bobsadviceforstocks at 12:47 PM CDT
Updated: Thursday, 16 October 2003 12:53 PM CDT
Wednesday, 15 October 2003
October 15, 2003 "Trading Transparency"
Stocks were up nicely and noticed that some of our stocks were near sell points, so I pealed off a few shares of some of our positions in my trading account: Davita (DVA) sold 50 shares of DVA at $34.61 (our initial purchase of 200 shares was at $23.15 on 5/5/03), Hibbett (HIBB) sold 40 shares at $27.02, (Initial purchas on 2/7/03 at $14.83, and additional shares on 3/6/03 at $14.57), sold 75 shares of Rite Aid (RAD) at $6.04 (acquired shares at cost of $2.62 on 12/19/02). I then scanned the list of stocks on the move, and with a good earnings report, purchased for the first time 150 shares of St Jude Medical (STJ), our very FIRST stock pick on this website...and the first time I have owned shares...at $57.74.
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