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Thursday, 15 December 2005
The ***PODCAST*** on Satyam (SAY)
Hello Friends! Here is the ***PODCAST*** on Satyam (SAY).

Enjoy!

Bob


Posted by bobsadviceforstocks at 10:39 PM CST | Post Comment | Permalink
Listen to my ***PODCAST*** on "Happy Holidays" An Editorial
Hello Friends! I just created a ***PODCAST*** on "Happy Holidays" An Editorial.

Please enjoy and you can comment on this right here on the blog or email me at bobsadviceforstocks@lycos.com.

Bob


Posted by bobsadviceforstocks at 9:55 PM CST | Post Comment | View Comments (1) | Permalink
December 15, 2005 Satyam Computer Services Ltd (SAY)
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 do when I start looking for a stock to write about on this blog, I reviewed the list of top % gainers on the NYSE today. Satyam Computer Services Ltd. (SAY) closed at $36.11, up $1.04 or 2.97% on the day, making the list, in an otherwise unimpressive market environment today. I do not own any shares of this stock nor do I own any options.

According to the Yahoo "Profile" on Satyam:
"Satyam Computer Services Limited operates as a consulting and information technology (IT) services company. Its range of solutions include software development, business intelligence and data warehousing, consulting and enterprise solutions, embedded systems, engineering solutions, enterprise resources planning applications solutions, geographic information system solutions, enterprise infrastructure solutions, and enterprise storage solutions. The company also provides business process outsourcing; Internet access and hosting; and network and network-enabled services."
The company is headquartered in Hyderabad, India.

Let's take a closer look at this Indian software company that provides extensive outsourcing services.

First, the latest quarter. On October 20, 2005, SAY announced 2nd quarter 2006 results. Revenue grew 9.09% sequentially and 33.97% year over year. (many of these results are in Rupees!). The net profit grew 34.195 year over year, and beat guidance. In addition, the company raised revenue guidance in the same report. As I like to say, this is the "trifecta": increasing revenue, earnings, and raised guidance---about as good a result as one can get from a quarterly report!

And how about longer-term results? What does Morningstar.com say about this company? Reviewing the Morningstar.com "5-Yr Restated" financials, we can see that revenue grew from $310.3 million in 2001 to $793.6 million in the trailing twelve months (TTM). Earnings are noted to have increased from $.52/share in 2003 to $.96/share in the TTM. Free cash flow has also improved from $88 million in 2003 to $132 million in the TTM.

The balance sheet, as reported by Morningstar.com, looks solid with $129.8 milion in cash, which alone can cover both the $86.1 million in current liabilities and the $30.1 million in long-term liabilities combined. In addition, the company is reported to have $203.1 million in other current assets.

And valuation statistics? Checking Yahoo "Key Statistics" on Satyam, the company is a large cap stock with a market capitalization of $5.81 billion. The trailing p/e is moderately rich at 32.24, the forward p/e (fye 31-Mar-07) is estimated at 23.76, and with the rapid growth expected to continue, we have a PEG of only 1.13.

Looking at the Price/Sales ratio, for relative valuation within its industrial group of "Information Technology Services", we can see that SAY is very expensive with a Price/Sales ratio of 6.1 per the Fidelity eResearch website. This is followed by SRA International (SRX) at a distant 1.7, Affiliated Computer Services (ACS) at 1.5, Anteon International (ANT) at 1.4, Computer Sciences (CSC) at 0.6 and Electronic Data Services (EDS) at 0.6. Certainly, from the point of view of this particular parameter, the valuation of this stock appears quite rich.

Going back to Yahoo for some additional numbers, we can see that there are 160.98 million shares outstanding with 876,910 shares out short representing only 1.3 trading days of volume. This doesn't appear significant to me. In addition, Yahoo reports that the company pays a small dividend of $.23/share yielding 0.60%. No stock splits are reported.

And a chart? Looking at a "Point & Figure" chart on SAY from Stockcharts.com:



We can see that the stock was trading "sideways" between January, 2002, and August, 2003, when it broke through resistance at $12.00 and then moved sharply higher. Once again, the stock showed weakness, dropping from a high of $36/share down to $17/share, until breaking through a new resistance level at around $22 in August, 2004, and moved higher from there. More recently, the stock appears to be moving ahead strongly.

So what do I think? The stock is certainly showing strong fundamental and technical strength with a superb quarterly report which also raised guidance, a solid Morningstar.com "5-Yr Restated" financials, including growing free cash flow and a solid balance sheet. Valuation-wise, the PEG being just a bit over 1.0 is encouraging. However, the Price/Sales appears very rich at 6.1, way ahead of other stocks in the same business.

With the other performance figures, I still find that the rest of the information outweighs this one statistic. If I were to be purchasing stock, this one might be on my list. However, as you may know, I only buy additional positions when one of my own positions hits a sale point on a gain and I am under my maximum # of positions, which is at 25 posltions at this time.

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

Bob



Posted by bobsadviceforstocks at 5:29 PM CST | Post Comment | Permalink
"Happy Holidays" An Editorial
Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice.

I generally spend my time on this blog writing about stocks and investments. And I plan to continue to do so in the future. But from time to time, just as you may see a comment in the Wall Street Journal or the Investors Business Daily, I would like to share a word with you about a perhaps unrelated subject. And you are welcome to respond and add your comments to this discussion.

There has been a movement started in this country to defeat the "War Against Christmas" as Bill O'Reilly, John Gibson, Rush Limbaugh, Pat Robertson and others have been explaining. And what is this "War" been doing? Have there been shots fired? Churches burned? Pogroms against true believers?

No. The war is simply that some people and some businesses are using and encouraging their employees to say "Happy Holidays". Perhaps sometimes in preference to the more Christian "Merry Christmas".

The war includes broadsides against Christianity in the form of inserts in the newspapers advertising sales and toys and maybe even a "holiday tree" instead of a Christmas tree. Of course, the attack on Christmas also includes denial of Christmas in public schools, removal of Creches from the Town Square and making things in general more "politically correct."

Is Christmas in trouble? Do we need to rise to the front to defend this assault?

What most of these pundits try to gloss over to their readers and listeners is the most important fact that America is a multicultural nation. We have a majority of Christians, a large majority in fact, but we have a variety of religious denominations and many who choose not to believe anything in the religion department at all.

When businesses say "Happy Holidays", they are recognizing and indeed respecting the diversity of all of their customers. And that is the American tradition and the freedom that we cherish in America.

To respect diversity is to respect tolerance, inclusivity, and yes indeed to respect our love for our fellow man.

Insofar as the public space is concerned, keeping religion out of this arena protects both the public that may or may not share this particular message, preventing the "Establishment of Religion" prohibited in the First Amendment, but also protects that religion itself.

The development of "Happy Holidays" is indeed a watered-down version of "Merry Christmas" for most people. This is the risk of mixing government and religion as well. We get a secularized version of a religious message. A new religious message that may not make anyone happy. And then we will have each religious denomination lobbying to have its version included or made the exclusive view. So let us continue to work on separating church and state to protect both institutions.

So let us encourage the good will and love of this holiday season. Let us respect diversity and not create conflicts that are imaginary to fire up our political base.

Wishing all of my friends a very Merry Christmas, a Happy Hannukah, Happy Kwanzaa, Happy Holidays and Season's Greetings!

May you all have a wonderful 2006 and may it find us more at peace with each other, with other nations, spending money to find cures for disease, hunger, ignorance, and improving the quality of life for all of the inhabitants on this planet. And may we all seek ways to understand and respect each other, and not feel threatened when some may choose to be inclusive in their holiday greetings!

Bob


Posted by bobsadviceforstocks at 8:10 AM CST | Post Comment | View Comments (6) | Permalink
Wednesday, 14 December 2005
New ***PODCAST*** for Matrix Initiatives (MTXX)
Hello Friends! I just wanted to let you know that I have made a
***PODCAST*** on MTXX
.

Bob


Posted by bobsadviceforstocks at 10:44 PM CST | Post Comment | Permalink
"Revisiting a Stock Pick" Matrixx Initiatives (MTXX)
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 consult with your professional investment advisors prior to making any investment decisions based on information on this website.

Looking through the list of top % gainers on the NASDAQ, I came across Matrixx Initiatives (MTXX) an old stock pick of mine, that is trading at $20.63, up $1.52 or 7.95% on the day as I write. I first posted Matrixx on Stock Picks Bob's Advice on December 29, 2003, almost two years ago (!), when it was trading at $18.28. The stock actually declined significantly after my post, dropping to as low as $8 in July, 2004, before climbing back to its current level.

Matrixx has recently been plugged by Jim Cramer on Mad Money. While I do not always see 'eye to eye' with Jim in his approach, I respect his stock-picking talents, and if we can find a stock that is also on his list, all the more power to us I guess. However, this type of media attention on a stock will only add to its volatility. By the way, I do not own any shares of this stock nor do I have any options or other leveraged positions involving this company.

To get a description of this company, I like to refer to the Yahoo "Profile" on Matrixx Initiatives:
"Matrixx Initiatives, Inc. engages in the development, production, marketing, and sale of over-the-counter pharmaceutical products. The company, through its subsidiary, Zicam LLC, produces and markets various products, including Zicam Cold Remedy nasal gel, a homeopathic remedy that reduces the duration and severity of the common cold; two related nasal swab cold remedy products, Zicam Cold Remedy Swabs and Zicam Cold Remedy Swabs Kids Size; three homeopathic oral delivery cold remedy products...."
Going through my usual regimen of checking out a company, I first inspected the news on Matrixx, which revealed that the company was raising guidance for 2005! The company now expects revenue for 2005 to grow 45-50%, and fully diluted eps to improve 35-45%. This was an increase in the prior guidance which suggested revenue growth of 25-35% and a 10-20% increase in earnings. I always love to see guidance being raised; the stock price usually follows in the same direction!

And how about the latest quarter results? On October 25, 2005, MTXX reported 3rd quarter 2005 results. For the quarter ended September 30, 2005, revenue climbed 49% to $25.2 million, compared to $16.9 million in the year ago same period. Net income came in at $5.6 million, or $.58/diluted share, up from $3.7 million or $.39/diluted share in the third quarter of 2004. These were solid results imho!

And what about longer-term? For that I like to turn to the Morningstar.com "5-Yr Restated" financials on MTXX where we can see that revenue has steadily grown from $10.8 million in 2000 to $73.4 million in the trailing twelve months (TTM).

During this period, earnings have been a bit erratic, climbing to $1.36/share from $(.91) between 2000 and 2001, then dropping to a loww of $.35/share in 2003, before climbing once again to the current result of $.80/share in the TTM.

Free cash flow, while small, has been positive recently with $0 reported in 2002, improving to $4 million in 2003, $7 million in 2004, and $5 million in the TTM.

And the balance sheet? As reported by Morningstar, this appears solid with $7.3 million in cash and $35.2 million in other current assets; this is plenty to cover both the $12.9 million in current liabilities and the $.9 million in long-term liabilities.

And how about some valuation numbers? Looking at the Yahoo "Key Statistics" on Matrixx, we can see that this is a very small company, actually a small cap stock with a market capitalization of $195.12 million. The trailing p/e is a moderate 25.57, with a forward p/e of 21.88. The PEG is a very nice 0.73. Any time we can get a stock with a PEG under 1.0, that means that the company is growing at a faster rate than the indicated price/earnings ratio.

Looking at the Fidelity eResearch website, we find that MTXX has been assigned to the "Drug Delivery" industrial group. Within this group of stocks, with Alkermes (ALKS) at the top with a Price/Sales ratio of 14.4, followed by Nektar (NKTR) at 11.6, Elan (ELN) following next with a Price/Sales ratio of 11.1, Biovail (BVF) at 4.3, Matrixx (MTXX) at 2.5, and Andrx (ADRX) at 1.2. Thus, the stock is reasonably priced by this statistic as well.

Back to Yahoo! This is a small company with only 9.59 million shares outstanding. Currently (11/10/05) there are 601,820 shares out short representing 6.805 of the float or 7.3 trading days of volume. Thus, this is significant using my 3 day short ratio cut-off of significance.

No dividend is paid and no stock splits are reported on Yahoo.

What about a chart? Taking a look at a "Point & Figure" chart on MTXX:


We can see that this stock has been slowly moving higher since mid-2001 when this chart starts. I say this due to the subtle pattern of higher lows and hnigher highs. Since July, 2005, this stock has broken out into higher priced territory at the $21 level. We should note that a similar pattern in early 2004 resulted in the stock price breaking back down to a low of $7 in July, 2004. Overall, the chart appears to be mildly optimistic.

So what do I think? Well I like this stock. I liked it back in 2003 (although the price declined after my pick; the situation continues to look solid. Let's review: first of all, this is a Cramer pick so that adds interest from all of his viewers, the company raised guidance, reported a solid latest quarter, has a five year history of fairly strong revenue and earnings growth, free cash flow is positive and steady, the balance sheet looks nice, and valuation, both with a PEG under 1.0, and a Price/Sales near the lowest in its group, appears reasonable. What is there not to like?

Thanks again for stopping by! Please be sure to check with your professional investment advisors! If you have any comments or questions, please feel free to leave them right on the blog or email me at bobsadviceforstocks@lycos.com.

Bob







Posted by bobsadviceforstocks at 12:55 PM CST | Post Comment | View Comments (2) | Permalink
Sunday, 11 December 2005
New ***PODCAST for the Weekend Review: PARL, WIT, and WWW
Hello Friends! I have posted another podcast for the latest blog post. Click CLICK HERE FOR MY PODCAST.

Bob


Posted by bobsadviceforstocks at 10:19 AM CST | Post Comment | Permalink
Updated: Sunday, 11 December 2005 3:43 PM CST
"Looking Back A Year" A review of stock picks from the week of October 4, 2004





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.

One of the things I like to do is to think about investments and in particular to pick stocks that seem to have the qualities that might lead to future price appreciation. In order to find out whether the selections are successful, I have taken to reviewing past stock selections on a rolling 52 (now about 60) week trailing basis. That is, I look at stocks from a bit more than a year ago, moving ahead another week each review, and see how they have turned out. Of course, this review depends on what is called a "buy and hold" strategy. In actuality, I sell losing stocks completely and quickly on price break-downs, and I sell my gaining stocks slowly and partially at targeted appreciation levels. However, for the sake of this review, this analysis suffices.

On October 4, 2004, I Posted WIPRO (WIT) on Stock Picks Bob's Advice when it was trading at $20.86. WIT split 2:1 on 9/2/05, making my effective pick price actually $10.43. WIT closed at $11.18 on 12/9/05, giving me a $.75/share gain or 7.2% appreciation since posting.

On October 18, 2005, Wipro reported 2nd quarter 2006 results. For the quarter ended September 30, 2005, revenue climbed 26% over the prior year and net income was up 23%.

On October 6, 2004, I posted Wolverine World Wide (WWW) on Stock Picks Bob's Advice when it was trading at $28.90. WWW split 3:2 on 2/2/05, so my effective pick price was actually $28.90 x 2/3 = $19.27. WWW closed at $22.52 on 12/9/05, for a gain of $3.25 or 16.9%.

On October 5, 2005, WWW reported 3rd quarter 2005 results. For the quarter ended September 10, 2005, revenue came in at $279.1 million, up 7% from the prior year's $260.9 million. Earnings per share came in at $.42, up from $.37/share the prior year, a 13.5% increase. The company also raised guidance. As reported in the same news story, from Timothy J. O'Donovan, the company's Chairman and CEO:
"With strong third quarter results and an order backlog increase of approximately 19 percent, we are increasing the Company's 2005 earnings per share estimate. We now expect earnings per share to range from $1.26 to $1.28. We have also focused our 2005 revenue range from $1.050 to $1.060 billion. The earnings per share estimate does not include any impact from the potential repatriation of foreign earnings under the American Jobs Creation Act of 2004 which the Company is currently evaluating."
A strong earnings report with an increase in guidance from the CEO is usually very bullish for a stock price!

Finally, on October 7, 2004, I posted Parlux Fragrances (PARL) on Stock Picks Bob's Advice when it was trading at $14.95. PARL has had a very nice "aroma" for this website, closing at $30.84 on 12/9/05, for a gain of $15.89 or 106.3% since posting.

This stock gets a BIG "thumbs-up" on the latest earnings report! On November 14, 2005, PARL announced 2nd quarter 2006 results. For the quarter ended September 30, 2005, net sales came in at $39.3 million, up 73% from $22.7 million last year. Net income was $4.4 million, up from $2.4 million, an 87% increase (!). Earnings per share grew 83% on a diluted basis from $.23/share last year to $.42/share in this year's quarter. These were very strong results!

So how did we do a year later in this week's group of stock picks? Fabulous! I picked three stocks that week and they have since moved higher in price ranging from 7.2% to 106.3% for an average price appreciation of 43.47%. Most of that is of course from the PARLUX stock. Unfortunately, I don't own any shares of any of these stocks but my stock club does, at my last meeting at least, own a few shares of WIPRO.

Please remember that past performance is never a guarantee of future performance, that I am an amateur investor, and that you should check with your professional investment advisors prior to making any investment decisions based on information on this website!

Thanks again for visiting! If you have any questions or comments, please feel free to write me a note at bobsadviceforstocks@lycos.com or leave your comments on the blog.

Bob









Posted by bobsadviceforstocks at 9:31 AM CST | Post Comment | Permalink
Saturday, 10 December 2005
New ***PODCAST*** for Weekend Trading Portfolio Review: ResMed (RMD)
Hello Friend! I just wanted to update my newest ***PODCAST on Weekend Trading Portfolio Review: ResMed (RMD)***.

If you have any comments or questions, please feel free to email me at bobsadviceforstocks@lycos.com.

Bob


Posted by bobsadviceforstocks at 7:12 PM CST | Post Comment | Permalink
Friday, 9 December 2005
"Weekend Trading Portfolio Analysis" ResMed (RMD)
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.


One of my goals on this blog is to allow you to understand investing from my perspective. That includes updates regarding my positions, my trading and my current thoughts on the investments that make up my portfolio. Several months ago, I started adding a weekly look at a single holding in my portfolio, working through the holdings alphabetically. Last week I discussed Quality Systems (QSII) on Stock Picks Bob's Advice; next alphabetically is ResMed (RMD).


On February 9, 2005, I purchased 120 shares of ResMed (RMD) in my trading account at $59.67/share. On September 27, 2005, I sold 30 shares of ResMed netting $77.64/share for a gain of $17.97 or 30.1%. This was 1/4 of my shares (as I like to point out, I have reduced my sales of shares to 1/6th positions) at my first "targeted sale price". RMD subsequently, on October 3, 2005, had a 2:1 split, making my effective purchase price actually $59.67/2 = $29.84. RMD closed 12/9/05 at $40.21, giving me an unrealized gain of $10.37 or 34.8% over my purchase price.


When will I be selling next? On the downside, since I sold a portion at the 30% gain level, I have moved my "mental stop" up to break even or $29.84/share. On the upside, the next point to sell 1/6th of my shares is at a 60% gain or 1.6 x $29.84 = $47.74.


Let's take an updated look at this company and see if it still looks like an attractive investment!


First of all, let's review the company's business. According to the Yahoo "Profile" on ResMed:
ResMed, Inc., through its subsidiaries, engages in the design, manufacture, and marketing of equipment for the diagnosis and treatment of sleep-disordered breathing and other respiratory disorders, including obstructive sleep apnea. Its products include airflow generators; diagnostic products; mask systems; headgear; and other accessories, including humidifiers, cold passover humidifiers, carry bags, breathing circuits, Twister remote, the Aero-Click connection system, and the AeroFix headgear.
And what of the latest quarter? On November 2, 2005, ResMed announced earnings results for the quarter ended September 30, 2005. Revenue came in at $127.1 million, a 45% increase over the same quarter last year. Even without acquisition related revenue, growth in revenue still amounted to a strong 30% growth. Net income came in at $16.4 million, up from $13.9 million last year. Diluted earnings per share amounted to $.23/share, up from $.20/share last year. The reported earnings included restructuring and amortization of "acquired intangibles" without which, earnings worked out to $.28/share. Still, even with this, earnings were up 15% for the quarter.


And what about Morningstar? Looking at the Morningstar.com "5-Yr Restated" financials on RMD, we can see the steady revenue growth from $155.2 million in 2001 to $464.9 million in the trailing twelve months (TTM). Earnings also show an uninterrupted pattern of steady growth from $.18/share in 2001 to $.94/share in the TTM.


A negative is the $(1) million in free cash flow due to a large increase in caital spending in the last twelve months. I shall need to continue monitoring this, although I do not think this is significant in the long run.


The balance sheet is solid with $134.2 million in cash and $236.4 million in other current assets, balanced against $230.3 million in current liabilities and $80.8 million in long-term liabilities.


And the chart? Looking at a "Point & Figure" chart on RMD from Stockcharts.com, we can see that since breaking through resistance in June, 2003, at the $21 level, the stock has been moving strongly higher. I don't think the chart looks at all negative, in fact, the stock is moving into new high territory.





Thus, the stock still looks like a great investment to me! The recent quarter was solid, the Morningstar.com report is essentially intact (except for the negative free cash flow which deserves attention), the balance sheet looks nice, and the chart looks strong.

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.

Bob




Posted by bobsadviceforstocks at 10:54 PM CST | Post Comment | Permalink
Updated: Saturday, 10 December 2005 6:21 PM CST

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