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 my favorite things about writing this blog is corresponding with fellow investors who have questions about investments and 'what to do...'.  I have to emphasize that my advice should always be taken with a grain of salt.  That is, remember that I am an amateur at all of this.  I am not qualified to advise anyone regarding their own particular investments and am not trying to do so.  I can only respond in telling people what I do in those situations.  That doesn't mean that my response is correct for them; this is just to help all of us think about investing.  My suggestion to consult with professional investment advisers holds.  

That being said, I did receive a nice letter from Raj who had a good question for me.  Raj wrote: 

"Hi Bob,

Thanks for the great work you been doing in helping
new players in market. I am one such new player who is
losing a lot of money day by day on SYNL. I bought the
stock at 37$(100 shares) at the end of june and since
then its been following a down trend and i being a new
player was ignorant and added 75 more shares at
34$/share. Today it hit a low of 21.5/share and i am
at loss of 2500 $ totally. What do you suggest, should
i dispose it off or do you think it still would yield
something fruitful. Any help in this regard would be
greatly appreciated

Regards
Raj"

Raj, thanks so much for writing!  The market has been very rough on investors, and I am sure there are many people who are facing this same problem every day.  What to do with a stock that declines in a never-ending pattern.  As I wrote above, I cannot tell you what is write with your particular situation.  I don't know all of the facts and besides, I am an amateur myself.  But let me tell you about what I do in similar situations.

After many years facing similar trading near-disasters like this, I have adopted, in a very disciplined fashion, my first rule of investing which is to limit your losses.  Let me again repeat the first rule of investing, just in case my point has not been made.  When I buy a stock, I set my maximum tolerated loss ahead of time (I do this with a 'mental' stop, but you could actually enter a real stop if your brokerage allows this.)  For me, after a first purchase of an equity, I sell the stock, regardless of my own affection or interest in the equity, if the stock sells down or passes an 8% loss.

In your particular case, with a cost of $37, I would sell if the stock dropped to 92% of that level or .92 x $.37 = $34.04.  I would not be owning the stock anymore at the $21.50 level.  So when you ask me what to do at this level, I really don't have much recent experience with stocks losing so much recently.  Because I would have and do sell those stocks that decline.  By the way, as I write, SYNL is trading at $22.18, up $.41 or 1.88% in an otherwise weak market.

If I were owning a stock that declined, I would need to decide whether I wished to continue holding that stock if the facts were favorable, and if I hadn't done so, I would then set a stop of 8% under the current level and sell the stock at that price if it declined further.  All of these losses must stop!  

You probably really like this stock.  Maybe I could say you love the stock because of what you have read and what you believe the company's prospects are.  I haven't looked yet but shall in a moment review some of those facts.  It doesn't matter.  I strongly believe that managing your holdings is equally important to the process of a successful investment strategy as is picking the stocks to put into your portfolio.  That is why, over and over again, I explain how I sell my losing stocks quickly and completely and my appreciating stocks slowly and partially.  I do not know if this strategy works or is right for anyone else anyhow.  But it seems to be working for me.

In addition, after selling a stock at a loss, it is important to avoid compounding that loss by immediately looking for a new stock to buy.  And you guessed it, I did that many times, limited my losses then went and bought a new holding only to lose some more money.  

Recently, I have been looking for the signals to help me make those investment decisions.  I use sales of my own shares at appreciation points as a source of a 'good news' indicator that allows me to put a new position into my portfolio. Sales on the downside or on otherwise bad news, means that I should be 'sitting on my hands' as I like to explain.

Briefly about Synalloy (SYNL), checking the Morningstar.com "5-Yr Restated" financials, thinks look okay in the earnings department and revenue growth, except that the company in 2006 and the TTM has been cash flow negative. Otherwise, on July 19, 2007, the company reported a strong second quarter 2007 result.  Sales climbed to $43.9 million from $36.7 million in the year ago same period.  Diluted earnings more than doubled to $.50/share from $.24/share. However, in light of the cash flow being negative, the best I could do with this stock is

SYNALLOY (SYNL) IS RATED A HOLD

I am not sure if I answered your question.  I hope so.  And what is right for me may not be right for you.  It is just that I have found something that works for me.  You need to establish your own trading rules and stick to them.  That, at least, is my take on all of this.

Good luck!  Keep me posted and thanks for writing!

Bob 

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 check with your professional investment advisers prior to making any investment decisions based on information on this website.

A few moments ago I spent that nickel that was burning that hole in my pocket :).  Checking the top % gainers lists,  I saw that an old favorite of mine, VCA Antech (WOOF), a stock that I had owned earlier this year and actually had sold at a loss, was behaving well.  It was, you could say, barking for attention :).  (Excuse the pun so early in the morning).  But the stock, as I write, is trading at $40.99, up $4.38 or 11.96% on the day.  I went ahead and purchased 210 shares at $40.986.  (I purchase in these odd numbers so that they are divisible by 7.  It isn't superstitious, but it is easier to do the division :)).  

WOOF had announced 2nd quarter 2007 results after the close of trading yesterday.  Revenue climbed 17.7% to $300.3 million, net income climbed 21.3% to $35.8 million, and diluted eps was up 20.0% to $.42/share.  The Morningstar.com "5-Yr Restated" financials appear intact although earnings have been a bit volatile.  For all of these reasons,

VCA ANTECH (WOOF) IS RATED A BUY

and buy is exactly what I did!  Wish me luck!

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

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.

A few moments ago I sold my remaining 108 shares of Kyphon at $67.9863.  These shares were originally purchased 5/20/05 at a cost basis of $29.21.  Thus, I had a gain of $38.77/share or 132.7% since purchase.

I sold all of my remaining shares, instead of my usual 1/7th of my holding as the stock moved sharply higher today (currently it is trading at $67.86, up $14.1818 or 26.42% on the day as I write) due to the announcement of an impending acquisition of the company by Medtronic (MDT) at $71/share.  I could probably have hung on to get the last few points, but the risk factor is that the acquisition doesn't go through.  My goal in investing is to be involved in stocks with capital appreciation due to their internal growth and price momentum not by making money by arbitrage.

On top of this, the company announced 2nd quarter 2007 results today which were strong with sales up 43% and net up 16%. 

In any case, I am back to 19 positions and with this sale of a position on 'good news' I am 'entitled' to add a position #20.  So I shall keep you posted as I am on the 'look-out' again, and that nickel is burning a hole in my pocket :).

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 

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.

Earlier today I posted about how I purchased 105 shares of National Oilwell Varco (NOV) at $117.92.  This purchase was enabled by my partial sale of Kyphon (KYPH) yesterday which, since I was below my maximum of 20 positions, 'entitled' me to add a new position to bring my portfolio up to the maximum of 20 positions that I recently established (from my prior portfolio size of 25 positions).  NOV closed at $123.89, up $11.56 or 10.29% on the day.

Let's take a closer lok at this company and I will share with you why, as I wrote previously,

NATIONAL OILWELL VARCO (NOV) IS RATED A BUY

What exactly does this company do?

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

"...engages in the design, construction, manufacture, and sale of systems, components, and products to the oil and gas industry worldwide. It operates in three segments: Rig Technology, Petroleum Services & Supplies, and Distribution Services."

How did they do in the latest quarter?

As we have seen in many of the stocks written up on this blog, it was the announcement of 2nd quarter 2007 results this morning hat pushed the stock higher early today.  Revenue for the quarter increased 44% to $2.38 billion from $1.66 billion during the same period last year.  Net income increased to $318.5 million or $1.79/share, up from $147.9 million or $.84/share last year.  This was more than a 100% increase in earnings year over year!

In addition, the backlog increased to $7.2 billion compared with the $6.4 billion in backlog the previous quarter.

As reported, this result was $.25/share higher than the $1.54/share expected by analysts.  The revenue came in at $2.38 billion while analysts had been expecting $2.2 billion. 

How about longer-term results?

Reviewing the Morningstar.com "5-Yr Restated" financials on National Oilwell, we can see that revenue has steadily increased from $1.5 billion in 2002 to $7.0 billion in 2006 and $7.7 billion in the trailing twelve months (TTM).

Earnings have also increased, although they dipped from $1.30 in 2004 to $.60/share in 2005, from $.80/share in 2002 to $1/40/share in 2006 and $4.70/share in the TTM.

The company has increased its float from 86 million in 2004 to 175 million in the TTM.  During the same period, revenue more than tripled while the shares increased by 100%.

Free cash flow has also been a little erratic, dropping from $127 million in 2004 to a negative $(28) million in 2005 than rebounding strongly to $1.01 billion in 2006 and $1.18 billion in the TTM.

The balance sheet appears solid with $1.2 billion in cash and $4.3 billion in other current assets.  Compared to the current liabilities of $3.0 billion, the current ratio works out to a 'healthy' 1.84.

What about some valuation numbers?

Reviewing the Yahoo "Key Statistics" on National Oilwell Varco, we find that this is a large cap stock with a market capitalization of $22.00 billion.  The trailing p/e is a moderate 26.13 and the forward p/e (fye 31-Dec-08) is estimated at a more reasonable 16.67.  The PEG ratio (5 yr expected) is estimated at 0.63, well below my acceptable level of 1.0 to 1.5 in terms of valuation relative to growth.

According to the Fidelity.com eresearch website, valuation is also reasonabl in terms of Price/Sales.  NOV comes in with a Price/Sales (TTM) of 2.57 compared to an industry average of 3.88 per Fidelity.  However, the Retun on Equity (ROE) (TTM) is below the industry average at 17.01% compared ot the industry average of 30.61%.  

Finishing up with Yahoo we can see that there are 177.61 million shares outstanding with 177.26 million that float.  As of 6/12/07, there were 7.59 million shares out short representing 2.7 trading days of volume (the short ratio) or 4.3% of the float.

No dividend is paid per Yahoo. The last stock split reported on Yahoo was a 2:1 back on November 19, 1997.

What does the chart look like?

If we review the "point & figure" chart on National Oilwell Varco from StockCharts.com, we can see that the stock which was consolidating through the latter part of 2006 in the $52 to $67 level, broke through resistance in February, 2007, and the $65 level.  The stock has moved relatively quickly to its current level of $123.89.  The chart looks quite strong to me!

Summary:  What do I think?

I have generally avoided investing in companies that are so dependent on the price of commodities like oil.  Well, excep for Bolt (BTJ) which has indeed been a terrific investment, although quite volatile, for me.

Here is a chart of light crude oil.

You can certainly see the upward price pressure of oil supporting the strong move in all of these oil service companies like NOV. 

In any case, National Oilwell Varco made a strong move today.  Fortunately, I caught the move relatively early and achieved a buffer of almost five points the very first day.  I would not be surprised to see some profit-taking tomorrow.

They announced earnings that were incredibly strong.  Especially for a stock with a p/e in the mid 20's with earnings reported up over 100%.  They beat expectations and have bene growing strongly for the last four or five years.  Finally, valuation, while not perfect, isn't bad.

And the chart is quite strong as well.

I like the stock a lot.  In fact enough to buy some shares!  Wish me luck!

Thanks again for dropping by and visiting!   If you have any comments or questions, please feel free to leave them on the blog.  If you get a chance, be sure and visit my Stock Picks Podcast Website!  Also, stop by and visit my Social Picks Page where Social Picks evaluates my many stock selections since early 2007 and evaluates my picking performance relative to many other bloggers and stock pickers!  Finally, if you would like to see how my actual Trading Portfolio has been performing, you can visit my Covestor Page where Covestor, for the past two months, has been monitoring my actual trading account and holdings and evaluating my performance relative to other investors on the website.

Have a great Thursday everyone!  Please remember that I do own shares in this stock, so take that into consideration.  Also remember that past performance is not guarantee of future performance and that I am truly an amateur so please check with your own advisers prior to making any investment decision!

Bob

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.

A few moments ago I purchased Position #20, after getting a 'permission slip' yesterday after my partial sale of Kyphon at a gain.  (See my previous entry for more details on that transaction).

Looking through the list of top % gainers today, I came across National Oilwell Varco (NOV) which as I write, is trading at $116.47, up $4.14 or 3.69% on the day.  I have not discussed this stock previously, and I owe all of you a good review. 

I purchased 105 shares at $117.92, so I am actually down a bit over a point on this one already :(.  NOV announced strong 2nd quarter 2007 results today which drove the stock higher in trading.  The 5-Yr Restated Financials on Morningstar.com appear solid. And I went ahead and bought some shares!  Wish me luck.  I am a bit under my purchase price already, but time will tell if this one works out.

NATIONAL OILWELL VARCO (NOV) IS RATED A BUY

Bob 

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.

What a day in the market!  The Dow closed down 226.47 points at 13,716.95, the NASDAQ was down 50.72 points at 2,639.86, and the S&P closed down 30.53 points at 1,511.04.  

And yet my only sale was a small sale of 1/7th of a position that hit an appreciation target. 

That doesn't mean that I didn't suffer losses.  In fact my Trading Account dropped about $1,600 or so in value.

But the difference is that having exit points allows one to weather the market.  It doesn't prevent losses.  It prevents panics.  In other words, it is imperative to have a working strategy dealing with every single investment that you own if you are to responsibly deal with your portfolio.  Of course, this is an amateur's perspective.  So take that into consideration.

For me, I know when I shall be selling each and every one of my holdings.  If the time comes, they shall be gone.

I know that I shall not be replacing my stocks unless I have an indication to be buying.  Ironically, I got that signal today with my sale on "good news".  I now have permission to add a new position up to my maximum of 20 holdings.

Planning.

That's what it is all about.

I am banking on a long-term bias towards upward movement in the overall market.  I am a long-term investor as long as stocks move in a reasonably positive direction.

Just a brief comment to let you know that I am here.  I am also losing money when stocks decline.  I am sitting tight when sitting tight is indicated.  And I am prepared to sell when the price dictates that action.

Have a better day trading tomorrow!

Bob 

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.

The market is doing lousy as I write.  Dow is down 100+, NASDAQ down 25+.  Yet my Kyphon stock (KYPH) hit a sale point on a price rise.  In fact, a few moments ago I sold 1/7th of my 125 shares (17 shares) at $56.29/share.  This was my third targeted sale, having sold twice before, thus my target was a 90% appreciation level.

These shares were originally purchased 5/29/05 at a cost of $29.21.  Thus, I had a realized gain of $27.08 or 92.7% since my purchase.  When will I next sell a portion of Kyphon?  On the upside, I shall be looking to sell 1/7th of my holding if the stock should appreciate to a 120% appreciation level.  This works out to 2.20 x $29.21 = $64.27.  On the downside, if the stock should drop to 1/2 of the highest appreciation level, which now works out to 1/2 of 90% or a 45% appreciation level, then I would plan on selling ALL remaining shares.  This price level would work out to 1.45 x $29.21 = $42.35.

With only 19 positions (maximum of 20), this sale at a gain gives me a "permission slip" to add a new position.   That "nickel" is burning a hole in my pocket already!

Thanks so much for stopping by!  If you have any comments or questions, please leave them on the blog or email me at bobsadviceforstocks@lycos.com!

Bob

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.

Please excuse me if my absence caused any concerns among all of my readers.  From time to time I shall, like all people, need to get away from the blogosphere and step back from the responsibilities of blogging.  But I do not think I shall be staying away often or more than just temporarily.

But it is the weekend, and before the day is done, I would like to get a review in on past stock picks from the weke of January 30, 2006.  My last "Weekend Review" was on July 7, 2007, when I reviewed the week of January 23, 2006.  Let's see what was posted during the next week and how all of those stock picks would have turned out if they were purchased and held.  

As I have commented on frequently on this subject, these reviews assume a "buy and hold" strategy with investing, with equal dollar amounts utilized in purchasing each of the stock selected and no sales of any of the holdings regardless of the price action of the holding.  In practice I recommend and employ a disciplined strategy of selling my declining stocks quickly and completely and my gaining stocks slowly and partially at targeted appreciation points.  However, for the sake of analysis, I utilize a "buy and hold" assumption for all of these reviews.

On January 30, 2006, I posted FMC Technologies (FTI) on Stock Picks Bob's Advice when the stock was trading at $51.30.  FTI closed at $93.51 on July 20, 2007, for a gain of $42.21 or 82.3%. 

On May 9, 2007, FTI reported 1st quarter 2007 results.  Revenue came in at $980 million, up 19% over the 1st quarter 2006 revenue results  of $827 million.  Net income climbed to $61.3 million from $47 million and diluted earnings per share increased to $.89/share from $.67/share last year.

With the outstanding earnings and the impressive stock chart,

FMC TECHNOLOGIES (FTI) IS RATED A BUY

On January 31, 2006, Church & Dwight (CHD) was picked on Stock Picks Bob's Advice when the stock was trading at $36.80.  CHD closed at $48.66 on July 20, 2007, for a gain of $11.86 or 32.2% since posting.

On May 8, 2007, Church & Dwight announced 1st quarter 2007 results.  Revenue increased 16% to $514.3 million from $442.4 million in the prior year same period.  Earnings came in at $45.1 million up from $39.9 million or $.66/share, up from $.60/share last year.  This was a mixed results in terms of expectations, as analysts had been expecting income of $.63/share (the company beat expectations) on revenue of $526.6 million (the company missed on revenue).

With the reasonably strong earnings report and a strong chart,

CHURCH & DWIGHT (CHD) IS RATED A BUY

On February 1, 2006, I posted Armor Holdings (AH) on Stock Picks Bob's Advice when the stock was trading at $50.75.  AH closed at $87.74 on July 20, 2007, for a gain of $36.99 or 72.9% since posting.

On May 7, 2007, Armor Holdings agreed to be acquired by BAE Systems Inc. for $88/share.  The Justice Department approved the acquisition on July 18, 2007, and shareholders will be voting on this acquisition on July 25, 2007 (in 3 days).  

With the stock being acquired I do not have an opinion on any further purchases or sales of this stock. 

On February 2, 2006, I "revisited" Oshkosh Truck (OSK) and picked the stock for Stock Picks Bob's Advice when it was trading at $53.06. OSK closed at $60.40 on July 20, 2007, for a gain of $7.34 or 13.8% since posting.

On May 3, 2007, Oshkosh reported 2nd quarter 2007 results.  Sales nearly doubled to $1.66 billion from $844.8 million with much of that increase ($707.9 million) due to the recently acquired JLG Industries.  Net income came in at $50.9 million or $.68/share, up from 449.8 million or $.67/share the prior year.  The company met analysts' sales expectations which was for $1.66 billion in sales, and beat earnings expectations which had been at $.64/share.  The company affirmed 2007 outlook of $3.15 to $3.25/share in earnings, which is below the average analyst which had been at $3.41/share.  

With the reasonable earnings report in light of the short-term financial stress of integrating the JLG acquisition, the strong chart, and the continuing interest in armored vehicles by the Pentagon for Iraq duty that involves Oshkosh,

OSHKOSH TRUCK (OSK) IS RATED A BUY

Finally on February 3, 2006, I posted Aviall (AVL) on Stock Picks Bob's Advice when the stock was trading at $35.28/share.   On May 1, 2006, Boeing (BA) announced the acquisition of Aviall for $48/share.  This was a quick gain of $12.72 or 36.1% since the stock was picked.

With the stock now owned by Boeing, this stock will no longer be followed by this blog.

So how did I do during this week during the end of January, 2006, and the first few days of February, 2006?  In a word, phenomenal!  These five stocks showed an average appreciation of 47.46% since posting!  And two were acquired!

Certainly, past performance is no indication of future performance.  And don't forget I am just an amateur!  But wasn't that a GREAT job of picking stocks!

Thanks again for visiting my blog!  If you get a chance, be sure and leave a comment or question on the blog or email me at bobsadviceforstocks@lycos.com.  If you can, be sure and visit my Stock Picks Podcast Website.  Now, with my participation on the Covestor Site, you should also visit my Covestor Page which has been following my actual trading account since early June, 2007.  Also, you might want to visit my Social Picks Page where that blog has been monitoring my picking activity on this website.  Are you busy enough now?

Regards to all of my friends!  Have a great week trading.

Bob 

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 wanted to let you all know that I shall be busy with a few things this week and have decided not to be blogging (unless I break that rule as well) until I get things taken care of.  If I make any trades, I shall be posting them, but shall try, if at all possible, to stay away from my computer (I have tried before :(), and get a few things done.

Expect to be back blogging in next few days.  Drop me a line in the meantime if you have any comments or questions!

Bob

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 mentioned yesterday, my Precision Castparts (PCP) stock hit an appreciation target and I sold 1/7th of my holding.  This was right after my MEDTOX (MTOX) stock tanked and I bailed out of that entire position.  The long and short of it (really the long and long) is that with the sale, and being at 18 positions (of my maximum of 20) I now had a 'permission slip' to add a new position to the Trading Portfolio.  And that nickel started burning a hole in my pocket almost immediately.

Earlier today, checking the list of top % gainers on the NYSE, the only stock that I found that seemed to fit my criteria was Kinetic Concepts (KCI),  an old favorite of mine here on Stock Picks Bob's Advice!  In fact, I wrote up Kinetic Concepts almost exactly a year ago on July 14, 2006, when the stock was trading at $44.45.  As I write, KCI is trading at $55.95, up $1.10 or 2.06% on the day.

KINETIC CONCEPTS (KCI) IS RATED A BUY

With that nickel in my pocket, I went ahead an purchased 140 shares of KCI at $56.2356 for my account.  Wish me luck!

Before making the purchase I checked the latest quarter results as well as the Morningstar.com "5-Yr Restated" financials.  Everything appears intact, and I went ahead and made a purchase.

Thanks so much for stopping by!  If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com. 

Bob