Stock Picks Bob's Advice
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 firstname.lastname@example.org .
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 email@example.com
"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.
Tuesday, 14 October 2003
October 14, 2003 aQuantive, Inc. (AQNT)
Hello friends! I confess, when I started this website I was a little pickier. (Is that a word?) Maybe more selective would be better English. Anyway, I didn't like to see any irregularities from perfect revenue growth, perfect free cash flow growth and a perfect balance sheet. Now BLTI which we just posted is close to perfection...as are many on the list. I just want to lighten up a little and give you some ideas that are CLOSE to perfect. If they appreciate in price, the money will be just as green. aQuantive (AQNT) is one of these. AQNT is having a nice day today; trading, as I write, at $13.34 up $1.26 on the day or 10.43%.
According to money.cnn.com, AQNT "...provides technology-based Internet advertising services to businesses, integrating Internet media planning and buying, management technology, user profiling & analysis systems."
AQNT, alas another dot.com is doing great financially! On July 23, 2003, AQNT announced their second quarter results for the period ended June 30, 2003. Revenue for the quarter increased 71% to $52.0 million from $30.4 million in the same quarter last year. Gross profits increased 74% to $14.5 million from $8.4 million last year. Net income for 2003 was $2.4 million or $.04/basic share (is this not fully diluted?), compared to a net LOSS of ($1.8) million or ($.03)/share.
Morningstar revenue growth is the irregular finding: revenue grew quickly from $600,000 in 1998, to $69.7 million in 1999, then to $194.7 million in 2000, the shrunk to $89.6 million in 2001, increased to $132.7 million in 2002, and $156 million in the trailing twelve months. Extrapolating the current quarter's $52 million would get us over $200 million for this year.
So somehow, I have not researched this part, they dropped in revenue in 2000 to 2001, but they appear to be back on track the past 3 years.
Earnings/share, which was at a loss of ($.70) in 2001, is now profitable. They were burning cash in 2000 with ($29) million in free cash flow, this improved to ($15) million in 2001, and then positive cash flow of $10 million in 2002, and $13 million in trailing twelve months.
The balance sheet, as reported on Morningstar.com, also looks quite nice. They have $121.4 million in cash and $32.0 million in other current assets. This is balanced against $47.5 million in current liabilities and NO long-term debt. This is quite healthy in my humble opinion.
The market cap is $775.2 million. The trailing p/e is astronomic at 151.0, but the company is just turning profitable and this should drop quickly. The forward p/e (for 2004) is only 34.51. The PEG ratio also shows a reasonable price for this issue with a PEG of 1.57. Price/sales a little rich at 4.04. Currently there are 59.63 million shares outstanding and 43.90 million of them float. No dividend is paid. This last data is all from Yahoo.com. As of 9/8/03, there are 2.58 million shares out short, quite significant, representing 3.728 days of average trading volume to cover.
I do not own any shares of this issue and frankly have never even HEARD of it before this morning....but it looks GREAT to me. Heck with the blip in the revenue, this company has superb revenue growth, nice earnings growth, positive and growing free cash flow, what is there NOT to like....now if I just had a little money to invest in this stock!
Regards to all of my friends and visitors!
October 14, 2003 BioLase Technology (BLTI)
As a kind of coincidence, I was posting last night a response on MSN.com about a question on BioLase. I could quote my response, but I said I liked the company a lot. And here it is, Tuesday, and I am now listing it on my site as it has once again hit the Boards of the greatest % gainers. BioLase (BLTI) is having a very nice day today trading at $13.47 up $1.12 on the day or 9.06% as I write. I do not currently own any shares.
According to money.cnn.com, BioLase (BLTI) "...designs, develops, manufactures and markets laser-based systems for use in dental and medical applications."
On July 23, 2003, BLTI reported their second quarter results for the period ended June 30, 2003. (It should be noted that on 9/17/03, BLTI filed amended 10-K and 10-Q's...due to the need to report revenue more conservatively. They are now reporting revenue as products as shipped rather than when payment received. I am frankly not sure of the significance of this as it probably is just a 'wash' over the long haul.)
Anyway, for the quarter ended June 30, 2003, the results were strong: net income was $1.7 million ($0.08 per diluted share) on sales of $11.1 million. Last year, net income was $669,000 ($0.03 per diluted share) on sales of $7.2 million. This growth is quite impressive.
Morningstar.com evaluation reveals a very nice trend of revenue growth this past 5 years from $1.5 million in 1998, $7.0 million in 1999, $9.7 million in 2000, $17.9 million in 2001, and $29.2 million in 2002 with $33 million in the trailing twelve months. Actually, extrapolating the current quarter reveals an annual revenue rate currently at $44 million/year.
Earnings have improved from ($.69) in 1998 to $.14 in the trailing twelve months. With the current quarter at $.08/share we would get a current extrapolated earnings rate of $.32/share on an annual basis for 2003.
Free cash flow, which was negative at ($5) million in 2000, improved to ($1) million in 2001, $0 in 2002 and now $1 million positive in trailing twelve months.
Looking at balance sheet on Morningstar reveals $5.8 million in cash and $8.3 million in other current assets. This is quite adequate to cover the $8.3 million in current assets and there is only $100,000 in long-term liabilities reported.
The market cap per Yahoo is $289.50 million. Since the company has just turned profitable, there is no calculated p/e or PEG ratio. The price/sales is a bit rich at 7.32. BLTI has 21.5 million shares outstanding with 21.1 million that float. Currently there are 5.67 million shares out short, a large amount, representing 26.88% of the float as of 7/8/03. I do not see newer numbers on Yahoo so this is a bit outdated as a statistic. No dividend is paid.
This is another fast-growing biomedical technology firm that shows dynamic growth, nice improvement in both earnings and free cash flow, and a great balance sheet. The stock is not selling at a bargain, but it is a great company and I would love to own some shares....(Is there EVER a stock I see I do NOT want to buy?)...but you know the old story about margin, margin, margin.
Thanks for stopping by! Visit again. If you have any questions please feel free to post right here or email me at firstname.lastname@example.org and I will try to get right back to you!
Monday, 13 October 2003
October 13, 2003 International Game Tech. (IGT)
Happy Columbus Day everyone! We don't get our snail mail today....but nobody figured about giving the email a rest. Anyhow, the stock market is up so far today and that puts me always in a better mood. I have two laggards in my trading portfolio, AAII which has a 50% short interest...and MMSI...both have had nice moves this past twelve months so maybe they just need to 'consolidate' as the technicians say...sort of digest the gains in on of the market's many stomachs. Now how is THAT for a mixed metaphor so early in the morning.
International Game Technology (IGT) is a long-time favorite of mine but unfortunately I do not own any shares. IGT is having a nice day today trading at $30.17 as I write up $2.08 or 7.40%. According to money.cnn.com, IGT "...is an operator and manufacturer of computerized casino gaming products and proprietary systems." As far as I know the are one of the world's largest if not the largest manufacturer of gambling machines...like slot machines!
IGT reported their third quarter results on July 17, 2003. Earlier this year, on July 2, 2003, IGT had a 4:1 split...a fairly rare occurrence in the market in my experience. The third quarter results for the period ended June 28, 2003 were solid. Net income totaled $103.7 million or $.30/diluted share vs $82.6 million or $.23/diluted share last year. Total quarterly revenues and earnings of unconsolidated affiliates (if you know what they mean?) grew 16% to $597.5 million.
Morningstar.com shows a steady growth in revenue from $0.8 billion in 1998, $0.9 billion in 1999, $0.9 billion in 2000, $1.2 billion in 2001, $1.8 billion in 2002 and $2.1 billion in trailing twelve months. Earnings/share have grown during this period from $.33 to $.95/share in the trailing twelve months.
Free cash flow has also increased from $110 million in 2000 to $471 million in 2002 but only $317 million in the trailing twelve months. The company is fairly flush with cash with $972.5 million in cash compared to only $493.3 million in current liabilities. The other current assets are not quite enough at $820 million to cover the $1.9 billion in long-term liabilities, but with the nice positive cash flow this does NOT seem to be a problem at all.
This is certainly a large Cap company with a Market Cap of $10.41 Billion. The trailing p/e isn't too bad at 27.81, the PEG ratio is at 1.65, and the price/sales a bit rich at 4.38. The company does pay a small dividend of $.40 yielding currently 1.42%. There are 345.06 million shares outstanding and 332.50 million of them float. There are 14.63 million shares out short...as of 9/8/03...representing 7.717 trading days. These shares may actually be positive for this stock for if it continues its upward drive, some of the shorts may be 'squeezed' and forced to cover...providing additional buying demand for this equity.
As you can probably tell, I like this stock a lot...I do not own shares but would love to see this in my portfolio somewhere...perhaps another time? Thanks again for stopping by. If you have any questions, comments, or words of encouragement, please drop me a line at email@example.com or leave them right here in the webpage.
Sunday, 12 October 2003
"How are we doing?" A look back on the week of August 25, 2003
As I like to do on weekends, hopefully before gathering my kids and taking them off to Sunday School, I like to reminisce. Not too far back but look back about six or seven weeks and see if 'our system is working'. As I have mentioned before, if I am able to hang in there with this website, we will soon start looking back six months to check our performance....and really need to think about updating our entries....my entries...anyhow, let's look at August 25, 2003. (Last week we checked out the August 18th week!.)
On August 25, 2003, I picked Electronic Clearing House (ECHO) at $6.36. ECHO closed 10/10/03 at $7.76. This was a great performance with an increase of $1.40 or 22.0%. Also on 8/25/03, I picked Invivo (SAFE) at $20.39. Now SAFE closed 10/10/03 at $15.67 which doesn't look like it was doing well, however, SAFE had a 3:2 split on 9/12/03, and the $15.67 price needs to be adjusted to an effective price of $23.51 meaning a gain of $3.12 or 15.3%.
August 26, 2003, this day I picked only Engineered Support System (EASI) at $54.37. EASI closed on 10/10/03 at $63.50. This was a gain of $9.13 or 16.8%.
On August 27, 2003, my only pick was NetFlix (NFLX) at $32.66. NFLX closed on 10/10/03 at $44.65. Another terrific performance this past six weeks, NFLX has gained $11.99 or 36.7%.
I was busier on August 28, 2003, with 3 picks: SupportSoft (SPRT), Quiksilver (ZQK), and Michaels Stores (MIK). SupportSoft was selected at $8.94. SPRT closed 10/10/03 at $12.24. This is a gain of $3.30 or 36.9%. ZQK closed at $17.90 on 10/10/03. I posted it when it was trading at $18.42. This was a LOSS of ($.52) during this period or (2.8%). MIK was selected at $43.01. MIK closed 10/10/03 at $45.75. This is a gain of $2.74 or 6.4%.
The final pick of the week was Wilson Greatbatch (GB) which was picked on 8/29/03 at $39.24. GB closed 10/10/03 at $36.88. This was a loss of ($2.36) or (6.0%).
Thus for the week which we selected eight stocks we had six with gains ranging from 6.74% to 36.9%, and two with losses of (2.8%) and (6.0%). The average performance for this stellar week was a gain of 15.7%. This is certainly one of our better weeks we have examined...so no claim we can do this every six weeks...but it is interesting to note! Of these stocks, the only stock that I personally own is NetFlix which I have some shares in a managed retirement account.
I hope you had a great weekend and come back and visit here next week!
Friday, 10 October 2003
October 10, 2003 Infosys Technologies Ltd (ADR) (INFY)
Welcome to my website. Or Welcome Back as the case may be. Most of the stocks I pick are American companies as I do not undeerstand and do not have access as easily to many foreign corporations...however, we DID post SOHU here, and now here we have an Indian corporation. I recently had trouble with my HP computer and without realizing it was transferred over to India for online assistance....the service was good and although I still didn't get the problem fixed....that is another story. Anyhow, many technology firms, and as I recently read in the Wall Street Journal, many investment banking houses are using the highly trained, low-cost (by American standards) professionals, are meeting with success.
According to money.cnn.com, INFY "...an India-based IT services company, utilizes an extensive offshore infrastructure to provide managed software solutions to clients worldwide." INFY is currently trading at $77.40 up $5.14 or 7.11% on the day.
We are now back in the earnings-reports-season, and INFY reported results today for the quarter ended September 30, 2003. Revenues for the quarter were $250.7 million, up 38.21% from $181.45 million for the same quarter last year. Net income was $64.71 million or $.49/share compared to $46.7 million or $.36/share last year.
Morningstar.com shows an explosive revenue growth picture from $39.6 million in 1997, $68.3 million in 1998, $121.0 million in 1999, $203.4 million in 2000, $413.9 million in 2001, and extrapolating the 2003 results, we are at a $1 billion/year revenue rate. The results for 2002 are not present on Morningstar.
Earnings on Morningstar grew from $.07/share in 1997 to $.99/share in 2001. Currently, the company is at an almost $2.00/share earnings rate.
Free cash flow is also limited to 2001 results: $24 million in 1999, $35 million in 2000, $41 million in 2001. I am sure this is improving as well, but frankly, I would rather have these numbers from Morningstar.com...they seem to be a bit behind on the foreign companies.
Assets and liabilities as of the listing of the Morningstar.com numbers are excellent with $124.1 million in cash, $82.7 million in other current assets vs $30.6 million in current liabilities and no long-term liabilities at all.
On Yahoo.com, we find that the trailing p/e is 45.45, PEG ratio more reasonable at 1.82, price/sales high at 11.53. There are 132.5 million shares outstanding and 100.60 million of them that float for a market cap of 10.30 Billion. This is NO small company! Currently there are 1.03 million shares out short as of 9/8/03 representing 3.041 trading days. The company pays a small dividend of $.31/share for a yield of 0.43%.
I do not own any shares of this company, but I believe that this Indian corporation is executing well with fabulous revenue and earnings growth, nice free cash flow (at least as far as OUR numbers show), but is not a value investment, that is may be a good value considering its growth, but the p/e, and p/sales ratio are high. I do like this investment and expect it to continue to do well in the future.
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