Stock Picks Bob's Advice
Wednesday, 5 November 2003
November 5, 2003 Beazer Homes (BZH)
I probably would be remiss if I didn't mention Beazer today. However, I again must stress I would be remiss if I didn't advise you, best Bob's advice I got, to check with your own financial advisor before making any decisions on the stocks and ideas I post. Anyhow, Beazer came out with good earnings today and several of the home-building stocks are participating in this sector rally. According to money.cnn.com, Beazer (BZH) "...designs, constructs, markets and sells single family homes in AZ, CA, FL, GA, MD, NV, NJ, NC, PA, SC, TN, TX and VA." BZH is currently trading at $106.34, up $5.17 or 5.10% on the day.
As reported today, via the NYTimes on the Web, from PRNewswire-FirstCall, Beazer reported that for the fourth quarter ended September 30, 2003, revenue of $1.0 billion up 15%, earnings per share of $4.18, up 38% vs $3.03 in the prior year, and record net income of $57.2 million, up 41% year-over-year.
Morningstar.com shows a steady growth in revenue from $977 million in 1998, $1.39 billion in 1999, $1.52 billion in 2000, $1.8 billion in 2001, $2.6 billion in 2002, and $3.04 billion in the trailing twelve months.
Earnings/share have grown from $2.66/share in 1998 to $11.70/share in the trailing twelve months.
Free cash flow has also been positive recently with ($23) million reported in 2000, ($31) million in 2001, $51 million in 2002 and $14 million in the trailing twelve months.
Balance sheet looks healthy with $15.4 million in cash but $1.7 billion in other current assets vs. $350.4 million in current liabilities and $764.4 million in long-term liabilities.
Looking at some key statistics from Yahoo.com, we find that the company has a market cap of $1.40 Billion, trailing p/e is 9.09 and forward p/e is cheap at 7.36. The PEG ratio is one of the lowest on this site at 0.53, and price/sales also cheap at 0.44.
There are 13.31 million shares outstanding with 12.50 million of them that float. Currently there are 3.07 million shares out short as of 10/8/03, representing 5.923 trading days. We may be witnessing a 'short squeeze' as some of these short sellers scramble to cover...? The company just announced a $.10/share quarterly dividend....with over $4.00 in earnings this quarter, maybe they could have been more generous??...no stock splits reported on Yahoo.
The numbers are GREAT on this company, like all of our other homebuilders we list. Unfortunately, like many other investors, I am concerned that this may be more of a cyclical business and we are late in the cycle. Home buying, along with home refinancing, appears to be very interest-rate dependent. If rates STAY low, then we may be in for continued growth, but if the rates start to climb???then we may see home sales slip significantly. Of course, that also is speculation.
Thanks again for stopping by! If you have any questions, comments, or words of encouragement, please feel free to email me at firstname.lastname@example.org As always, please consult with your own investment advisor before taking any actions based on what I have written here. Many of these investments and investment style may not be appropriate for all people!
November 5, 2003 Watson Pharmaceuticals (WPI)
Hello Friends! We have had a bit of a dry spell the last few days as the market rotated into different types of stocks and indeed is absorbing its latest advances the last few months. We got into and out of HealthExtras (HLEX) probably before the stock purchase even settled! But rules are rules and sometimes I even follow them. But before YOU follow any ideas on this website, please check with your own financial advisor as I am not a financial advisor and do not know if any of these investments are suitable for you!
Watson Pharmaceuticals hit the 'best advances' list today on news of good earnings. Watson, according to money.cnn.com "...is engaged in the development, production, marketing and distribution of both branded and off-patent pharmaceutical products." Currently, as I write, Watson (WPI) is trading at $41.01 up $2.57 or 6.69%.
As reported today on CBS MarketWatch.com, Watson (WPI) announced third quarter results. They earned $51.5 million or $.47/share compared with $40.7 million or $.38/share in the 2002 third quarter. Revenues increased nicely to $358.8 million, a 17% increase from $307.9 million last year.
Looking at Morningstar.com, we find that Watson has been increasing revenue steadily from $0.6 billion in 1998, $0.7 billion in 1999, $0.8 billion in 2000, $1.1 billion in 2001, and $1.2 billion in 2002. In the trailing twelve months, they are at $1.3 billion in revenue.
Earnings have grown somewhat erratically from $1.22 in 1998 to $1.69 in trailing twelve months. Free cash flow has also improved last few years from ($76) million in 2000, $139 million in 2001, $220 million in 2002 and $207 million in trailing twelve months.
At first glance, as reported on Morningstar, Watson's balance sheet also looks healthy with $582.6 million in cash and $624.1 million in other current assets vs. $330.7 million in current liabilities and $882.7 million in long-term debt.
Looking at Yahoo.com for some basic statistics, we find that WPI has a market cap of $4.42 Billion, the trailing p/e is 24.23 with forward p/e of 18.30. PEG ratio is at 1.52, Price/sales at 3.11.
There are 107.73 million shares outstanding with 96.5 million of them that float. Currently, as of 10/3/03, there are 4.75 million shares out short (down from 5.69 million the prior month) representing 6.388 trading days. This would be quite a bit of buying in order to cover these pre-sold shares. No dividend is paid. The last stock split reported on Yahoo was in October, 1997, when a 2:1 split occurred.
Overall, I like Watson. It is not cheaply priced with a PEG at 1.52, but then again, it isn't too badly valued. The stock isn't growing rapidly but it has had a steady growth the last five years.
Something to think about! Thanks again for stopping by. If you have any questions, please feel free to leave them right here on the website (let me know if you have problems doing that) or email me at email@example.com
"Trading Transparency" HLEX
Quick note: HLEX unfortunately hit our 8% loss level, and we sold 200 this morning at a 9% loss. As often is the case, with a market correction, we sell the stocks we most recently purchased as they are the most vulnerable to hitting our 'stop'.
Monday, 3 November 2003
"Trading Transparency" DVA, JCOM
I sold 150 shares of my DVA today on what I initially felt was an inadequate quarterly report. In retrospect, the report may have been more than adequate, and I may have jumped the gun on this one. In its place, I purchased 150 shares of JCOM which also recently reported an outstanding earnings report.
"Trading Transparency" HealthExtras (HLEX)
The market is up a bit today and we are looking to move to our 25 position trading portfolio. HealthExtras is a Pharmacy management company that we posted on this website early on. We listed HLEX on 5/14/03 at $5.70, unfortunately we are only NOW buying some stock. Anyhow, they came out with good earnings, moved up nicely this morning, and I thought it was as good a stock as any to pick up a few shares. Unfortunately, it is a non-marginable stock so requires 100% equity ownership...at least on Fidelity. So only bought 200 shares, for prices ranging from $13.35 to $13.44.
Posted by bobsadviceforstocks at 8:59 AM CST
Updated: Monday, 3 November 2003 1:51 PM CST
Sunday, 2 November 2003
Hello Friends! I hope you all had a great weekend. I spent last night with a blue/yellow/green face playing Commander Data at a Murder Mystery Party. That was a first for me and I was glad last night when all of the paint came out in the shower!
Like always, I would like to remind you to PLEASE consult with an investment advisor before using any information on this site as I am an amateur and am not a professional investment advisor!
That being said, let's look back on the week of September 15, 2003, and see how my stock ideas have done. On September 15, 2003, I posted Aeropostale (ARO) at $27.25. It closed on October 31, 2003, at $30.85. This is a gain of $3.60 or 13.2%.
I posted two stocks on September 16, 2003: Lexar Media (LEXR) at $19.73, and Frisch's Restaurants (FRS) at $23.75. LEXR closed 10/31/03 at $22.91 for a gain of $3.18 or 16.1%. FRS closed Friday, 10/31/03 at $24.50 for a gain of $.75 or 3.2%.
Three stocks were mentioned on this site on 9/17/03 : Endo Pharmaceuticals (ENDP) at $20.99, TALX Corp. (TALX) at $26.25, and Gen-Probe (GPRO) at $62.90. ENDP closed Friday, 10/31/03 at $16.30 for a loss of ($4.69) or (22.3%). TALX closed 10/31/03 at $21.63 for a loss of ($4.62) or (17.6%). Finally GPRO closed 10/31/03 at $26.77 ($53.54 adjusted for a 2:1 stock split on 10/1/03). This is a loss of ($4.68) (based on adjusted purchase price of $31.45), representing a loss of (14.9%). Clearly, this was not our BEST day in picking stocks!
September 18, 2003, was a day when we selected Merge Tech. (MRGE) at $18.99. MRGE closed on 10/31/03 at $17.52 for a loss of ($1.47) or (7.7%).
Three stocks were selected on September 19, 2003: StrataSys (SSYS) at $50.04, Navigant Consulting (NCI) at $14.53, and IDX Systems (IDXC) at $26.20. On 10/31/03, SSYS closed at $47.60 for a loss of ($2.44) or (4.9%), NCI closed at $16.43 for a gain of $1.90 or 13.1%, and IDXC closed at $26.20, unchanged over the last six weeks.
The ten stocks had an average loss of (2.1%) during this period, certainly not an exciting performance. Keeping those 8% stops would have eliminated some of those losses keeping the overall performance above water....you can see the validity of using stops....but in this exercise, we examine how stocks actually performed...and this groups was less than exciting thus far!
We shall soon start looking at 6 month performance which will give us a better idea how we are doing over the intermediate term!
Thanks again for stopping by and have a great week.
Posted by bobsadviceforstocks at 8:16 PM CST
Updated: Sunday, 2 November 2003 8:22 PM CST
Friday, 31 October 2003
October 31, 2003
Happy Halloween everyone! I was out for a walk early this morning and I started having some thoughts about the role of margin in the trading account. We have successfully used margin thus far in magnifying our gains without experiencing any apparent undue risk. In addition, I have been adding to my trading portfolio and am now up to 22 positions. O.K. here is the plan. I want to get up to 25 positions in the account, which we will do as we sell off portions of stocks that have gained significantly. After that point, we will only ADD a new position when we have SOLD an old position due to an 8% loss....or other fundamental changes in the company outlook. However, I plan to continue to sell portions of holdings as they appreciate until such time as the margin has been eliminated. At that time we can consider adding additional positions over 25. In addition, an effort will be made to increase the size of new positions in terms of total dollar amount.
Does that sound like a sound strategy? If you have any comments, questions, or words of encouragement, always feel free to drop me a line at firstname.lastname@example.org
Posted by bobsadviceforstocks at 7:28 AM CST
Updated: Sunday, 2 November 2003 2:45 PM CST
Thursday, 30 October 2003
October 30, 2003 NetScreen Technologies, Inc. (NSCN)
Hello Again! We are finding our kind of stocks. I do not own any shares of this company, but frankly, on first examination of the numbers, I am thinking seriously about picking some up. Again, I urge you to discuss all investment decisions of your own with your personal financial advisor as investments I discuss may or may not be suitable for you and may or may not be profitable investments!
Anyhow, back to the story. I have another fast-growing tech stock for you to look at. NetScreen Technologies, Inc. (NSCN), according to money.cnn.com, "...develops, markets and sells a family of network security systems and appliances for enterprises & service providers, delivering integrated firewall, VPN, and network traffic management capabilities." As I write, NSCN is trading at $27.16, up $2.92 or 12.05% on the day.
On October 29, 2003, (yesterday), NSCN reported their fourth quarter 2003 results. For the quarter ended September 30, 2003, revenue was $71.6 million, a SEQUENTIAL growth of 11.3% over the June 30, 2003 quarter and a 74.4% increase over revenue of $41.1 million in the same quarter last year. Fabulous results! Net income was $7.1 million or $.08/diluted share vs a loss of ($925,000) or ($.01)/diluted share last year. (please look at the actual reports as there DOES appear to be a lot of footnotes).
Morningstar.com records the rapid growth of this company from revenue of $700,000 in 1998, $5.9 million in 1999, $26.6 million in 2000, $85.6 million in 2001, $138.5 million in 2002 and $214 milllion in the trailing twelve months.
Net income just turned positive this year at $43 million. Looking at free cash flow on Morningstar, we find a gradual improvement from ($12) million in 2000, ($12) million in 2001, $28 million in 2002 and $61 million in the trailing twelve months.
The balance sheet is beautiful. As reported on Morningstar, this company has $315.2 million in cash, enough to cover multiple times the $79.8 million in current liabilities and $2.2 million in long-term liabilities. In addition, they have $72.4 million in other current liabilities.
From Yahoo.com, we find that the company has a market cap of $2.22 Billion with a trailing p/e of 45.24, a forward p/e of 41.79, and a PEG ratio of 1.38. Price/sales also a bit pricey at 8.04.
This company has 81.41 million shares outstanding with 54.90 million of them that float. 8.73% of the float is out short representing 4.79 million shares out short as of 10/8/03, which would take 2.305 trading days to cover. No dividend is paid.
This is a fast-growing, profitable company with a great balance sheet. Certainly not selling at a discount, the PEG ratio isn't too bad but the rest of the value parameters are a bit steep. Since I am already pretty heavy into margin, I will pass on this right now...but might be a good investment long-term.
Thanks for stopping by. Again, please discuss any of your own investment decisions with your own investment advisor and if you have any questions or comments you can email me at email@example.com
October 30, 2003 Kyphon, Inc. (KYPH)
Hello Friends! Thanks for stopping by. As always, remember to check with your own financial advisor with any stocks I mention. They may or may not be suitable for you and I am not in a position to decide that!
Having gotten that out of the way, I found another orthopedic device manufacturer that looks interesting today. I do not own any shares of Kyphon. Kyphon (KYPH), according to money.cnn.com "...develops devices using its proprietary ballon (sic) technology for orthopedic applications. KYPH's products are used for the treatment of vertebral body compression fractures, primarily caused by osteoporosis." KYPH is having a great day, currently trading as I write at $29.15 up $3.59 or 14.05%.
On October 29, 2003, KYPH was reported by BUSINESS WIRE, and picked up by NYTimes on the Web, to release their third quarter 2003 results. For the quarter ending September 30, 2003, the company reported sales of $35.1 million compared to $20.7 million in 2002 same quarter, and net income of $4.7 million or $.11/diluted share vs ($11.6) million or ($.32)/diluted share last year.
Morningstar.com documents the rapid growth of this company from $300,000 in revenue in 1999, to $6.1 million in 2000, $36.1 million in 2001, $76.3 million in 2002, and now with the current quarter they are running at over a $125 million/year rate.
Free cash flow has improved recently from ($21) million in 2000, ($15) million in 2001, ($2) million in 2002 to $3 million POSITIVE in the trailing twelve months.
Their balance sheet is beautiful: $43.4 million in CASH, way more than enough to cover the $11.1 million in current liabilities and NO long-term liabilities. In addition, KYPH reports $57.3 million in other current assets as noted on Morningstar.com.
Looking at Yahoo.com for other statistics, we find that the market cap is now $1.14 Billion, with a trailing p/e of 137.29 and a forward p/e of 77.45. This company is priced to perfection. The PEG ratio is steep as well at 5.28. Price/sales are rich at 8.66.
There are 38.64 million shares outstanding with 16.60 million of them that float. Other investors must also think this is a bit expensive as there are 1.87 million shares out short, representing 4.151 days of average trading volume to cover. No dividend is paid.
In general, I like this stock a lot. However, you will need to pay top dollar to get shares on this one and one false step and the price is likely to be cut severely. I am not rushing out to buy shares but wish I had them some time ago!
Thanks for stopping by! Again, please discuss any financial investment decisions with your own personal financial advisor! If you have any questions, comments, or words of encouragement, please feel free to post them right here or email me at firstname.lastname@example.org
Wednesday, 29 October 2003
October 29, 2003 SpectraLink (SLNK)
Hello friends! How about another late-night report? Again, as always, check with your own investment advisor before acting on any of these stocks as they might not be suitable for you! (Also, I am just an amateur investor...and this is my hobby...when it comes to really investing...double-check with your own advisor on anything that sounds interesting!)
O.K. back to the BLOG: SLNK had a nice day today. According to money.cnn.com, SpectraLink Corp. (SLNK) "...designs, manufactures and sells workplace wireless telephone systems that complement existing telephone systems by providing mobile communications in a building or campus environment." SLNK had a nice day today closing at $18.54 up $2.01 or 12.16% on the day.
Last week, on October 23, 2003, SLNK announced results for the third quarter of 2003 ended September 30, 2003. Revenues reported were $18.3 million, a 20% increase over 2002 results. Earnings for the quarter were $2.3 million, or $.12/diluted share, representing a 49% increase in earnings over the same period last year.
Revenues have grown, according to Morningstar.com, from $35.1 million in 1998, $41.2 million in 1999, $54 million in 2000, $60.8 million in 2001, $60.9 million in 2002, and $65 million in the trailing twelve months.
Earnings per share have grown, although not linearly, from $.11 in 1998 to $.35 in the trailing twelve months.
Free cash flow has been growing as well: $5 million in 2000, $11 million in 2001, $13 million in 2002 and $10 million in the trailing twelve months.
Looking at the balance sheet as reported on Morningstar.com shows $43.7 million in cash, more than enough to cover both the current liabilities of $12.7 million and the long-term liabilities of $300,000. In addition, SLNK has $22.4 million in other current assets.
SLNK is a small company with a market cap of $339.17 million. The trailing p/e is a little rich at 47.66, but the forward p/e for fiscal year 2004 a bit better at 30.61. The company is growing rapidly commensurate with the p/e with a PEG ratio not too bad at 1.46. Price to sales is no steal at 4.44.
Yahoo.com reports, in addition to the above statistics, that there are 18.29 million shares outstanding and 16.70 million of them float. There are 375,000 shares out short as of 10/8/03 representing 0.5 days of trading...no dividend is paid.
This is another stock with nice numbers but a p/e that isn't exactly cheap. I do not own any shares but this might be a good addition to my portfolio if I had cash available to buy anything. You know, the old story, margin, margin, margin!
Thanks again for stopping by! If you have any questions, comments, or words of encouragement, please email me at email@example.com
Remember, once again, CONSULT YOUR INVESTMENT ADVISOR before making any decisions on what is written here. You might get some ideas you can use, but PLEASE check with your advisor first!
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