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. 

It is another weekend!  And for me that means, if I don't skip this, doing my proverbial 'housework' around here and looking back at past stock selections on my blog.  As part of my effort at transparency and to help make this website somewhat meaningful, I have found it helpful to review, in a systematic fashion, all of my past stock 'picks' when I am a year or so out.  (I started almost exactly a year out and then, after missing a weekend here, a weekend there....you get the picture---I am now more like a 1 1/3 year out review!)  Since there weren't any stock picks posted for the week of November 7, 205, and since I am already more than a year out, well instead of giving in to my almost joy at realizing there weren't any stocks to review, I decided to jump to the week of November 14, 2005, and take a look at those stock picks.  (A I dedicated or what?...no answers please :))

These "reviews" do not reflect actual holdings of mine, my actual trading strategy, and the effects of taxes and partial sales of stocks, etc.  These are simply a simplified way of looking at past stock selections and seeing simply if they moved higher or lower since being posted!  In other words, the review of performance assumes a 'buy and hold' strategy and equal dollar purchases of each stock from the week involved.  I calculate the average performance of the stocks by getting the mean of the performance of all of the stocks discussed.  

In my own Trading Portfolio, and what I write about here, is a strategy that is very different.  I recommend aggressively selling losing stocks quickly and completely, initially at 8% loss levels, and gaining stocks slowly and partially at targeted appreciation points.  This strategy is key to my own portfolio management philosophy and the difference between 'buying and holding' and actively managing the portfolio would certainly make a difference in the outcomes.  I use the buy and hold evaluation technique simply because I am actually fairly low tech in my approach.  I do not have any software to assess what might have happened and simply put, I think a review like this is adequate to give you, the reader, an idea about these stocks.  

On November 14, 2005, I 'revisited' DJ Orthopedics (DJO) on Stock Picks Bob's Advice when the stock was trading at $31.35.   I use the term "revisit" because my first 'pick' of DJ Orthopedics (DJO) on this blog was on August 22, 2003 when the stock was trading at $10.89.  Unfortunately, I have never owned any shares or options on this stock.  DJO closed at $37.90 on March 30, 2007, for a gain of $6.55 or 20.9% since posting.

Here is a "Point and Figure" Chart on DJO from StockCharts.com: 

On February 12, 2007, DJO announced 4th quarter 2006 results.  Net revenues for the quarter came in at $110.8 million, up 47.8% from the $75.0 million in the fourth quarter of 2005.  Net income, however, dropped to $1.0 million down from $8.1 million in the prior year same period or $.04/share, down from $.35/share.  Even using "Non-GAAP" numbers, removing impact of stock-based charges, cost of acquisitions, and the company move to a new headquarters, net income still dropped to $.31/share down from $.35/share.  This company has a superb record of revenue growth, however, with the drop in income in the latest quarter, the best I can do is rate

DJ ORTHOPEDICS (DJO) IS RATED A HOLD

On November 16, 2005, I posted Gilead Sciences (GILD) on Stock Picks Bob's Advice when the stock was trading at $55.63. GILD closed at $76.65 on March 30, 2007, for a gain of $21.02 or 37.8% since posting.  I do not own any shares nor do I have any options on this stock.

Here is a "Point & Figure" Chart on Gilead from StockCharts.com:

On January 31, 2007, Gilead Sciences announced 4th quarter 2006 results.  Total revenue for the fourth quarter of 2006 came in at $899.2 million, up 48% from prior year sales.  GAAP net income was a net loss of $1.67 billion or $(3.62)/share, compared to a net income of $281.6 million or $.59/diluted share for the same quarter in 2005.  Looking at 'Non-GAAP' net income was $372.8 million or $.78/share compared with last year's Non-GAAP net income for 2005 of $256.5 million or $.54/diluted share, which eliminates one-time tax expenses and expenses related to stock-based compensation and similar items.  I much prefer GAAP results, but the prospects, if I may editorialize, for Gilead are such that I shall place

GILEAD SCIENCES (GILD) IS RATED A BUY

On November 18, 2005 I "revisited" Marvell Technologies (MRVL) on Stock Picks Bob's Advice when the stock was trading at $55.70.  I first looked at Marvell on May 21, 2004, when the stock was trading at $42.99.  Marvell had a 2:1 stock split on June 29, 2004 and another 2:1 stock split on July 25, 2006, making the initial stock pick price $10.75, and the second pick price actually $27.85.  MRVL closed at $16.81 on March 30, 2007, for a loss of $(11.04) or (39.6)% since the latest post.

Here is the "point and figure" chart on Marvell and my stock pick prices:

On Feberuary 26, 2007, Marvell reported preliminary 4th quarter 2006 results showing a 27% revenue growth from $489 million to $622 million in the latest quarter. The company, however, delayed earnings per share results as there is an ongoing review of stock option granting practice.  A month later, the company continues to delay earnings results making assessment of the financial operations from my perspective most difficult.

In light of this,

MARVELL (MRVL) IS RATED A SELL

Finally, on November 18, 2005, I posted Brady Corp (BRC) on Stock Picks Bob's Advice when the stock was trading at $38.90.  BRC closed at $31.20 on March 30, 2007, for a loss of $(7.70) or (19.8)% since posting.

On February 21, 2007, Brady (BRC) announced 2nd quarter 2007 results.  Sales for the quarter were up a strong 39.1% to $321.3 million, compared to $231.0 million in the 2nd quarter of 2006. However, net income for the quarter fell 7.3% to $19.7 million from $21.3 million the prior year.  Earnings per diluted Class A shares came in at $.36/share in the 2007 quarter, down from $.43 in the 2nd quarter 2006.  

With the strong revenue growth and the anemic earnings results, 

BRADY (BRC) IS RATED A HOLD.

The following is a "Point & Figure" chart on Brady (BRC) from StockCharts.com:

So how did I do with these four picks during the week of November 14, 2005?

Of the four stocks, two gained, and two lost money for an average performance of a loss of (.2)% on these four stocks!

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.  Have a great week trading and investing everyone!

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 was looking through the list of top % gainers today and came across Smucker (SJM) which closed at $53.44, up $2.06 or 4.01% on the day. I do not own any shares nor do I have any options on this stock but I must confess to being a regular peanut butter and jelly consumer and Smucker is certainly one of my favorite brands!

Let's take a closer look at this stock and I will share with you why I believe it deserves a place on this blog!

SMUCKER (SJM) IS RATED A BUY 

What exactly does this company do?

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

"...engages in the manufacture and marketing of branded food products worldwide. It provides peanut butter, shortening and oils, flour and baking ingredients, fruit spreads, baking mixes and ready-to-spread frostings, fruit and vegetable juices, beverages, dessert toppings, syrups, frozen sandwiches, pickles and condiments, and potato side dishes."

How did Smucker do in the latest quarter?

On February 16, 2007, Smucker (SJM) announced 3rd quarter 2007 results.  Sales for the company declined in the quarter from $536.5 million in the quarter ended January 31, 2006, to $523.1 million in the same quarter ended January 31, 2007.  O.K., I know I always pick stocks with revenue growing in the latest quarter!  But I really like Smucker's jam and Jif peanut butter...and it has been a really lousy stock market and I need some comfort food like this to discuss :).  But seriously, as the company points out, if it excludes discontinued Canadian businesses and U.S. industrial ingredient businesses, their sales actually increased 6%.  Net income for the quarter did increase 29% to $40.4 million from $31.3 million, or a 31% increase on a per share basis from $.54/share in the third quarter of 2006 to $.71/share in the same quarter in the 2007 fiscal year.  

This certainly was a mixed-news report, with the company missing revenue expectations of $534 million, but beating expectations for earnings of $.69/share.  Apparently, Smucker was a beneficiary of the troubled Peter Pan peanut butter salmonella outbreak, as consumers turned to Jif for an alternative spread.  

How about longer-term financial results?

Reviewing the Morningstar.com "5-Yr Restated" financials, we can see the large increase in revenue from $650 million in 2002 to $2.155 billion in 2006 and $2.156 billion in the trailing twelve months (TTM). 

Earnings during this period have steadily increased from $1.31/share in 2002 to $2.45/share in 2006 and $2.63/share in the TTM.

The company has also been steadily increasing its dividend from $.68/share in 2002 to $1.08/share in 2006 and $1.11/share in the TTM.  Since 2004, shares outstanding have increased from 50 million to 58 million in 2006 and 57 million in the TTM.  Revenue and earnings have easily outpaced the growth in shares.

Free cash flow has been positive and growing with $39 million in 2004 increasing to $135 million in 2006 and $222 million in the trailing twelve months (TTM).

The balance sheet is good with $152.2 million in cash and $429.8 million in other current assets.  This total of $582 million in current assets, when compared to the $247.5 million in current liabilities yields a current ratio of 2.35.  The company does have a significant $653 million in long-term liabilities, but with the growing free cash flow, this doesn't appear to be a significant problem.

What about some valuation numbers?

Reviewing the Yahoo "Key Statistics" on Smucker, we can see that this company is a mid cap stock with a market cap of $3.03 billion.  The trailing p/e is a reasonable 20.32, with a forward p/e (fye 30-Apr-08) estimated at 18.18.  The PEG (5 yr expected) is a bit rich at 2.21.

Checking the Fidelity.com eresearch website, we can see that the valuation isn't too rich with a Price/Sales (TTM) of 1.36 with an industry average of 1.47.  However, profitability, as measured by return on equity (TTM) comes in at 8.62%, less than the industry average of 20.69%.

Returning to Yahoo, we find that there are 56.62 million shares outstanding with 53.27 million that float.  As of 2/12/07, there were 1.53 million shares out short representing 2.9% of the float of 7.9 trading days of volume (the short ratio).  Using my '3 day rule', this short interest may well be significant with the stock moving higher today on an upgrade even while the rest of the market moved lower.

As noted above, the company pays a forward dividend of $1.12 yielding 2.20%.  No stock splits are reported on Yahoo.

What does the chart look like?

If we examine the "Point & Figure" chart on Smucker from StockCharts.com, we can see a fairly steady progression from the $29 range in February, 2002 to the current $53.44 level.  The company showed weakness early in 2006, but then recovered only to appreciate sharply throughout 2006 and into 2007.  The chart looks strong to me.

Summary:  What do I think about this stock?

I like Smucker (SJM) a lot.  The latest quarterly report was imperfect, with revenue needing to be adjusted for discontinued business segments.  However, the company has a nice Morningstar report, valuation is acceptable, the balance sheet is strong, the chart is solid, and the company makes a product that is high quality and easily understood.  And I like Peanut Butter and Jelly.  

Thanks so much for stopping by and visiting my blog!  If you have any comments or questions, please feel free to leave your remarks right on the blog or email me at bobsadviceforstocks@lycos.com.  If you get a chance, stop by and visit my Stock Picks Podcast Website.

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 was looking through the list of top % gainers on the NASDAQ this afternoon, hoping to find a new name to share with you herre on the blog.  A lot of my entries recently have been about stocks that I have recently bought, sold, or otherwise own in my Trading Account.   MEDTOX Scientific (MTOX) was on the list, closing at $16.72, up $1.72 or 11.47% on the day.  I believe that this small company deserves a place on the blog, and I would like to share with you some of the things that led me to this conclusion.  I do not own any shares nor do I have any options on this stock.

MEDTOX (MTOX) IS RATED A BUY 

What exactly does this company do?

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

"...through its subsidiaries, provides specialty laboratory testing services and on-site/point-of-collection devices in the United States. The company operates in two segments, Laboratory Services and Product Sales."

How did they do in the latest quarter?

On February 27, 2007, MTOX announced 4th quarter 2006 results.   Revenue for the quarter increased 16% to $17.3 million over the prior year.  Operating income increased 48% to $8.2 million.  Income before a one-time income tax benefit accrued in 2005 came in at $1.5 million vs. $.6 million in the prior year.  Diluted earnings per share were actually unchanged when the tax benefit is included at $.13/share in 2006 and $.13/share in 2005. 

What about longer-term financial results?

If we review the Morningstar.com  "5-Yr Restated" financials on MTOX, we can see the steady rise in revenue from $49.1 million in 2001 (except for a slight dip in 2003) to $63 million in 2005 and $67.5 million in the trailing twelve months (TTM).  Earnings have also been a bit erratic--climbing from $.36/share to $1.56/share from 2001 to 2002, then dipping to a loss of $(.04)/share in 2003.  Since 2003, earnings have steadily improved and remained profitable with $.40/share in 2005 and $.52/share in the TTM.  This small company has maintained their stock shares outstanding with little change with 7 million shares reported in 2001, increasing to 8 million in the TTM.

Free cash flow has been improving with $1 million in 2003, $3 million in 2004, $4 million in 2005 and $6 million in the TTM.

The balance sheet appears solid with $.8 million in cash and $18.2 million in other current assets, with the total of $19.0 million in current assets easily covering the $9.9 million in current liabilities (yielding a current ratio of 1.92), as well as the $3.4 million in long-term liabilities combined.

What about some valuation numbers on this stock?

Looking at Yahoo "Key Statistics" on MTOX, we find that this is a very small company with a market capitalization of only $137.27 million.  The trailing p/e isn't bad at 32.34, with a forward p/e better at 18.79 (fye 31-Dec-08).  The estimated PEG (5 yr expected) comes in at a very reasonable .95.  Generally stocks with PEG's between 1.0 and 1.5 are considered reasonably priced.  You can infer that a stock with a PEG under 1.0 like this one is relatively cheap, and that a stock with a PEG over 1.5 is relatively expensive.

According to the Fidelity.com eresearch website, MTOX is relatively cheaply priced when evaluated by the Price/Sales ratio coming in with a Price/Sales TTM of 1.75, compared to an industry average of 6.92. Looking at the Return on Equity (ROE) TTM, to evaluate profitability, we find that the company is much more profitable than the rest of the industry with a ROE of of 9.,76%, well above the industry average of 1.54% for its group.

Finishing up with Yahoo, we find that there are 8.21 million shares outstanding and 7.47 million that float.  Of those that float, 0.1% are out short or 9,310 share representing 0.5 trading days of volume (the short ratio).  No dividends are paid and no stock splits are reported on Yahoo.

What does the chart look like?

If we look at a "Point & Figure" Chart on MTOX from StockCharts.com, we can see that after a dip from $8.50 in April, 2002, to a low of $3.00 in March, 2003, the stock has steadily appreciated to its current level of $16.72, where it appears to be staying right above its support line and appearing to be heading for new higher territory.  The stock chart looks strong to me!

Summary:  What do I think?

Well I actually like this stock although it is much smaller than the average stock I look at here on this blog.  The last quarter was strong and showed solid earnings growth (if you remove the one-time tax gain in the prior year) along with steady revenue growth as well.  Certainly, the medical testing area has great growth potential.  Longer-term, the company has shown steady growth the past few years and valuation-wise shows reasonable valuation with a PEG under 1.0, a Price/Sales low for its group, and a Return on Equity well above the industry average.  Finally, the chart looks nice and there doesn't appear to be much in the way of technical weakness on this stock.  I don't own any shares, am not planning right now to buy any shares, but if I were buying shares, this is the kind of stock that would attract me to make a purchase!

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.  And if you get a chance, be sure and visit my Stock Picks Podcast Website!

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.

Absolutely one of my favorite things about writing a blog is to receive comments and emails from readers.  If you are interested in dropping me a line, please feel free to just leave comments write under the entries on the blog and I shall try to respond.  If you would prefer, you can drop me a line at bobsadviceforstocks@lycos.com.  While I cannot promise to get to every email I receive, I shall try to respond to as many as possible.  If you would, please include your first name and where you are writing from.

I received another email from Marcus A.L. who writes from Knoxville, Tennessee with a good question.  Marcus wrote me yesterday:

"Hi Bob,
   Do you trade on "news?" VCA Antech (Woof) should benefit from all the poisoned pet food frenzy that is gaining momentum in all forms of media. I know you have a strict rule of cutting your loses at 8%, but do you ever revisit a stock under any circumstances? Now that we're on the subject of news; do you follow the daily news of the market in general? Do you watch CNBC or read the Wall Street Journal to keep the temperature of the market?


Thanks,
Marcus A. L."

Marcus, you have written a great comment and let me try to respond.  As you know, I recently wrote up and purchased shares in VCA Antech, a company that I greatly admire for many of the reasons I pick stocks.  Great earnings, and great news.  However, I hit my 8% loss and sold my shares, no matter how reluctantly.

I do revisit stocks and occasionally will purchase shares again.  Currently I hold Kyphon (KYPH) which I initially sold at a loss, only to have the opportunity to repurchase a position.  There are other stocks like Hibbett (HIBB) that I don't own, but would love to find the opportunity to re-establish a position.  The same goes with WOOF.

I suspect that VCA Antech will benefit in some fashion from this rat poison in the food problem.  But I doubt that will be significant for them.  The real prognosticator for this stock will be their ability to continue to generate outstanding financial results quarter after quarter.  I suspect they will indeed be able to do this, but time will tell.

My purchases of new positions (or re-establishing old positions) is dictated by my rigid trading indicators.  I need to sell a portion of an existing position at a gain (my so-called 'good news' event), be under my 25 position maximum, and identify a stock that is THAT DAY on the top % gainers list that also meets my particular criteria.

So even if I wanted to add VCA Antech today if I had a sale that permitted me to expand my portfolio, if VCA Antech was not on the top % list that day....well I wouldn't be 'able' to pick it.  Sounds terribly limiting and arbitrary doesn't it?  But it seems to work.

This technique forces me to look at new names all the time.  Instead of limiting my choices to stocks I am familiar with, I am continuously scanning the top % gainers list and reviewing the Morningstar.com facts and figures.  However, if I am indeed interested in re-establishing a position in WOOF, then it is likely that the 'stars will all be aligned' and it will happen :).  I hope.

I personally follow the market by listening to CNBC and watching CNBC when I get a chance, read the Investors Business Daily on occasion, and the business section from the NYTimes.  I also like to scan through the stories on Marketwatch, I love to read Kiplinger's, Money Magazine, Fortune, Forbes, Smart Money, and rarely will pick up a copy of the Wall Street Journal.  

But the temperature of the market is of relatively little importance to my trading strategy which depends on the activity within my own portfolio to determine my own actions.

I hope that my idiosyncratic methods are not too difficult to understand.  However, they certainly aren't likely to be the best way to do things.  They are just the way that I have found that has been working for me!  Let me know how you have chosen to manage your own portfolio when you get a chance!

In fact if any of you have actually employed any of my strategies I discuss here, I would love to hear from you and hear how you have used them, improved upon them, and whether they have facilitated your success or have been unsuccessful for you.

Bob 

RESMED (RMD) IS RATED A BUY

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 the things I like to do on this blog is to share with you my actual holdings in my Trading Portfolio, my actual trades, and the results of such activity.  I started this a bit over a year ago, realizing that I hadn't been keeping you all posted as well as I should on what my actual stocks I own have been doing, and how I have been managing with them.

Two weeks ago I wrote up my Quality Systems (QSII) holding.  Going alphabetically, I am up to ResMed (RMD) and shall try to update you on this position.  I had some interesting comments on that entry and they were not entirely without merit.  I should point out that all sales that I make have negative consequences of both the cost of the transactions (I use a discount broker but that is really necessary if you are going to make the many transactions that I make) and you also are going to incur tax consequences.  

Furthermore, I write this blog not trying to assert that this is the only way, or even the best way to invest.  I write this as my own personal journey through the investing world, sharing with all of you my thoughts and perspectives on investing.  There are many other smarter minds out there, there are other approaches to identifying stocks and averaging up on stocks or whatever.  This is merely my diary of my own technique, a technique that I have adopted after reading of many other approaches and experimenting in a mostly 'seat-of-the-pants' system of investing.  My disciplined approach has been working well for me.  I hope that all of you are able to learn from my successes and failures and utilize as many of my techniques as you find profitable.

I first discussed ResMed on Stock Picks Bob's Advice on December 5, 2003, when the stock was trading at $41.76/share.  This represents a price of $20.88 adjusted for the 2:1 stock split in October, 2005.  

I currently own 150 shares of ResMed (RMD) that were acquired 2/4/05, at a cost basis of $29.87/share. My original purchase was reported on Stock Picks on the same day, February 4, 2005, as 120 shares purchased at $59.67.   RMD had a 2:1 stock split on October 3, 2005, making my effective stock purchase price actually $29.87.

ResMed closed at $50.67 on March 23, 2007, giving me an unrealized gain on these remaining shares (I have sold portions of my holding as the stock has appreciated) of $20.80 or 69.6% on my current holding.  My over-all performance with this stock is lower, because I have taken smaller gains, at both 30% and 60% levels on portions of my original purchase. 

In fact, I sold 30 shares of my original holding (using my original strategy of selling 1/4th of my remaining shares at targeted appreciation points) on 9/27/05 at a price of $76.09/share, representing a gain of $16.42 or 27.5%, leaving me 90 shares before the 2:1 stock split.  Then of my 180 shares,  I sold another 30 shares of RMD on 5/5/06 at a price of   $47.47, representing a gain of $17.60 or 58.9% above my original cost.  

Going forward, my planned next sale would be 1/6th of my 150 shares or 25 shares at a 90% appreciation point or 1.90 x $29.87 = $56.75.  On the downside, I plan on selling all of my remaining shares if the stock should trace back to a 30% appreciation point (1/2 of my highest sale point of 60%) or 1.30 x $29.87 = $38.31/share.

So can I calculate what my actual return has been (still not taking into consideration tax issues) on both my realized and unrealized holdings?  To summarize, I purchased 120 shares of ResMed at $59.67 = $7,160.40.  I have sold two portions of this stock, 30 shares in 9/27/05 with proceeds of $2,329.25 (price of $38.82 adjusted for the 10/05 2:1 split), and 30 shares 5/5/06 with proceeds of $1,424.20 (price of $47.47), giving a sum of $3,753.45 of sales.  I have 150 shares remaining of RMD and with Friday's closing price of $50.67, that means I still have $7,600.50 of stock left.  Thus if I add together the $3,753.45 with the $7,600.50  = $11,353.95.  This represents a gain of $11,353.95/$7,160.40 = 1.586 or 59% appreciation on my original purchase.  This is less than the 69.64% appreciation on the remaining shares but reflects the shares already sold and is fairly close to that figure as well!

Let's take a little closer look at ResMed and see if it still deserves a spot on the blog.

What exactly does this company do?

According to the Yahoo "Profile" on ResMed (RMD), the company

"...engages in the development, manufacture, and marketing of products for the screening, treatment, and long-term management of sleep-disordered breathing and other respiratory disorders. It offers medical equipment for sleep-disordered breathing (SDB), which includes obstructive sleep apnea (OSA) and other respiratory disorders that occur during sleep. The company�s 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."

How did they do in the latest quarter?

On February 6, 2007, ResMed announced 2nd quarter results.  For the quarter ended December 31, 2006, revenue came in at $178.4 million, up 22% over the same quarter ended December 31, 2005.  Net income was $29.0 million, up from $22.3 million last year, and diluted earnings per share came in at $.37/share, up from $.30/share the prior year. 

The company came in a little light on revenue as analysts expectations were for revenue of $182 million.

How about longer-term financial results?

Reviewing the Morningstar.com "5-Yr Restated" financials on ResMed, we can see the beautiful progression in revenue from $204.1 million in 2002 to $607 million in 2006 and $675.5 million in the trailing twelve months (TTM).

Earnings have also steadily increased from $.55/share in 2002 to $1.16/share in 2006 and $1.32/share in the TTM.  During this time, while revenue has been up over 200% and earnings have climbed about 100%, the number of shares outstanding has grown just a little over 20% from 64 million to 77 million in the TTM.  This is an acceptable dilution of shares from my perspective.   No dividends are paid.

Free cash flow has been a little erratic with $19 million in 2004, growing to $31 million in 2005, then falling to a negative $(4) million in 2006, but rebounding to a nice $27 million in the TTM.

The balance sheet is solid with $254.6 million in cash and $336.3 million in other current assets.  This total of $590.9 million can easily cover both the $163.7 million in current liabilities as well as the $117.9 million in long-term liabilities combined.  Looking just at the current ratio, comparing the total current assets of $590.9 million to the $163.7 million in current liabilities yields a very strong ratio of 3.61. (Generally I consider current ratios of 1.25 or higher as being 'healthy' all things considered.)

What about some valuation numbers?

Examining the Yahoo "Key Statistics" on RMD, we find that this is a mid-cap stock with a market capitalization of $3.89 billion.  The trailing p/e is a bit rich at 38.18, with a forward p/e (fye 30-Jun-08) estimated at 25.72.  The growth is expected to be vigorous going forward with a PEG (5 yr expected) estimated at 1.46.  (PEG's of 1.0 to 1.5 are reasonable from my perspective.)

According to the Fidelity.com eresearch website on RMD, the Price/Sales (TTM) for RMD is a very reasonable 5.65 relative to the industry average of 30.09.  Again, according to Fidelity, the Return on Equity (TTM) is just a bit under the industry average of 15.87%, with RMD coming in at 13.64%.

Finishing up with Yahoo, we find that there are 76.80 million shares outstanding with 74.38 million that float.  Currently, there is a bit of a significant short interest on this stock with a short ratio of 5.3 trading days or 4.8% of the float.  I generally use 3 days for my own idiosyncratic cut-off for significance.  If the company continues to report good news, these short-sellers may well be 'squeezed' as they scramble to cover their 'shorts' buy buying shares on the open market.  This could add to any price rise if such good news is forthcoming.

No dividend is paid, and as I noted above, the last stock split was a 2:1 split on October 3, 2005.

What does the chart look like?

If we review the "Point & Figure" chart on ResMed from  StockCharts.com above,  I think we can see that except for technical weakness back in January, 2002, through July, 2002, when the stock declined from $25 to a low of $12.50, the stock has been on a 'tear' with steady price appreciation the past four or five years.  This has been a very strong stock and a strong chart to match!

Conclusion:  What do I think?

Well, I still like this stock a lot.  In fact, I own shares in this stock!  And you should certainly take that into consideration.  I don't talk much about my own personal life, but I can tell you that I personally use one of these CPAP machines and have slept better (when I am not blogging!) and have let my wife sleep better as well!  The stock itself has been kind to me and represents the kind of stock I believe belongs in my portfolio.

The last quarter was solid.  The past five years have been terrific.  Valuation is a bit rich but with the steady performance of this stock, may well be worth the premium. 

Thanks so much for stopping by and visiting!  If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.  If you get a chance, be sure and visit my Stock Picks Podcast Website.  Hopefully, I shall also get a chance to write up and report on a new stock on the Podcast this week!

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 purchased shares in IHS on Thursday, March 22, 2007, and I wrote it up here on the blog.  I promised you that I would write up a few things about this stock, which actually has traded a bit lower since I purchased shares at $44.07.  (IHS closed at $42.10 on 3/23/07) so thus far it hasn't been a knock-out purchase, but I still like the numbers and want to review the company for all of you readers here on Stock Picks!

First of all,

What exactly does this company do?

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

"...provides technical information, decision-support tools, and related services to customers in the energy, defense, aerospace, construction, electronics, and automotive industries worldwide. It operates in two segments: Energy and Engineering. The Energy segment develops and delivers oil and gas industry data on exploration, development, production, and transportation activities to energy producers and oil companies. It also provides decision-support tools and operational, research, and strategic advisory services to these customers, as well as to utilities and transportation, petrochemical, coal, and power companies. The Engineering segment provides solutions, such as technical specifications and standards, regulations, parts data, design guides, and other information to customers in its targeted industries. This segment serves defense, aerospace, construction, energy, electronics, and automotive industries."

How did they do in the latest quarter?

It was the announcement of  1st quarter 2007 results after the close of trading on Wednesday, March 21, 2007, that drove the stock higher on Thursday.  Revenue for the quarter ended February 28, 2007, came in at $152.6 million, up 18% over the first quarter 2006 revenue figure of $129.9 million.  Net income for the quarter increased 36% to $18.4 million or $.32/diluted share, up from $13.5 million or $.24/diluted share in the same quarter last year.  

In addition, the company raised guidance:

"IHS revises guidance upwards to revenue growth in the range of 11 to 13 percent and adjusted EBITDA growth in the range of 18 to 22 percent for the full year ending November 30, 2007."

The adjusted earnings per share of $.38 beat analyst expectations of $.35/share and the revenue of $152.6 million also beat expectations of $148 million in revenue. 

From my perspective, this was a very strong earnings report with strong revenue and earnings growth, beating of expectations, and the raising of guidance.   However, the stock price was hit on Friday, apparently from a non-event (imho) of a shareholder filing to sell 3.8 million shares in a public offering.  At this time, the market seems to have absorbed this news and the stock is trading fractionally higher in after-hour quotes.

How about longer-term financial results?

If we review the Morningstar.com "5-Yr Restated" financials on IHS, we find that the company has steadily been increasing revenue from $339 million in 2002 to $551 million in 2006.  Earnings were $.99/share in 2006 and from the latest report are continuing to show strong growth.  (There are limited figures available on Morningstar) IHS has a long history, but as noted in the history, underwent an initial public offering on the NYSE on November 11, 2005.

The company reported 56 million shares in 2006 and 59 million in the trailing twelve months (TTM).  The company reported $63 million in free cash flow in 2004, $43 million in 2005 and $105 million in 2006.

The balance sheet appears solid with $182.1 million in cash and $198.8 million in other current assets.   This total of $380.9 million, when compared with the $338.5 million in current liabilities yields a current ratio of 1.125.  While not as strong as many of the company reviewed here, this current ratio does not reflect the very low level of long-term debt totaling $40.6 million and the nice free cash flow. 

What about some valuation numbers?

Looking at the Yahoo "Key Statistics" on IHS, we find that the company is a mid cap stock with a market capitalization of $2.47 billion.  The trailing p/e is a bit rich at 42.31, with a forward p/e (fye 30-November-08) estimated at 24.91.  The company is growing rapidly enough that the PEG (5 yr expected) is estimnated at 1.70.  While preferring a value of 1.0 to 1.5, this isn't too far out of line for me.

Checking the Fidelity.com eresearch website, we find that the Price/Sales TTM ratio is indeed a bit steep at 4.32 compared to an industry average of 2.39.   The company is also a bit richly priced in terms of profitability, with a Return on Equity (ROE) (TTM) of 11.15%, compared to an industry average of 14.11%.

Returning to Yahoo, we find that there are 58.79 million shares outstanding with only 23.43 million that float.  As of 2/12/07, there were 834,300 shares out short representing 2.50% of the float or 4 trading days of volume (the short ratio).  While more than my own 3 day rule for significance, this doesn't appear to be a big factor in the recent stock price rise.

No dividends are paid and no stock splits are reported on Yahoo.

What does the chart look like?

If we look at the "Point & Figure" chart on IHS from StockCharts.com, we can see that the stock has moved steadily higher since first trading at $17 in late 2005, when it came public.  The chart simply looks strong to me and does not appear to evidence any particular weakness.

Summary: What do I think?

Well, I liked this stock enough to buy some shares :).  Seriously, with the big move in Bolt (BTJ), I do believe I was biased enough to pick this engineering firm with ties to the energy business.  Their latest quarter was  great with solid revenue growth and earnings growth that beat expectations, and raising of guidance into the upcoming year.  That is often enough to propel a stock higher.  Meanwhile I am down a bit on the purchase, but the company is still interesting.  However, valuation is a bit rich and the balance sheet, while solid, could be stronger with more current assets vs. the current liabilities.  The rest looks nice.

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

Have a great weekend everyone!

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.

With the third partial sale of Bolt (BTJ), this gave me a "permission slip" to add a new position in my Trading Account.  Looking through the list of top % gainers on the NYSE today, I came across IHS (IHS), an oil industry related company making a nice move higher today on the back of solid earnings news.

With my permission slip in hand :), I went ahead and purchased 120 shares of IHS at $44.07.  I shall try to post up an entry on this company as soon as possible to explain my rationale for this selection.  Meanwhile, I wanted to keep you posted with my progress for the sake of 'transparency'.  As I write, IHS is trading at $44.04, up $4.08 or 10.21% on the day.

Wish me luck!

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 34 shares of my Bolt (BTJ) holding at a price of $33.08.  These shares were purchased 1/12/07 at a cost basis of $17.44/share.  Thus, I had a gain of $15.64 or 89.7% on this sale.  My target was a 90% gain, which at the time I entered the order, Bolt had reached.

This is my third sale of Bolt, having sold 50 shares on 2/23/07 with proceeds of  $1,148.01 at a price of $22.96, representing a gain of $5.52 or 31.7% (my targeted 30% appreciation point), a second sale on 3/12/07 of 41 shares with proceeds of $1,165.71 at a price of $28.43, representing a gain of $10.99 or 63% since purchase (my targeted 60% 2nd appreciation point), and today's sale of 34 shares with proceeds of $1,124.70, at a price of $33.08, representing an appreciation of 89.7% (virtually at my 90% 3rd sale point.)

My strategy shall be to sell another 1/6th of remaining shares or 175/6 = 29 shares if the shares should hit my 4th targeted sale point on the upside at a 120% appreciation point.  This is calculated by multiplying 2.20 x $17.44 = $38.37.

On the downside, I allow a stock that has been sold more than once to decline to 50% of its highest appreciation sale, or since I have sold at a 90% appreciation point, I would unload ALL remaining shares if Bolt should decline to a 45% appreciation point, which calculated, works out to 1.45 x $17.44 =  $25.29.  I always also reserve the right to sell all remaining shares on the back of any announced fundamentally bad news.

In terms of portfolio management, since this is a 'good news' sale, which for me is a sale at an appreciation event instead of a 'bad news' sale on a decline or fundamentally bad news announcement, and since I am below my 25 position maximum (currently at 17 positions), I thus have a 'permission slip' to start looking for a new position to add today!

And as I like to always say :), that nickel is burning a hole in my pocket already!  Thanks so much for stopping by and 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.

I haven't been writing up many new stocks the past few days.  In fact, last weekend I missed my review (I can tell you that all the 3 or 4 stocks I was to review from that week a year ago actually did poorly, but I shall get you the details hopefully this weekend.)  There are a lot of things I need to take care of around my house and I suspect I shall be laying a bit low the next few days or so.  But I did want to get to a few letters I received and answer the comments the best I can.  

I always appreciate receiving comments and communication from people who stop by and visit my blog.  I truly am an amateur investor.  I don't have all or even am sure that my answers are correct or the best response to your inquiries.  So please do your own homework on all of this.  My stock strategy has been working for me.  And I enjoy sharing with you my own peculiar approach to picking stocks and managing my portfolio.  This blog has helped me develop my own discipline in dealing with the stock market.  I now know what I am going to do if stocks soar (as they did yesterday) or collapse (as they did a couple of weeks ago).  I am thankful to all of you who have written in suggestions and have added comments to these discussions. 

Back to the subject :).

First letter from Steven T. who wrote from Frankenmuch, Michigan:

"Bob,  Just came across your website.  Wow! What agreat website!  Packed with information.
     Was wondering if in all your past postings if there are ones( dates) that you could drect me to where you may have discussed bank stocks.  I am an avid bank stock investor and am always on the look out for information on them.  Am particularly interested in regional/community banks.

Sincerely,

Steven T"

First of all, thanks for you comments.  There are indeed a lot of 'stuff' packed into this website.  But the organization is certainly lacking.  But I can save you the search.  In general, I haven't been writing up financials or bank stocks on the blog.  I don't have a good handle on how to evaluate these types of companies.  My approach to using Morningstar.com works well with other companies, companies that make 'widgets' or sell 'stuff' at the retail level.  

That certainly doesn't mean that bank stocks, especially regional/community banks aren't a GREAT investment--perhaps.  It just means I don't have an opinion on them and haven't been buying any.  They may well be the GREATEST place to invest!  In fact, if you have an approach to buying regional/community banks, and would be kind enough to share with me and my readers your technique, please write in and I would be happy to post it---and yes, consider using it as well :).  My particular approach is NOT necessarily the best way to pick stocks.  I do not want to ever say that.  I am just sharing with all of you some stocks that meet my own particular approach of examining investments.

Next letter.

Jim C. wrote:

"Dear Bob,

 

Stumbled across your website and found it interesting.  You describe yourself as an amateur stock picker so I quess that would put me at the embryonic stage.  Been wanting to get involved in securities investing for a quite a while now and think that once I've finished reading some of my preliminary books to start my education that I would like to handle my own portfolio because no one will care more about my IRA and retirement funds more than me.  My question is do you have a recommendation for a stock research program for beginners to experienced investors?   I've been to seminars pitching "Market Investors", had a hedge fund manager recommend the "Worden Brothers TC 2000" and have heard good and bad about both but I just want to ask around as much as possible for any good software programs that can help with the research and provide good solid, legitimate recommendations for investment.  I'm sure you're busy with more important issues on your blog but if you could find the time to help a late starting retirement embryo like me I'd sure appreciate it.  Thankyou.

 

Jim C"

Jim, thanks for writing.  And no, I DON'T have more important things to write about than to discuss a great question with a reader.

Unfortunately, like the prior reader's inquiry, I am going to tell you 'I don't know.'.  In other words, I don't use any of that fancy investment software to come up with my own stock picks.  I don't even automate my buys and sales in my own investment account.  I manually go through the list of stocks and my brokerage house will let me know what % gain or loss I have.  I then figure out (in my head) whether I need to sell a stock at a loss or a gain.

When I go to buy a stock, I manually go through the lists of top % gainers.  I then go over to Yahoo, or Morningstar.com, or Fidelity.com, or wherever I need to go online to get the news or information.  On each entry I post these links.

So I don't have an opinion on software because I don't use any.  That does not mean that software isn't a GREAT option.  It might be. It just means that since I don't use any of these programs, I don't have an opinion on them.  Let me know what you find out and what you decide!   And if any of you readers have comments or suggestions for Jim, PLEASE leave them on the comments right here on the blog or email me at bobsadviceforstocks@lycos.com and I can share with Jim your ideas.

Finally, I had an email from Marcus A. L. from Knoxville Tennesee who wrote:

"Hi Bob,

   I'm still plundering through your website; I'm adopting you style of stock picking. I saw this stock (SIMO) on "today's top gainers list." Fundamentally speaking, everything looks great; if you have a minute or two let me know what you think of it. I'm going to wait until the stock dips, and I then I'm pulling the trigger. Hopefully she will continue to climb the market, although she is up over %100 for the year. No matter what happens, if she falls %8 i will get out asap.

 

Marcus A L"

Marcus, thanks for writing.  First of all, I don't have any shares of Silicon Motion Technology ADR (SIMO).  Let's take a very brief view of this stock and see if it fits my strategy.  The stock, which is an ADR, meaning it is an American Depository Receipt (or foreign-based company) which is trading on some equivalent basis in the States, is actually based in Taiwan.  That still does not 'disqualify' the stock as I have written up and owned ADR's myself.  But that is a fyi anyhow.  I am sure you knew this anyhow.

According to Morningstar, the company

"...develops and manufactures embedded graphics, digital signal processing, and multimedia companion chips. The company's graphics, video, and audio applications are designed for use in a wide variety of products, including handheld devices, wireless broadband terminals, LCD presentation devices, and other consumer devices."

So far so good.

Latest quarter: sales up 34% year over year and 13% sequentially.  Nice.   Net income up 36% year over year and 16% sequentially.  Very nice. EPS came in at $.32 vs $.24 year over year and up 15% sequentially from $.28 prior quarter.  Also very nice.

The Morningstar.com "5-Yr Restated" is a bit sparse with information.  However, revenue does show steady growth, net income is growing, there aren't a lot of information (any) on earnings/share or total shares.   I suspect that this ADR is new for trading in the United States.  Free cash flow is growing and the balance sheet is solid.

You are basically correct.  This is the kind of stock I usually do like.  However, a couple of caveats, the data isn't very good on Morningstar.com, suggesting a recent IPO.  Also, the chip business is notoriously cyclical with periods of booms and busts common.  So be careful.

I do like you commitment to selling a stock at an 8% loss if needed.  I am not quite in agreement with your strategy of waiting for the stock to dip.  That doesn't mean it isn't a good way to do it.  It just isn't how I buy stocks.  I like to buy stocks when they are making a big % gain.  Might be a little riskier than your approach.  Also, I only buy when my own portfolio gives me a 'signal'.  If you are just starting out, then this might well be a good stock to add into your portfolio.  Thanks so much for writing. 

Remember that I am truly an amateur.  So you will need to do your own homework (as you are doing!) and develop your own rules to determine your own buys and sales.  Pick something that works for you and stick to it!  You won't be successful all the time.  But if you are profitable most of the time you will be ahead of the pack.

Thanks again for all of you who took the time to write!  Take everything I write with a 'grain of salt' and do your own homeowork and develop your own buying and selling strategy. 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.

I like to write about stocks!  But in order to find out what works and what doesn't I also find it important to 'look back' and review past stock picks and discussions about stocks.  These reviews assume a "buy and hold" approach to investing.  The performance evaluation assumes an equal $ purchase of each stock discussed that week and a decision to hold the stocks without regard to their performance.  In reality, I advocate and practice a disciplined buying and selling strategy that limits losses and starts realizing profits as they develop.  This difference in strategy would certainly affect the performance of any investment and should be considered when reading these reviews.

However, for the ease of review, I have chosen to assume a buy and hold approach for all stocks discussed.

On October 31, 2005, I posted Hi-Tech Pharmacal (HITK) on Stock Picks Bob's Advice at a price of $37.55.   HITK had a 3:2 stock split on 1/12/06 with a resultant 'pick price' of $25.03.  HITK closed at $11.48 on March 23, 2007, for a resultant loss of $(13.55) or (54.1)%.

On March 8, 2007,  HITK announced 3rd quarter 2007 results.  For the quarter ended January 31, 2007, net sales came in at $18.0 million, down 21% from the $22.9 million reported in the year-earlier same quarter.  Net income declined to $.7 million from $4.9 million in the same quarter last year, and diluted earnings per share also declined sharply to $.06/share, down from $.36/share last year.

HI-TECH PHARMACAL (HITK) IS RATED A SELL

On November 2, 2005, I posted Aspect Medical (ASPM) on Stock Picks Bob's Advice when the stock was trading at $35.40.   ASPM closed at $15.66 on March 23, 2007,  for a loss of $(19.74) or (55.8)% since posting.

On February 7, 2007, Aspect Medical reported 4th quarter 2006 results.  For the quarter ended December 31, 2006, revenue increased to $24.0 million from $21.6 million in the same quarter last year.  Net income before a one-time tax benefit decreased to $2.4 million from $3.1 million the prior year.  With the tax benefit, net income increased to $30.6 million this year vs. $3.1 million in the same quarter last year or $1.32/diluted share vs. $.13/diluted share last year.  Even though I am convinced of the importance of GAAP results, one-time tax reversals, etc., should be understood before believing that earnings really have increased almost ten-fold, when actually they declined.

In addition, the company guided first quarter results to below expectations. They guided to first quarter profit of $.01 to $.03/share while analysts had been expecting first quarter earnings of $.16/share.  Also, the company predicted revenue of $22.6 to $23.6 million in the first quarter of 2007.  Again, analysts had been expecting revenue of $25.5 million in the quarter.

ASPECT MEDICAL (ASPM) IS RATED A SELL

Finally, on November 3, 2005, I posted Fair Isaac (FIC) on Stock Picks Bob's Advice when the stock was trading at $44.50.  FIC closed at $38.49 on March 23, 2007, for a loss on this selection of $(6.01) or (13.5)% since posting.

On January 24, 2007, Fair Isaac announced 1st quarter 2007 results.  For the quarter ended December 31, 2006, revenue came in at $208.2 million ahead of the $202.8 million reported in the same quarter in the 2006 fiscal year.  Net income was $31.2 million or $.52/diluted share vs. $28.5 million or $.43/diluted share.  However, $2.3 million of income resulted from a one-time tax benefit.  

The company slightly missed revenue expectations of $210 million. 

FAIR ISAAC (FIC) IS RATED A HOLD.

So how did I do with these three stocks during that week in October/November, 2005?  In a word, well the best word would be AWFUL.  I had three stocks selected and ALL three stocks declined after I picked them.  Is there anything else I need to write to tell you there is nothing guaranteed about what I write?  It is important to keep looking through stocks, letting stocks that don't work out go, and hanging on to the winners!  Anyhow, my average performance for these three was a loss of (41.1)%.  YIKES....now you can see why I waited a week to review these three!

Thanks again for stopping by and visiting!  If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.  If you get a chance, be sure and visit my Stock Picks Podcast Website.  Have a great week trading and investing!

Bob