Stock Review: Part 2
More overviews of stocks.
PTSI - A vanilla trucking company that continues to surprise. They keep growing earnings ~40% each quarter and show no signs of slowing down. They are immune to oil price increases - those surcharges are passed on to customers. The key is margin growth: 85% of their costs are flat (fuel cost increases are offset with fuel surcharges).
PWR - PWR is part o fthe value chain of laying electrical and optical cable. Earnings growth is expected to rise 300% on a 20% revenue increase. My belief is that regular telephone companies must start offering video or they risk a slow and painful death to cable companies. The only option that I can see is to use optical fibre - laying optical fibre to each home. They would use companies like PWR to do the actual cable deployment.
RFMD - They had solid earnings on revenue growth of some 50%. RFMD is very cell phone dependent and I continue to have concerns about cell phone growth. But I love how they have a cheap forward P/E
STX - Komag and IVAC released strong earnings. I think that STX will do very well, although a slowdown in iPod sales will be offset by DVR sales. The PC sales slowdown will be dulled somewhat by an increase from game players (in a few months). Storage continues to be strong as well. In other words - there is growth but it is probably barely double digit. STX will be gaining from margin gains following its acquisition. There may be better opportunities. Meanwhile, I suspect that the price movement is an example of buy-on-the-rumor.
TIE - Strong earnings, expectations beaten, forecasts raised - everything I expect from TIE. TIE expects to reach $2 per share for 2006. A tthe same time, it will be adding production by year end. I am very positive about the company's prospects, but I don't feel that the market is behind it.
TRID - As expected, a blowout quarter. Sales up 150%. Earnings remain cloudy due to the options issue, but I'll assume that they at least come close to expectations. That gives them a ~25 P/E. Analysts continue to show only admiration for the company, but the market is mostly wary. I would suggest that they are amongst the most undervalued companies I have reviewed.
TRN - railroad cars and trucks. I am fascinated by this mundane company with strong sales growth. I definitely think that they are undervalued and worth buying at this price.
TTI - Like GRP, another drilling equipment/services company with a lot of oomph. I think that they will beat earnings. A buy.
VOL - Down 15% in 5 days. After beating expectations by almost 70%, it's been almost 8 weeks since their earnings. So they are settling down a bit.
WCC - Wesco's in the construction business and has been punished for it. It doubled earnings Y/Y and beat expectations by 10%. Nevertheless, I do see a winding down so I would avoid.
WIRE - Live by the sword, die by the sword. WIRE is a copper play
http://finance.yahoo.com/q/bc?t=3m&s=WIRE&l=on&z=m&q=l&c=pcu
And copper is back in fashion. Or at least not as oversold.
WSO - Air conditioning services. And this heat wave will boost their success. They just had earnings increase 27% last quarter, and I bet this quarter will be stronger. One of the reasons I own them is because of the housing construction boom: everyone will need air conditioning support.
ZOLT - Who knows? Seriously, this is a small company that could be huge. There is strong demand for their product.
ZRAN - They beat earnings but gave a weak Q3 forcast: potentially 5% drop in revenue. I don't like that fuzziness, otherwise I would say that they are a screaming buy.
GHL - Strong performance this quarter: earnings doubled Y/Y. I continue to be concerned about the insider shares that will get sold and dilute the value. However, they move exactly as the competition LAZ & GS except that GHL has the stock share overhang.
http://finance.yahoo.com/q/bc?t=6m&s=GHL&l=on&z=m&q=l&c=laz
http://finance.yahoo.com/q/bc?t=6m&s=GHL&l=on&z=m&q=l&c=gs
M&A continues to be a powerful draw. I recomend GS over GHL at this time.
ITG - I like this financial trading company. Slow and steady growth.
MRVL - What a beaten down stock. Close to its 52 week low, the price and PEG are now at the right level to get back in. A definite BUY.
PCP - I own this company and I just watch it grow. It was hit during the last 3 months but is back almost all the way. It supplies critical parts to Boeing and the military and sees solid growth.
CSH - Down following pre-earnings excitement. I see the long arm of an investment fund at work here - unloading post earnings. The company is growing and is well positioned for any slowdown. To be brutally honest, pawnbrokers and the like do better in bad times, and a slowdown in the housing industry will affect blue collar workers the hardest.
That being said, the market values their competition more highly:
http://finance.yahoo.com/q/bc?s=CSH&t=3m&l=on&z=m&q=l&c=ezpw
I find that strange considering that CSH is better value: better margins and lower P/E.
CELG - I feel that this is an overhyped company and the recent earnings continue to make me feel that way. Very little growth but a ~90 forward P/E.
SNDK - This is huge: SNDK is buying Msystems (FLSH). This was announced today and probably the reason for the recent stock run-up. This is a good move.
AKAM - Downloading has yet to peak. Movie downloading is still second to buying CDs. Meanwhile, TV show and movie downloading is just starting. AKAM is the leader here and there is plenty of room for others as well. In fact, if you are a cable company offering VoD, why not add music and movie download capability as well. Just as NFLX made Blockbuster a dinosaur, I suspect AKAM will suffer from Comcast or TWC VoD capabilities.
But demand is strong for this service.
GILD - Stable growth but margins are suffering.
WFMI - I love Whole Foods. They are growing and they have no competition to speak of. Sure, Walmart and Safeway and others want in, but they are just not going to do more than nibble at the edges. That being said, WFMI has a 51 P/E and that's just too high for me.
WHR (Whirlpool) - Sales rose 33% and profits fell 20%. Take out the Maytag acquisition and sales were up only 5%. And that 33% was 5% below expectations. Meanwhile, even with the extra sales, profits fell 20%. Hmmm, what isn't right here? WHR also admitted that materials costs are rising but it hopes to offset this with price increases.
WHR has cut expected North American unit shipment growth from 4% to 2%. North America is responsible for 75% of total sales.
So to net it out - growth is slowing but they hope to maintain sales by raising prices 12%.
So I am correct that the housing slowdown is affecting sales. I am incorrect that the hit would be felt now.
The question is whether things will get worse going forward. WHR is counting on at least keeping sales unit flat in North America and raising prices 12%. In their corner is sizeable market share (aka pricing strength), more homes being built (demand for appliances), and new products (hey! wireless refrigerators). I think a housing slowdown will be deeper than they expect, the pricing strength will not materialize, and nobody cares about their new products.
Meanwhile, they have to sell many of the companies they bought along with Maytag (Amana, Hoover). I expect them to have to take a writedown in goodwill because I doubt they will get full price during a housing slowdown.
ETH - Furniture is not quite done, it seems. Revenue rose 12% and earnings rose 15%. Not quite the drop that I expected. Nevertheless, I take comfort in the fact that they have stated slower expectations going forward. It has said that it doesn't have as much business as they expected ("written business").
Competitors are less excited. Stanley, Furniture Brands and LaZ Boys have admitted that problems are about to happen in the furniture business.
CPWM (Cost Plus) - Another in our housing stocks. Nothing new
RSH - Radioshack is struggling to stay afloat. They will fall 10% on bad news or a bad day in the market
NVL - They just got handed a default notice. Good for us.
PTSI - A vanilla trucking company that continues to surprise. They keep growing earnings ~40% each quarter and show no signs of slowing down. They are immune to oil price increases - those surcharges are passed on to customers. The key is margin growth: 85% of their costs are flat (fuel cost increases are offset with fuel surcharges).
PWR - PWR is part o fthe value chain of laying electrical and optical cable. Earnings growth is expected to rise 300% on a 20% revenue increase. My belief is that regular telephone companies must start offering video or they risk a slow and painful death to cable companies. The only option that I can see is to use optical fibre - laying optical fibre to each home. They would use companies like PWR to do the actual cable deployment.
RFMD - They had solid earnings on revenue growth of some 50%. RFMD is very cell phone dependent and I continue to have concerns about cell phone growth. But I love how they have a cheap forward P/E
STX - Komag and IVAC released strong earnings. I think that STX will do very well, although a slowdown in iPod sales will be offset by DVR sales. The PC sales slowdown will be dulled somewhat by an increase from game players (in a few months). Storage continues to be strong as well. In other words - there is growth but it is probably barely double digit. STX will be gaining from margin gains following its acquisition. There may be better opportunities. Meanwhile, I suspect that the price movement is an example of buy-on-the-rumor.
TIE - Strong earnings, expectations beaten, forecasts raised - everything I expect from TIE. TIE expects to reach $2 per share for 2006. A tthe same time, it will be adding production by year end. I am very positive about the company's prospects, but I don't feel that the market is behind it.
TRID - As expected, a blowout quarter. Sales up 150%. Earnings remain cloudy due to the options issue, but I'll assume that they at least come close to expectations. That gives them a ~25 P/E. Analysts continue to show only admiration for the company, but the market is mostly wary. I would suggest that they are amongst the most undervalued companies I have reviewed.
TRN - railroad cars and trucks. I am fascinated by this mundane company with strong sales growth. I definitely think that they are undervalued and worth buying at this price.
TTI - Like GRP, another drilling equipment/services company with a lot of oomph. I think that they will beat earnings. A buy.
VOL - Down 15% in 5 days. After beating expectations by almost 70%, it's been almost 8 weeks since their earnings. So they are settling down a bit.
WCC - Wesco's in the construction business and has been punished for it. It doubled earnings Y/Y and beat expectations by 10%. Nevertheless, I do see a winding down so I would avoid.
WIRE - Live by the sword, die by the sword. WIRE is a copper play
http://finance.yahoo.com/q/bc?t=3m&s=WIRE&l=on&z=m&q=l&c=pcu
And copper is back in fashion. Or at least not as oversold.
WSO - Air conditioning services. And this heat wave will boost their success. They just had earnings increase 27% last quarter, and I bet this quarter will be stronger. One of the reasons I own them is because of the housing construction boom: everyone will need air conditioning support.
ZOLT - Who knows? Seriously, this is a small company that could be huge. There is strong demand for their product.
ZRAN - They beat earnings but gave a weak Q3 forcast: potentially 5% drop in revenue. I don't like that fuzziness, otherwise I would say that they are a screaming buy.
GHL - Strong performance this quarter: earnings doubled Y/Y. I continue to be concerned about the insider shares that will get sold and dilute the value. However, they move exactly as the competition LAZ & GS except that GHL has the stock share overhang.
http://finance.yahoo.com/q/bc?t=6m&s=GHL&l=on&z=m&q=l&c=laz
http://finance.yahoo.com/q/bc?t=6m&s=GHL&l=on&z=m&q=l&c=gs
M&A continues to be a powerful draw. I recomend GS over GHL at this time.
ITG - I like this financial trading company. Slow and steady growth.
MRVL - What a beaten down stock. Close to its 52 week low, the price and PEG are now at the right level to get back in. A definite BUY.
PCP - I own this company and I just watch it grow. It was hit during the last 3 months but is back almost all the way. It supplies critical parts to Boeing and the military and sees solid growth.
CSH - Down following pre-earnings excitement. I see the long arm of an investment fund at work here - unloading post earnings. The company is growing and is well positioned for any slowdown. To be brutally honest, pawnbrokers and the like do better in bad times, and a slowdown in the housing industry will affect blue collar workers the hardest.
That being said, the market values their competition more highly:
http://finance.yahoo.com/q/bc?s=CSH&t=3m&l=on&z=m&q=l&c=ezpw
I find that strange considering that CSH is better value: better margins and lower P/E.
CELG - I feel that this is an overhyped company and the recent earnings continue to make me feel that way. Very little growth but a ~90 forward P/E.
SNDK - This is huge: SNDK is buying Msystems (FLSH). This was announced today and probably the reason for the recent stock run-up. This is a good move.
AKAM - Downloading has yet to peak. Movie downloading is still second to buying CDs. Meanwhile, TV show and movie downloading is just starting. AKAM is the leader here and there is plenty of room for others as well. In fact, if you are a cable company offering VoD, why not add music and movie download capability as well. Just as NFLX made Blockbuster a dinosaur, I suspect AKAM will suffer from Comcast or TWC VoD capabilities.
But demand is strong for this service.
GILD - Stable growth but margins are suffering.
WFMI - I love Whole Foods. They are growing and they have no competition to speak of. Sure, Walmart and Safeway and others want in, but they are just not going to do more than nibble at the edges. That being said, WFMI has a 51 P/E and that's just too high for me.
WHR (Whirlpool) - Sales rose 33% and profits fell 20%. Take out the Maytag acquisition and sales were up only 5%. And that 33% was 5% below expectations. Meanwhile, even with the extra sales, profits fell 20%. Hmmm, what isn't right here? WHR also admitted that materials costs are rising but it hopes to offset this with price increases.
WHR has cut expected North American unit shipment growth from 4% to 2%. North America is responsible for 75% of total sales.
So to net it out - growth is slowing but they hope to maintain sales by raising prices 12%.
So I am correct that the housing slowdown is affecting sales. I am incorrect that the hit would be felt now.
The question is whether things will get worse going forward. WHR is counting on at least keeping sales unit flat in North America and raising prices 12%. In their corner is sizeable market share (aka pricing strength), more homes being built (demand for appliances), and new products (hey! wireless refrigerators). I think a housing slowdown will be deeper than they expect, the pricing strength will not materialize, and nobody cares about their new products.
Meanwhile, they have to sell many of the companies they bought along with Maytag (Amana, Hoover). I expect them to have to take a writedown in goodwill because I doubt they will get full price during a housing slowdown.
ETH - Furniture is not quite done, it seems. Revenue rose 12% and earnings rose 15%. Not quite the drop that I expected. Nevertheless, I take comfort in the fact that they have stated slower expectations going forward. It has said that it doesn't have as much business as they expected ("written business").
Competitors are less excited. Stanley, Furniture Brands and LaZ Boys have admitted that problems are about to happen in the furniture business.
CPWM (Cost Plus) - Another in our housing stocks. Nothing new
RSH - Radioshack is struggling to stay afloat. They will fall 10% on bad news or a bad day in the market
NVL - They just got handed a default notice. Good for us.
posted by Andrew at
6:49 PM
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