SYX

[David Randolph]

You could not be more right.  SYX reappeared on the IBD 100 list this weekend at #4.  Our shares are beginning to look very cheap.  Great call David.  Do you have a target in mind?  I think $24-$25 is probable before the next 10Q.

Hi buddjas1, you know I don't like to think in terms of price targets, I prefer to study the developments on a daily basis and keep adjusting my projections as more information becomes available.

But I can say that with the current public information SYX should be trading at $32 to be fairly valued, in my opinion. Because then it would be valued at 23 times projected 2006 full year earnings, which is its industry average.

On Friday the stock recovered all it lost on Thursday. I don't think this latest gap, being a breakaway gap, will be closed soon. SYX is currently the 3 Stocks on Fire Portfolio's biggest winner, and I tend to keep my winners.

I'll keep on holding SYX.

[David Randolph]

To bad I was not visiting 3SOF the last couple of months. I had bought some SYX after the 2nd drop in October at 10.04...then bought more at around 11 and 12. I would have perhaps held my shares.

Yes, I think you would have held SYX HANDBALLJIM You see, I had been losing 13% on SYX and I held with full confidence that it would rally, because my trade was both technically and fundamentally based.

At the time I think I was looking for a quick profit, but I did realize it seemed to be a good company. But when you see a large drop (black candlestick) on the chart and then you see it followed by another...it kind of put some fear in the back of my head. So I ended up selling due to these concerns.

Yes, the mistake was looking for a quick profit in the first place. If you're looking for a quick profit, you can't have much profound reasons to buy the stock, just short term motives. In the end you're thrown out of it with a small profit, or many times, a small loss (if you're disciplined enough to take the loss as quickly as you take the profit).

Over the long run you will never grow rich using a short term strategy. Let me invite you to read Reminiscences' chapter 5, it explains pretty well the difference between betting on small fluctuations and capturing the big swings, that is, the vital difference between gambling and speculating:

Reminiscences of a Stock Operator - Chapter 5

I have yet to read any helpful information about after hours strategies. After hours trading seems to be making and breaking many stocks these days. I am sure if a book comes out written by a professional trader on this subject it would sell off the chain. Has anyone seen any helpful info online?

No, I haven't seen it, and I think it would be useless (but I agree it would sell well). That is another form of short term trading that would inevitably fail, even more given it is an illiquid time to trade. Taking SYX as an example, do you think it slowly climbed in AH, from $14 to $16? No, it went up immediately as the news was released and with very few shares traded.

Stick around, I feel you want to improve your trading style, and of course, results

[David Randolph]

SYX opened with a small gap up, tried to close it, but demand was too strong. I don't know if this latest gap will be closed or not, and frankly, I couldn't care less.

SYX is worth at least $32 with the current fundamental picture, of course I'll continue holding, even though I already have a 22% profit on the stock.

[David Randolph]

www.tigerdirect.com is getting traction, growing sales 30.7% from the year ago levels:

«Net sales for the nine months ended September 30, 2006 increased 10.7% to $1.7 billion compared to $1.5 billion in the year-ago period. Net sales in the first nine months of 2006 included approximately $583.4 million of internet-related sales, a 30.7% increase from $446.5 million of internet-related sales in the prior year's first nine months.»

That is helping to increase the gross profit margin:

«The gross profit margin was 15.3% in the current period, compared to 14.5% in the year-ago period. The increase in the gross profit margin resulted from a favorable change in product mix, increased internet sales, increased consideration from vendors and reduced warehouse costs for staff and supplies.»

Selling, general and administrative expenses are going down on a relative basis:

«Selling, general and administrative expenses as a percentage of net sales was 12.3% in the current nine month period compared to 13.2% in the year-ago period.»

Strong profits:

«Net income for the first nine months was $37.1 million, or $1.06 per basic share and $.99 per diluted share, compared to $8.0 million, or $.23 per basic and $.22 per diluted share, in the first nine months of 2005.»

I expect $1.40 EPS for fiscal 2006. So the current earnings multiple is 12. SYX's industry average is 23.

The best is yet to come on SYX.

[buddjas1]

Has 3SOF ever considered putting more than 6.66% of capital into low risk, high reward stocks like SYX?  I noticed that 3SOF will break the rule on the low end for pink sheet stocks; how about on the high end.  In other words, why treat all stocks the same?  After all, more SYX is better than 25% cash.

[David Randolph]

Has 3SOF ever considered putting more than 6.66% of capital into low risk, high reward stocks like SYX?  I noticed that 3SOF will break the rule on the low end for pink sheet stocks; how about on the high end.  In other words, why treat all stocks the same?  After all, more SYX is better than 25% cash.

Yes, we've considered that in the past, but never done it because of money management rules. Money management rules say that to be full invested 3 Stocks needs 15 different holdings. This reduces the overall risk of the portfolio. Imagine I invested 20 or 30% of capital in just one holding and that single stock collapsed due to some overnight news? The stock specific risk would be too high. And remember, as a stock goes up its weighting in the overall portfolio goes up with it. For example, SYX is now 7.9% of the portfolio.

But you're right, money invested in SYX is theoretically better than just sitting in cash, and certainly better than the crap I've been buying lately

Coming back to SYX, fundamentals are awesome, the stock just needs to cross above $19.25 for the world to see it. And I'm pretty positive it will do that ... as positive as I can be on a stock.

I'll continue holding SYX for the foreseeable future ... just a quick check at www.tigerdirect.com ... extremely aggressive and competitive as always, I love it

[David Randolph]

SYX is probably the most legitimate holding of the Stocks on Fire Portfolio, both from a technical and fundamental standpoint, no surprise it is the biggest gainer.

I was curious to see how they could continue as aggressive as they've been selling their products, and they just don't seem to stop: www.tigerdirect.com

I want to make some long term estimates on SYX, considering its recent revenue growth, gross and net profit margins, but for now let me just keep on saying that SYX is worth at least $32 a share with the current public information as you can read on the rest of this thread.

[David Randolph]

SYX is the best and continues to prove it everyday. And I'm not talking about the share price, I'm talking that today, when I entered www.tigerdirect.com, there were new technical developments that will lead to increasing sales.

Watch how now you have your shopping cart and other appealing info on the right part of the website.

These guys are working everyday to increase shareholder value. They sure deserve my money.

Unfortunately I don't have much time for today's updates (it's my brother's birthday), so let me just say ... that SYX is a long term holding of the Stocks on Fire Portfolio.

[buddjas1]

This is just the beginning.  There are still 2.8 million shares short out there. 

[David Randolph]

This is just the beginning.  There are still 2.8 million shares short out there. 

Thanks for adding even more fuel to SYX's bullish case buddjas1

We had more positive news today:

11:16am 01/04/07 TigerDirect Expands Payment Options with SECURE-eBill(TM) - BusinessWire

And a marvelous bullish breakout of the all important $19.25 resistance level. The sky is clear, current fundamentals justify at least $32 price per share, I'll continue holding SYX.

[eggman11]

Hello,

I was wondering if anyone has a good idea of good entry price for SYX. I am late to the party, but it has had a large run-up in the past four days. I am more of a fundamentalist than a technician and it looks due for a pullback, the 10-day average is currently around $17.50, so it does look extended short term. Any suggestions of a decent entry price would be appreciated?

Thanks

[David Randolph]

Hello,

I was wondering if anyone has a good idea of good entry price for SYX. I am late to the party, but it has had a large run-up in the past four days. I am more of a fundamentalist than a technician and it looks due for a pullback, the 10-day average is currently around $17.50, so it does look extended short term. Any suggestions of a decent entry price would be appreciated?

Thanks

When you wrote this post I was about to write: "What's wrong with the current  market price? It looks like a great buy to me!"

But then I thought indeed it could retrace a bit ... it ended at $19. The fact is I don't have a clue about the short term. It can go down to the 10 days moving average, currently at $17.53 or it can run to new highs above $20 on Monday.

The only thing I know is the fundamental value of the stock is $30 plus and the short/medium and long term technical trend is bullish. Sure, perhaps you can catch it at $17.50. But you also risk watching it run to $30 without you on board.

I have nothing better to do but to buy and hold SYX. Good luck

[eggman11]

Thanks David for your reply. After I posted it dipped sharply and was able to pick up some shares @ $18.42. It was due for a pullback and it looked it all happened in one day. dipped as low as $18.10, but came back and closed at $19. I think we will move to new highs next week.

[David Randolph]

Thanks David for your reply. After I posted it dipped sharply and was able to pick up some shares @ $18.42. It was due for a pullback and it looked it all happened in one day. dipped as low as $18.10, but came back and closed at $19. I think we will move to new highs next week.

I'm glad you joined me on SYX eggman11, it sure looks like a great long term opportunity. www.tigerdirect.com is rocking and rolling and SYX is selling for 0.28 times revenues !!!

I don't see any analyst covering the stock. SYX is an hidden gem. When Q4 results are released I see it pumping to $30.

Online retailers will continue to grow, and grow, and grow for many years to come. It just makes sense to me and a growing consumer base across the world. I can compare products faster and get cheaper prices, because online retailing eliminates many costs of selling products.

I don't have to say I'll keep on holding SYX, you know it's my darling stock.

[oicpecnoc]

I tried to review the entire thread to see if this has been discussed and I couldn't find anything, but if this is a repeat, I apologize in advance.

http://www.stocklemon.com/10_12_06.html

If you don't have time to read it, the biggest worry would be that their pricing is rebate driven, and it is apparently a pretty big adventure to get the rebate according to many complaints.  The point from SL is that SYX owns the company that provides the rebates.  They also point out that this is a pretty big industry problem, and that some big boys are actually moving away from the rebate game. 

I bought this in the mid 12's, the #'s can't be argued, and Cramer gave it a Bull tonight as well, but I am glad I know some of the potnetial landmines I had not seen before.  I will probably bail in the low 20's, hoping of course it gets there, not necessarily because of the potential landmines, its just that my piggish ways have cost me in the past.