Give me 3 Stocks

[David Randolph]

Hello, please provide me three stock tickers to be analyzed tomorrow as a reply to this post. The 3 Stocks on Fire Team is studying new technologies that will make it possible for me to analyze more than 3 stocks, but for now that's all we can do.

The first 3 tickers I get (just one ticker per member, please) will be the winners of today's "contest". There's no point in placing additional requests after we get the 3 winners.

Thanks for your participation

[Terliso]

ADGO.ob

[cdrankwalter]

zolt

[elliemae]

AMED

[David Randolph]

Ok, the winners are: ADGO.OB, ZOLT and AMED.

Thanks Terliso, cdrankwalter and elliemae

This thread will be used to post those three analysis tomorrow morning (hopefully before the open).

[stocky]

PGLA.

[David Randolph]

1. Profile

Adams Golf, Inc. (ADGO.OB) engages in designing, assembling, marketing, and distributing golf clubs in the United States. Its products include drivers, fairway woods, irons, and wedges. The company also offers a line of golf bags, hats, and other accessories. Adams Golf sells its products to golf shops, sporting goods retailers, mass merchants, and international distributors in the United States, Europe, Canada, Japan and other Asian regions. The company was founded by Barney Adams in 1987 and is based in Wilmington, Delaware.

2. Technical Analysis
2.1. All History Chart



Great looking all history chart for ADGO.

2.2. Short Term Chart



I can see why Terliso likes ADGO.OB, the chart is as bullish as it can be. And showing extremely high volume, 30 million shares traded yesterday

3. Fundamental Analysis
3.1. Number of Shares Outstanding



No dilution over the years on ADGO.OB. I like that.

The current market cap is 23,660,860*$1.97 = $46.61 M.

3.2. Liquidity



Although the current ratio (current assets/current liabilities) isn't as high as it has been, it's still very healthy at 3.77. I see $36 M in working capital and $11 M in cash. That sounds great for a $46.6 M market cap company.

3.3. Revenues



Revenues were stagnant for many years, but 2006 is going very well. I see strong seasonality on ADGO.OB, with Q3 and Q4 being the weakest quarters (Q4 is the weakest), so I expect just $11 M in revenues for Q4, which gives me the $72 M in full fiscal 2006 that you see on the graph above.

This represents a revenue increase of 28.6% from 2005 levels.

The price to sales ratio is $46.61 M/$72 M = 0.65. The Sporting Goods industry average is 0.79.

3.4. Profits



I estimate full year 2006 EPS at $0.14. If this estimate is correct, the Price Earnings Multiple is $1.97/$0.14 = 14. The industry average is 21.

3.6. Recent News

• Adams Golf to Acquire Women's Golf Unlimited Brands
Business Wire (Wed, Dec 20)

This news was the catalyst for the recent share price and volume surge. They don't provide details on the press release, but they did it on an 8-K SEC file:

«On December 15, 2006, we entered into a definitive agreement with
Women's Golf Unlimited, Inc. ("WGU") to purchase certain of its assets,
including the trademarks, internet domain names and customer lists for
WGU's Square Two Golf[TM] and Lady Fairway[TM] brands.  The purchase
price is $600,000 cash, to be paid at closing, and an earn out payment
of up to a maximum of $400,000, based on sales of products using the WGU
brands during the 13-month period following the closing. The earn out
payment, if earned, will be paid quarterly and will be subject to
adjustment quarterly and at the end of the earn-out period.»

A $1 M dollar acquisition doesn't seem all that significant for the company. There can be synergies and some increase in sales, but, not all that significant. The stock is up 38% since that news came out, 6 days ago.

4. General Overview

I think ADGO's fundamentals are attractive, but the valuation gap is closing. I guess the stock may go up another 10 or 20% before being fully valued.

I value the fact that there wasn't any dilution over the years, but I see the company's market potential as limited. It is a niche player. It needs to diversify its business so it can grow more.

Volume is too high for my taste, the entire float is changing hands every day. I don't like that, I see short term/fast money involved here and that kind of money doesn't have any patience at all. So when the stock gets a red day, it will probably tank over the short term.

My current outlook is positive, but I would take profits, say, at $2.20 or $2.40 ...  or else when the stock opens with a gap up and starts falling back down.

Terliso knows all there is to know about this short term stuff.

Good luck

[kpunarc]

David, you do really well with the Fundamental breakdowns and i'm really learning a ton. Question: Where do you get most of those charts that are consistently in your FA posts?

[David Randolph]

David, you do really well with the Fundamental breakdowns and i'm really learning a ton. Question: Where do you get most of those charts that are consistently in your FA posts?

Hi kpunarc, I saw your question on IFON's thread, yes, I mean 7 pm ET (NY time).

Where do I get the fundamental charts? Well, I have a service, which is called "Fundamentals", from www.alphatrade.com. But that service only has fundamental tables, then I need to copy paste the values (or mostly do it by hand) to an excel spreadsheet to make the graphs you see.

Hehe, soon you'll see me in action, I mean, you will actually see how I get the fundamental data and study it in a fast way ... working on that (don't want to spoil the surprise).

[David Randolph]

1. Profile

Zoltek Companies, Inc. (ZOLT), through its wholly owned subsidiaries, engages in the manufacture, marketing, and development of carbon fibers for various applications. The company manufactures and sells carbon fibers, which are used as the primary building material in commercial products; filament winding and pultrusion equipment for the production of composite parts; and technical fibers for aircraft brake and other friction applications. It has operations primarily in the United States and Europe and sells its carbon fibers worldwide. Zoltek Companies was founded by Zsolt Rumy in 1975 and is based in St. Louis, Missouri.

2. Technical Analysis
2.1. All History Chart



ZOLT has been around in the stock market since 1992. It's interesting how it went from below $5 to $30 plus in its history. I'm interested in knowing what caused these huge long term fluctuations, if they were predictable or not, and why.

2.2. Medium Term Chart



ZOLT is trading near an important medium term support. The 50 days SMA crossed below the 200 days SMA, which is a bearish technical development.

2.3. Short Term Chart



There was a big gap down recently. The short term trend is bearish. The stock needs to recover some ground from this dangerous zone. If it falls another 10% it will enter long term bearish territory. The news that caused that big gap down was this:

Zoltek shares fall on fourth-quarter results, outlook

3. Fundamental Analysis
3.1. Number of Shares Outstanding



Ouch, I see heavy dilution in 2006. The current market cap is 26,970,642*$19.85 = $535 M

3.2. Liquidity



ZOLT's balance sheet looks weak. The current ratio is just 1.47 (I like to see it above 2). Also $32 M in long term debt. And about $49 M in receivables and inventories.

The weak balance sheet probably explains the share count increase.

3.3. Revenues



The revenue graph partially explains why the stock fell so much after 1997. Probably there were great expectations for future growth that didn't materialize, so the stock collapsed. The low point of revenues was also the low point for the share price.

Even though revenues were an all time record of $92 M in 2006, the price to sales ratio is a rich $535 M/$92 M = 5.82. The Industrial Electrical Equipment industry average is 1.94, so ZOLT seems overvalued here.

3.4. Profits



Jesus, even though sales are growing, losses are getting bigger and bigger. I understand why the huge gap down after the Q4 results.

4. General Overview

ZOLT seems clearly overvalued at this point. I can't justify the current valuation by this fundamental study, unless there's something behind the scenes that I can't see in just a two hours study. I would say ZOLT is worth 1/5 of its current market value.

Can be wrong though, good luck

[Terliso]

And showing extremely high volume, 30 million shares traded yesterday

David, thanks for that analysis.....Correction, ADGO only traded in thousands not in millions.

[David Randolph]

David, thanks for that analysis.....Correction, ADGO only traded in thousands not in millions. 

Damn it, sometimes my Metastock database has this volume error ... so forget about all the comments I made on volume. These details can be important, that's why it will probably be good to wait 2 more days to confirm all the issues and look for hidden stuff before actually buying a stock for the long term.

Thanks for the correction Terliso

[David Randolph]

Hi folks

Below is my first video analysis, so you need to excuse my poor English

Then let me know what you think of "video on the web" coming to 3 Stocks. It sure increases the productivity.

http://video.google.com/googleplayer.swf?docId=-2898080052745054560&hl=en

Happy new year

[basonista]

Applause for trying something new!  This will certainly be an effective way for you to get your message out and if it saves you time in the process all the better!  I can already see that 3sof is going to start the new year off right!

[elliemae]

David, I liked the video presentation and agreed with your analysis of current valuation (that's why I sell my AMED stock every quarter and take my 15% profit in my ESPP account, I work for them)  I believe in the next 5 years real growth will occur since they have been buying up homecare agencies at a torrid pace, however, if Democrats start their cuts with healthcare, all bets are off!  Also, their balance sheet is higher now, had a stock offering of 3 million shares that raised 118 million pre-split in November.  Thanks for all of your hard work.  Elliemae