Analysis on Demand

[David Randolph]

TINY please, long term nanotech, nanoRAM play.

Hi Tokyopua

TINY is a $250 M market cap company, if you're still interested in this analysis please request it on the daily thread at the 3 Stocks on Fire Portfolio message board.

Thanks.

[nullzero]

EDIT: nm I just noticed more then 500m now...

David what do you think of GMR?

[David Randolph]

David, please look at SNDA too,  I think you skipped my post!  Hope you're feeling better.

Hi trexkerry

SNDA's chart shows a positive trend, with both, the 50 and the 200 days moving averages with positive slopes and the 50 days above the 200 days. The stock just had what looks to be a breakaway gap due to the following news:

• UPDATE - China's Shanda Q4 net beats forecasts, shares up
at Reuters (Tue, Feb 13)

- Market cap is $1.75 B. Shanda Interactive offers a portfolio of online games that users play over the Internet. The games the Company operates are licensed to them by third parties as well as developed in-house.
- Revenue trend is positive if we consider the yearly table, but revenues in Q3 2006 were actually down 9.8% from Q3 2005. But Q4 was stronger than expected, with revenues coming in at $60.3 M compared to $48 M in Q4 2005.
Total 2006 revenues were $211.9 M, down 12.8% from 2005 levels.
- As for profits, EPS was $0.94 for 2006, down from $2.26 in 2005. This puts the trailing earnings multiple at 26.
But, 4th quarter EPS was $0.42 and if we annualize this we get $1.68 EPS and the earnings multiple would then be 14.6.

I think the stock looks interesting at this point, but I wonder if competitors like NCTY aren't more attractive. I see the company's long term potential, but I don't find it all that cheap, for a Chinese company (we know they always carry a discount valuation due to political and other concerns).

I'm neutral on SNDA.

[David Randolph]

David, I am curiuos about JSDA.  I realize it's valuation is high for current earnings, however, it has gone from 2% to 25% market penetration in a contract with a national distributor (FIZ) and when JSDA announces earnings on March 8th, they will also announce new retail stores that are selling their products.  On yahoo message boards, they have been spotted in Costco, Wal-mart, Target Krogers, Publix, Smith's and a few other grocery stores that I can't recall.  Before Dec. 31 they had an exclusive contract with Target and now have new contract with bev. distributor.  They sell soda (multiple flavors in regular, diet and the new pure cane sugar, and also have organic drinks, teas and energy drinks)  Cramer tauted them as the next HANS back in Dec.  I know Setravis has held JSDA for a while.  What is your opinion of JSDA?  Is there really a 10 fold potential with the PPS/market cap. in the next 2 years?  Thanks in advance.  Elliemae 

You got me interested on JSDA, the problem is it is just a $344 M market cap company and we're looking to study stocks with more than $500 M market cap on this thread.

Can you please copy/paste this exact post to the 3 Stocks on Fire porftolio message board right after the market opens? (or later, no problem with that)

Thanks elliemae

[David Randolph]

David, can you please look into ACY. Just 1.6 Millions shares outstanding. good YOY rev increase. Chart looks good too.

I already made an analysis on ALY njshiva, let me copy/paste it to here:

«Yes, let me take a look at ALY, never heard of that stock before, so thanks for the request

The medium and long term technical trend, given by the slope of the moving averages and an ascending trendline, is still bullish. But, as you say, the stock has been weak in 2007.

Fundamentally:

- Market cap is $430 M. Company provides services and equipment to oil and natural gas exploration and production companies, domestically in Texas, Louisiana, New Mexico, Colorado, Oklahoma, Mississippi, Utah, Wyoming, offshore in the Gulf of Mexico, & internationally in Mexico.
- Balance sheet shows growing long term debt, at $262 M now. That can put pressure on future earnings, as interest costs erode net profit margins.
- Revenue trend is quite positive. Growing strongly for eight quarters in a row, which is impressive. Revenue in Q3 alone was $85 M. On average, analysts are expecting revenues of $305 M for fiscal 2006 and $522 M for fiscal 2007.
- In terms of EPS, the company was profitable for the past three quarters and is expected to earn $1.74 in 06 and $2.15 in 07. That puts the forward earnings multiple at 8 which is attractive.

Let's put the dilution issue in context:



The share count has been increasing about 14% a quarter since Q1 2004

That by itself made the market cap rise 520% without any increase in the share price (that is, the share price rose, but the market cap rose a lot more).

As you say, recently they sold 6 million shares more and sold $250 M in convertible notes to pay down debt. That will put the potential share count at about 45 million and that means the market cap will be around $780 M considering the price the stock is trading now. That will also make it harder for the company to meet the EPS projections, and this way it doesn't look so cheap, with a higher than 1 revenue multiple.

I really don't like dilution and I would say this management doesn't have an history of working for the shareholder's benefit. Yes, they are growing the company, but at the expense of the shareholder, not for the shareholder, because a shareholder needs the share price, not the market cap, to rise!

I'm not a fan, I wouldn't invest in this company, but thanks for the suggestion, good luck »

[njshiva]

David, can you please look into ACY. Just 1.6 Millions shares outstanding. good YOY rev increase. Chart looks good too.


I already made an analysis on ALY njshiva, let me copy/paste it to here:

Thanks David. But my request was for ACY.

Never mind david... just noticed that the subject says > 500mlns. So this may not be the candidate.

[David Randolph]

Thanks David. But my request was for ACY.

Never mind david... just noticed that the subject says > 500mlns. So this may not be the candidate.

Sorry for the confusion njshiva

ACY is a $24 M market cap, if you please request for that analysis on the 3 Stocks on Fire Portfolio message board after the market opens, thanks

[Se7en]

David, what are your thoughts on NUAN and CECE?

[la-onda]

Hi,
what about GIGM new 52 weeks high?

tia
Oliver

[berloga]

Hi David,

   What are your thoughts about this mining and steel company MTL, operating in Russia. They seem to have been generating fat profits.

Thanks you.
Berloga.

[realcoolhead]

David, I have a mixed opinion about requiring $500M market-cap for future picks in main portfolio. I understand the need for risk control, yet looking at the best performers so far: SYX, CPNE.OB, OFI, XING, they are either still below $500M, or came from below $500M (SYX!!!).

A while back I posted my concern regarding market favoring big-cap lately, and your response, which I think makes a lot of sense, was that as long as we pick stocks with good fundamentals, we should care less about the size of company. Moreover, it is precisely because of these excellent small/micro-cap picks the portfolio can tolerate some inevitable "losers" (like DIET, I know the jury is still out on this one, but just for argument's sake ... ) . Another point is, small/micro-cap stocks have none or very little Wall Street analyst coverage, maybe this is the very area a talented guy like yourself can excel and exploit the market inefficiency, and also the very area we retail investors can possibly have an edge.

At some point when the portfolio becomes too large, when you can not "efficiently" place an order for small/micro-cap stocks, maybe a better way to control risk yet not compromising your competitive edge is to enlarge the number of positions in the portfolio? Like from 15 stocks to 25 stocks ... 

Anyway, just some thoughts I feel like to throw out and I hope I made my point clear. I am very pleased with way this portfolio is going! 

You got me interested on JSDA, the problem is it is just a $344 M market cap company and we're looking to study stocks with more than $500 M market cap on this thread.

Can you please copy/paste this exact post to the 3 Stocks on Fire porftolio message board right after the market opens? (or later, no problem with that)

Thanks elliemae

[David Randolph]

Good morning

I have NUAN, CECE, GIGM and MTL. I believe NUAN and CECE were covered on the 3 Stocks on Fire Portfolio message board, check the Stocks Covered List. Anyway, I probably should review them again, I really like CECE, probably I should buy it for the Main, perhaps after more in depth study.

Today I'm short on time to cover these stocks, maybe tomorrow.

David, I have a mixed opinion about requiring $500M market-cap for future picks in main portfolio. I understand the need for risk control, yet looking at the best performers so far: SYX, CPNE.OB, OFI, XING, they are either still below $500M, or came from below $500M (SYX!!!).

A while back I posted my concern regarding market favoring big-cap lately, and your response, which I think makes a lot of sense, was that as long as we pick stocks with good fundamentals, we should care less about the size of company. Moreover, it is precisely because of these excellent small/micro-cap picks the portfolio can tolerate some inevitable "losers" (like DIET, I know the jury is still out on this one, but just for argument's sake ...  ) . Another point is, small/micro-cap stocks have none or very little Wall Street analyst coverage, maybe this is the very area a talented guy like yourself can excel and exploit the market inefficiency, and also the very area we retail investors can possibly have an edge.

I totally agree with you realcoolhead. I'm not willing to change the Main's holdings from small to mid or large caps, due to the motives you referred. On this thread my principal objective is to also cover some larger companies, because, we never know, there can be a really attractive opportunity and ... well, I hope someday I'll be managing large sums of money and I'll need to know large caps well Also, there wasn't any answer for analysis requests of this type of stocks with the prior 3 SOF working model. Now there is, although limited by my personal time availability.

At some point when the portfolio becomes too large, when you can not "efficiently" place an order for small/micro-cap stocks, maybe a better way to control risk yet not compromising your competitive edge is to enlarge the number of positions in the portfolio? Like from 15 stocks to 25 stocks ...

Great idea realcoolhead Probably that would work better than holding large caps with limited profit potential (although Buffet would totally disagree with this. We may have some discussion on this, and probably, he's right ... I'm still thinking about the issue).

Anyway, just some thoughts I feel like to throw out and I hope I made my point clear. I am very pleased with way this portfolio is going!

Me too, thanks for your support realcoolhead

[la-onda]

hi david,
whats up with VLO?
link:
http://www.3stocksonfire.org/trading/index.php?topic=3368.msg89500#new

cheers from SG
Oliver

[kpunarc]

I'm not sure if this is the right place to post...but can anyone (specifically David) answer what makes AlphaTrade Fundamentals better or worth more than finance.yahoo.com or cnbc.com

[capricho]

Hi David,

What are your thoughts on CHINA and TRA?

Regards,

Capricho