CECE

[David Randolph]

Video analysis for CECE:

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I've reviewed the fundamentals of CECE and listened to yesterday's conference call. The common valuation metrics, like the Price to Sales Ratio and the Price to Earnings Ratio point to a quite undervalued picture when compared to the Pollution & Treatment Controls industry, which is trading at 2.6 times sales and 54 times earnings.

Moreover, my conservative long term estimates point to an average annual return on investment of 25%, which is attractive. This doesn't mean I'll hold the stock for 10 years to get a 25% average annual return, it means the stock is trading at a discount given what we can extrapolate from current fundamental trends.

The trading plan is:

Buy CECE for the Main Portfolio, 6.66% of capital as always.

[realcoolhead]

David, sorry for off-topic. But I bought OFI back around $5.6 a while back, what target price would you recommend on this one? Based on your analysis the other day, I believe it is not good enough for you to buy this one back anymore? Thanks.

[Se7en]

I bought CECE last week at 14.61$, good to have you on board David!

[David Randolph]

David, sorry for off-topic. But I bought OFI back around $5.6 a while back, what target price would you recommend on this one? Based on your analysis the other day, I believe it is not good enough for you to buy this one back anymore? Thanks.

No problem realcool

OFI looks attractive on a revenue and earnings multiple comparison and previously I considered that to be very important, as I didn't know better. My current fundamental approach considers not the absolute comparison between multiples, but the expected rate of change for those fundamentals.

Within this second approach OFI looks like an average long term investment, that is, given what we can expect from current fundamental trends, the stock will return about 8% on our investment, which is average. This doesn't mean it won't go up to $12 - $15 in 2007-8, it just means that it won't outperform on a 10 year grand scale, unless there's a fundamental shift towards more profitability, but being a food related business, I don't know how fat margins can get in that sector.

Now you decide, good luck

[kpunarc]

Hey David (or anyone that could answer)...how do you get the 'multiples' to figure out how to determine the price of a stock...

EPS * multiples = share price (correct me if i'm wrong)

[David Randolph]

Hey David (or anyone that could answer)...how do you get the 'multiples' to figure out how to determine the price of a stock...

EPS * multiples = share price (correct me if i'm wrong)

When I say "multiples" I'm talking about the revenue and the EPS multiple.

Revenue Multiple = Market Cap/Annual Revenue

EPS Multiple = Share Price/Annual EPS (or, which is the same, EPS*Multiple = Share Price as you say)

I don't "figure out" or "determine" the price of a stock, the market does that

Let me know if you have any further doubts. Thank you.

[kpunarc]

ahh....you're awesome. thanks

[realcoolhead]

Thanks. I think I will hold it for a little while, at least until the next earning report.

I am a member of AAII (American Association of Individual Investors). One thing I like about it is that they have some pretty cool stock screening tools. I have been looking at it and some of them are really impressive. I have attached an Excel file for the performance of all the screens. One of them called "O'Shaughnessy--Tiny Titans" is very impressive: it has 2,965% total return since the beginning of 1998 --- over 45% annualized. What is more interesting is that its selection criteria is very simple:

* Companies not based in the United States are excluded
* Companies that trade on the over-the-counter market are excluded
* Market capitalization for the latest fiscal quarter is greater than or equal to $25 million and is less than or equal to $250 million
* The price-to-sales ratio is less than one
* The final results are the 25 companies with the highest relative price strength over the last 52 weeks

I think it might be a good source for finding stocks for the main portfolio. If you are interested, I will list the current 25 (as of 2/28/07). Interestingly, MSI and OFI are on it  , and HAUP is on it too.

(Just realized Excel file is not allowed for attachment, so I had to convert it to txt file.)

No problem realcool

OFI looks attractive on a revenue and earnings multiple comparison and previously I considered that to be very important, as I didn't know better. My current fundamental approach considers not the absolute comparison between multiples, but the expected rate of change for those fundamentals.

Within this second approach OFI looks like an average long term investment, that is, given what we can expect from current fundamental trends, the stock will return about 8% on our investment, which is average. This doesn't mean it won't go up to $12 - $15 in 2007-8, it just means that it won't outperform on a 10 year grand scale, unless there's a fundamental shift towards more profitability, but being a food related business, I don't know how fat margins can get in that sector.

Now you decide, good luck

[realcoolhead]

Sorry, I just realized I "polluted" CECE board one more time.  I guess Member's Corner is a more appropriate place to post non-CECE related stuff...

[David Randolph]

Hi coolhead, I appreciate that screen, it makes sense to me, as it mixes technical & fundamental information. 45% average annual return is awesome, just to get an idea, Buffet only made 24% in his career (lately he has been making less than that).

That .txt file cannot be read, to insert excel files you just need to zip them first, the board accepts .zip files. That could be a very interesting thread for the Member's Corner, when you have some time, please post that table, thank you

I bought CECE last week at 14.61$, good to have you on board David!

Nice entry price Se7en, I believe CECE will reward us going forward.

There wasn't anything new since yesterday, lets see how this investment unfolds and look for more fundamental information over the following daily updates.

I'll keep holding CECE.

[tokyopua]

Big intraday drop here on CECE with no news, I am in looking for a bounce at 13.33.

[tokyopua]

Wow, anyone know what is going on?  Does CECE have some subprime mortgage business on the side we dont know about lol? 

[soxguy]

Bought at 12.72. Hope it was the right move.

[DragonAMG]

Should I buy or wait this out?  Currently at 12.62

[soxguy]

Ouch! Still dropping. Gotta bounce.