Analysis on Demand

[Terliso]

David,
Could you pls relook at MCZ?
Thanks,
Nick

Ah Nick, your private message didn't let me sleep tonight, as I kept thinking "how did I sell that wonderful stock and didn't get back in before the run up?" It's really bad when one starts thinking about what he made wrong in the past, or what he could have made right. There are no "could haves", if I could have, I would have, it's that simple (or it should be).

About your question, I sold MCZ with a small profit, I believe, because at the time I got worried about the general market, and didn't got the nerve to get back into it when I turned bullish again. MCZ's trade helps me in my new methodology of only considering company specific information and ignoring macro or general market developments.

I'll cover MCZ when I have some time, I hope before the next push up. At first sight the chart and fundamentals are very attractive.

David,

MCZ, the bullishness just started. I would love to buy it if you going to call it today.

[Houlahan]

David, when searching/screening for stocks, what is the guidelines you have for stocks.
Like Market cap not over..
EPS of

I don't screen or search for new stocks, the ones you guys (and girls) give me are more than enough to keep me busy. But I have a technical filter that I like to use when looking for stocks on fire, which is a Metastock filter ... are you interested?

After getting the stocks that are technically bullish I get lost looking at their fundamentals. Sometimes a few stocks pop up immediately as very interesting, it depends. Unfortunately the strategy is complex enough for me not to be able to explain it in a single post, but you have the 3 SOF Strategy document to read if you want to.

But basically, I like companies where the share count didn't grew much over the past few years, healthy balance sheet, that have strong revenue growth, high and stable net profit margin and finally that are trading below average valuation when compared to their industry. Usually this "status" doesn't last long, so the best chance is to find stocks with a recent relevant change in the fundamental trends ... fundamentals have to change for stock prices to change in a meaningful way, so I'm interested in changes in fundamentals.

For example, if a company has a 3% net profit margin, and suddenly starts earning 15% of its sales, that usually changes the company's value completely (like it is happening with NVTL, for example).

Ooopps, too long, hope it wasn't boring

David you are never boring!
Thank you, the information was helpful. I have read your PDF file the "3SOF Strategy" several times. I know you mentioned in the past a market cap and I can not remember or find it on the threads.
So what is your max. on the market cap?

By the way, I was never able to open the Excel file "fundamental study.xsl". I have a very old version of Excel.

Not sure if I what Metastock filter at this time. I think it is a little pricey. Thanks for asking.

[David Randolph]

David,

MCZ, the bullishness just started. I would love to buy it if you going to call it today. 

Nah, not today Terliso, I never take intraday decisions or make intraday recommendations. Moreover I need to cover the stock in light of new valuation model. Maybe Monday, but I'm not sure, just after performing the analysis.

Going for the beach with the kids now, see you later

[ravenquork]

David, when searching/screening for stocks, what is the guidelines you have for stocks.
Like Market cap not over..
EPS of

I don't screen or search for new stocks, the ones you guys (and girls) give me are more than enough to keep me busy. But I have a technical filter that I like to use when looking for stocks on fire, which is a Metastock filter ... are you interested?

After getting the stocks that are technically bullish I get lost looking at their fundamentals. Sometimes a few stocks pop up immediately as very interesting, it depends. Unfortunately the strategy is complex enough for me not to be able to explain it in a single post, but you have the 3 SOF Strategy document to read if you want to.

But basically, I like companies where the share count didn't grew much over the past few years, healthy balance sheet, that have strong revenue growth, high and stable net profit margin and finally that are trading below average valuation when compared to their industry. Usually this "status" doesn't last long, so the best chance is to find stocks with a recent relevant change in the fundamental trends ... fundamentals have to change for stock prices to change in a meaningful way, so I'm interested in changes in fundamentals.

For example, if a company has a 3% net profit margin, and suddenly starts earning 15% of its sales, that usually changes the company's value completely (like it is happening with NVTL, for example).

Ooopps, too long, hope it wasn't boring

David you are never boring!
Thank you, the information was helpful. I have read your PDF file the "3SOF Strategy" several times. I know you mentioned in the past a market cap and I can not remember or find it on the threads.
So what is your max. on the market cap?

By the way, I was never able to open the Excel file "fundamental study.xsl". I have a very old version of Excel.

Not sure if I what Metastock filter at this time. I think it is a little pricey. Thanks for asking.

Hi David,
I would be interested in taking a look at your metastock screen.

[LSUJay]

They found 500,000 coins with estimates that each is worth more than $1,000 a piece... to collectors and such.  I'm not sure of the outcome, but it's definitely hot news and could have been a pick for the old 3 stocks on fire thread.

What's the size of the world market in terms of silver coins, does anyone have a clue? I just wonder if a 500,000 finding won't depress worldwide prices for the coins, I mean, will they have the same value, they're not so rare after all ...

Yes, maybe in the old 3 SOF days, but now the stock wouldn't fit my valuation model (and it is below the opening price). Good luck if you own it LSUJay

(I'm going to close this thread now, will post CTCH's analysis in a moment)

I was able to get in at just above $7... it's still going up with some heavy afterhours trading.  I don't know if it's a bad move, but I'm only risking a small portion of my capital.

[kslifka]

They found 500,000 coins with estimates that each is worth more than $1,000 a piece... to collectors and such.  I'm not sure of the outcome, but it's definitely hot news and could have been a pick for the old 3 stocks on fire thread.

What's the size of the world market in terms of silver coins, does anyone have a clue? I just wonder if a 500,000 finding won't depress worldwide prices for the coins, I mean, will they have the same value, they're not so rare after all ...

Yes, maybe in the old 3 SOF days, but now the stock wouldn't fit my valuation model (and it is below the opening price). Good luck if you own it LSUJay

(I'm going to close this thread now, will post CTCH's analysis in a moment)

I was able to get in at just above $7... it's still going up with some heavy afterhours trading.  I don't know if it's a bad move, but I'm only risking a small portion of my capital.

LSU...$7 was a great entry on OMR.  UP to $8.60 after hours.  I'm sure you will at least have a good profit on Monday.  After that I don't know.

[m2machine]

David...please take a look at ILC...I think you will like what you see once you dig into a bit. This is a ground-floor opportunity IMO. A few investors have already taken notice:


http://stockcharts.com/charts/gallery.htML?ilc


*** HIGHLIGHTS:

- RECENT PRESENTATION THAT DISCUSSES MOST OF THE KEY POINTS BELOW:

http://www.redchip.com/visibility/about.asp?symbol=ILC&page=presentationPHX

- PROFITABLE FOR 2007 (RECENT PRE-ANNOUNCEMENT)

- HUGE 1Q 2008 COMING UP. SIGNIFICANT DEFERRED REVENUE FROM 4Q 2007

- OVER 20% REVENUE GROWTH FOR 2008.....AND PROFITABLE

- NICHE MARKET IS EXPECTED TO GROW FROM $250M IN 2007 to $1.5 BILLION in 2012

- 2700 CUSTOMERS......98% RETENTION RATE.....HERE ARE SOME KEY CUSTOMERS:

Xerox, Qualcomm, Dow Chemical, Sony, JP Morgan Chase, WebMD, Citigroup, Aetna, US Navy, Charles SCHWAB, American Express

- 40% YEARLY COMPOUNDED GROWTH RATE

- GROWING, PROFITABLE SOFTWARE/TECHNOLOGY COMPANY TRADING AT P/S OF 1

- ILINC RECENTLY FEATURED ON BARRON'S ONLINE

http://webreprints.djreprints.com/1710371105647.html

Key Paragraphs:

How about another theme?

We call it the New Necessity: Collaboration. The ability to collaborate at a distance is becoming a necessity for big business. There has been a significant increase in telecommunicating just in the last five or six years, facilitated by technology. Think of it: We know of one micro-multinational with 25 employees who live across five time zones, four nations and two continents. This has facilitated the need for collaboration tools.

Such as?

Online video and teleconferencing capabilities and collaboration software. Cisco [CSCO] just bought WebEx, which provides Web and video conferencing. Citrix [CRXS] is another. Polycom [PLCM] plays in it. Optelecom [OPTC] and iLinc [ILC] are other companies. People are working more distantly from corporate offices, and there's a greater need for collaboration.

- COMPANY WEBSITE:

http://www.ilinc.com/



About iLinc Communications, Inc.

iLinc Communications, Inc. (NASDAQ: ILC)  is a leading developer of Web conferencing software and audio conferencing solutions for highly secure and cost-effective online meetings, presentations, and training sessions. Our technology allows people in diverse locations to communicate and collaborate online while avoiding the expense, environmental damage, and productivity losses associated with travel. We make it better than being there. We do so by providing an award-winning, enterprise-wide suite of Web, audio, and video conferencing solutions that can be scaled up or down to meet the needs of any size organization. Offering the industry's most flexible pricing models, we give you the power to choose an installed, hosted, or hybrid solution -- whichever model delivers the highest ROI for your particular business. More information about the Phoenix-based Company may be found on the Web at www.iLinc.com.

[avivwiz]

Hi David.
pls take a look at TSEM.

it's a good company that made a big turnaround in the last couple of years.
i'd invested in TSEM in the past, i think that now the stock is looking to be pretty cheap.

i would like to hear your appinion about TSEM's future.

Thanks,
Avivwiz

[David Randolph]

I've studied HSOA more deeply, specifically its management's practices, and decided not to buy/recommend the stock, despite what seems to be terrific news. I already had taken into account heavy dilution, but didn't considered management has the bad habit of misleading investors with overly optimistic press releases that they use to sell their recently issued shares in bulk. For example, on Thursday they filed a form S-8 saying insiders would be selling 2,415,414 shares, and on Friday they claim to have been awarded $100 M in new contracts. This isn't the first time they do this, and in the past they gave guidance of $160 M in 2006 revenues and then delivered just $127 M.

So, I'll pass HSOA, good luck to anyone holding

[David Randolph]

David,

MCZ, the bullishness just started. I would love to buy it if you going to call it today. 

Nah, not today Terliso, I never take intraday decisions or make intraday recommendations. Moreover I need to cover the stock in light of new valuation model. Maybe Monday, but I'm not sure, just after performing the analysis.

Going for the beach with the kids now, see you later

I've taken a more in depth look at MCZ, and besides wishing I had never sold it, I saw that Q1 2007 wasn't reported yet, and that is the weakest quarter from a seasonal standpoint. The news flow has been very positive and the technical picture is quite bullish as you can see on the chart below, but the company made just $0.05 EPS over the last 9 months, and it always loses money in Q1 ... say it will lose $0.02 per share, fiscal 2007 EPS will be $0.03 and the stock would then be trading with a trailing EPS of $0.99/$0.03 = 33, which is above the industry average of 21.

So, my idea is to wait some more time and possibly buy when the company reports the full year fiscal 2007 numbers, which will probably be seen as a disappointment by investors. We shall see, congrats if you've been holding MCZ

[nullzero]

ICOC looks good would like to see a anaylsis on it  .

[David Randolph]

Someone, I believe it was raspi, asked about XING. Over the following link is the reason why I sold it at $19.1 with a 27% profit: Reason for selling XING in 02-22-2007.

XING's market cap on a fully diluted basis is 36.63 million shares issued and outstanding times $13.55 = $496 M.

But the thing got worse with the QXM IPO, because that is nothing but further dilution, since QXM is currently a $563 M market cap company according to Market Watch.

Remember when I said that XING would definitely be worth $1 B in the future? Ok, here you have it, XING and QXM are the same business as before, and their combined market value is $1.06 B. The stock price went down, but the combined market cap went up.

Perhaps I'm seeing something wrong, but the QXM IPO represented further dilution to me, and the Dutton EPS estimate doesn't seem reasonable at all after the recent developments.

I know several of you own XING, not just own, many people love this stock, so I'm sorry for being bearish on it. If XING wanted to get serious it should start filing forms 10 with the SEC, but management doesn't want to do that, because then they would have to disclose all XING's risks and potential dilution.

The chart also turned decisively bearish, with the stock breaking down below the 200 days SMA. I hope I'm wrong, good luck

[David Randolph]

What do you think about  HAYN?

Technically the short, medium and long term trends are bullish:



In fundamental terms I'll study it in light of my new valuation model:

1) Dilution factor

I see that the share count rose 1.65 million recently, partially due to a public offering the company priced in March 19. The company used the proceeds to pay down debt. The balance sheet shows a current ratio of 4.31, which is healthy, but inventories account for 68.5% of total current assets. I'm going to attach a 5% dilution factor to HAYN.

2) Revenue CAGR

Historical average annual revenue growth has been 30%. I'll insert 1.3 as the revenue CAGR estimate on the valuation model.

3) Estimated net profit margin

The average net profit margin over the last 4 quarters was 10.5%. I'll consider this as my net profit margin estimate

4) EPS multiple estimate

The Steel & Iron industry trades at 12.44 times earnings. I believe it is reasonable to expect HAYN to trade at its industry average valuation over the medium term, so I'll use 12.44 as my EPS multiple estimate.

The valuation model results are:



Given the above estimates I expect HAYN to rise about 5% a year for the next three years, so the stock doesn't seem to be an interesting investment. But thanks for the suggestion, good luck if you own it !

[David Randolph]

CAM

In technical terms CAM's chart is very bullish in all time frames. The stock had its ups and downs (like all stocks), but on a trend basis it just keeps going up.



Let's make some fundamental estimates based on the recent trends:

1) Dilution factor

Almost nothing over the years. $848 M in cash and equivalents. No short term liquidity problems. I'll put 1.01 on the dilution factor estimate.

2) Revenue CAGR

Considering the revenue growth history since 2001 and the estimates analysts have for the future, I see 25% revenue CAGR going forward.

3) Net profit margin estimate

Net profit margin has been expanding, from 3.48% in 2003 to 9.3% in 2006 and 10.1% in Q1 2007. I'll use 10% as my net profit margin estimate.

4) EPS multiple estimate

As usual, here I tend to put the industry average, which in CAM's case is 15.77.

The valuation model results are:



According to my estimates CAM will rise about 13.3% a year over the next three years, on average, which is more than the general market long term average, but less than what is needed for me to consider the stock attractive. I guess this is in line with what one can expect from a $7.8 B market cap company. 

[nicknite20]

Hi David,
LAYN is once again in the spotlight..been added to the IBD top 100 list over the weekend.
I'm holding a position in LAYN..i think its a nice safe stock for the long run. 

They report earnings on 31st.


http://www.3stocksonfire.org/trading/index.php?topic=9240.0