Current Price: $20.00
Industry: Electronics
The Company designs, develops, engineers, manufactures and markets laser-based products, primarily used for cutting, welding and marking a wide range of materials.
What I like:
- A low P/E ratio compared to that of its peers, while maintaining a high beta. This stock has crashed along with the market recently, but traditionally gives better than market returns.
- This stock price has a 52-week high of nearly $44 and the fundamentals are in place where it could get back up near those levels, especially in the right economic climate.
- Despite being in an industry where R&D is prevalent, Rofin-Sinar has traditionally not carried much debt on its balance sheet, and it maintains that tradition with only about $23 million in debt featured on their latest interim balance sheet.
- Sales are rising according to interim statements and look to once again be on pace with 2008 levels.
- ROI and ROA remain above industry averages.
What I don't like:
- Profits dipped quite low in 2009-2010 and while they look to be rebounding, it remains to be seen if Rofin-Sinar can maintain those levels for more than a couple of quarters.
- This is an industry that averages negative sales growth. While RSTI has managed to keep this growth positive, the overall industry trend is not good.
- Recent interim statement inventory levels are much higher than normal. Hopefully this is not a sign that the company is unable to move its stock.
Verdict: With the recent market crash, RSTI fell from the $30-35 share price range down to its current level. While I doubt that it can regain its $44 share price of a few months ago, there does not seem to be any reason it can not return to that $30-35 range if general market conditions improve.
Thursday, August 18, 2011
Tuesday, August 16, 2011
Aeropostale, Inc. (NYSE:ARO)
Current Price: $12.50
Industry: Clothing Retailer
The Company is a mall-based specialty retailer of casual apparel and accessories. The Company designs, markets and sells its own brand of merchandise principally targeting 11 to 18 year-old young women and young men.
What I like:
- Consistent, year-over-year growth of both sales and profits. Sales are up from $1.6 billion in 2008 to $2.4 billion in 2011. This growth in sales rate well above the industry average which has remained fairly stagnant at 0.28%.
- No debt on the balance sheet. This company is opening more and more stores, but using its profits to do so and not taking on any future liabilities.
- ROA and ROI are well above industry averages. Employee efficiency ratios do the same.
- Look around any suburban mall. Alongside with the Abercrombie, AE and Hollister shirts on teenagers and young adults, you'll now see just as many Aeropostle shirts. This company is growing amongst that group but investors haven't yet caught on to how popular this brand is becoming.
What I don't like:
- Lets face it, the clothing industry is a fickle one. Today's flavor is tomorrow's laughed-at trend. This stock probably isn't for the long haul as of yet, as there trends haven't caught on with parents, who tend to stick with those brands much longer (see The Gap or Banana Republic).
- Retained earnings are lower as the company bought back some common shares. Whether this means the company has to take on additional debt to expand its store base remains to be seen.
- This stock has had a recent rebound up to its current price. I liked it better a few days ago when its stock price was around $11.50.
Verdict: I think this stock is still a definite buy. The company is expanding and becoming more popular. It's stock price has been at a high of $27.73 in the last 52 week period. While I don't know if it will reach quite that level again any time soon, I see no reason it can't get around $20/share.
Industry: Clothing Retailer
The Company is a mall-based specialty retailer of casual apparel and accessories. The Company designs, markets and sells its own brand of merchandise principally targeting 11 to 18 year-old young women and young men.
What I like:
- Consistent, year-over-year growth of both sales and profits. Sales are up from $1.6 billion in 2008 to $2.4 billion in 2011. This growth in sales rate well above the industry average which has remained fairly stagnant at 0.28%.
- No debt on the balance sheet. This company is opening more and more stores, but using its profits to do so and not taking on any future liabilities.
- ROA and ROI are well above industry averages. Employee efficiency ratios do the same.
- Look around any suburban mall. Alongside with the Abercrombie, AE and Hollister shirts on teenagers and young adults, you'll now see just as many Aeropostle shirts. This company is growing amongst that group but investors haven't yet caught on to how popular this brand is becoming.
What I don't like:
- Lets face it, the clothing industry is a fickle one. Today's flavor is tomorrow's laughed-at trend. This stock probably isn't for the long haul as of yet, as there trends haven't caught on with parents, who tend to stick with those brands much longer (see The Gap or Banana Republic).
- Retained earnings are lower as the company bought back some common shares. Whether this means the company has to take on additional debt to expand its store base remains to be seen.
- This stock has had a recent rebound up to its current price. I liked it better a few days ago when its stock price was around $11.50.
Verdict: I think this stock is still a definite buy. The company is expanding and becoming more popular. It's stock price has been at a high of $27.73 in the last 52 week period. While I don't know if it will reach quite that level again any time soon, I see no reason it can't get around $20/share.
Sunday, August 7, 2011
ICON plc (NASDAQ: ICLR)
Current stock price: $20.20
Industry: Health Services
ICON PLC is a contract research organization, providing outsourced development services on a global basis to the pharmaceutical, biotechnology and medical device industries.
What I like:
- ICON shows consistent, year over year sales growth, up from $630 million in 2007 to $900 million in 2010. Early 2011 results show sales in line with 2010.
- ICON has no debt whatsoever, be it short or long-term.
- The company's financial strength ratios (current ratios, debt-to-equity) do well in comparison to other companies in the industry.
- The company's ROI and ROA are well above industry averages.
- This company stands to grow as pharmaceutical companies continue their trend of outsourcing their testing operations. Regardless of the success or failure of a drug trial, ICON will make their money.
- ICON's stock is just coming off of its 52 week low of $18.93.
What I don't like:
- ICON has an incredibly clean balance sheet. If we're nitpicking, ICON's gross margins lag slightly behind industry averages.
- While the stock is at its 52 week low, the range the stock has traded in for the last year has been between $18.93 and $26.22. The low volatility of this stock could restrict its short-term growth.
Recommendation: Buy.
This firm features a nearly spotless balance sheet and consistent earnings growth. ICLR is based in Ireland, insulating the firm against a weakening U.S. economy. As stated above, many firms in this industry are outsourcing their clinical trials and ICLR stands to grow even further as this trend takes hold.
Industry: Health Services
ICON PLC is a contract research organization, providing outsourced development services on a global basis to the pharmaceutical, biotechnology and medical device industries.
What I like:
- ICON shows consistent, year over year sales growth, up from $630 million in 2007 to $900 million in 2010. Early 2011 results show sales in line with 2010.
- ICON has no debt whatsoever, be it short or long-term.
- The company's financial strength ratios (current ratios, debt-to-equity) do well in comparison to other companies in the industry.
- The company's ROI and ROA are well above industry averages.
- This company stands to grow as pharmaceutical companies continue their trend of outsourcing their testing operations. Regardless of the success or failure of a drug trial, ICON will make their money.
- ICON's stock is just coming off of its 52 week low of $18.93.
What I don't like:
- ICON has an incredibly clean balance sheet. If we're nitpicking, ICON's gross margins lag slightly behind industry averages.
- While the stock is at its 52 week low, the range the stock has traded in for the last year has been between $18.93 and $26.22. The low volatility of this stock could restrict its short-term growth.
Recommendation: Buy.
This firm features a nearly spotless balance sheet and consistent earnings growth. ICLR is based in Ireland, insulating the firm against a weakening U.S. economy. As stated above, many firms in this industry are outsourcing their clinical trials and ICLR stands to grow even further as this trend takes hold.
Grupo Simec S.A.B. de C.V. (AMEX: SIM)
Current Price: $6.98
Industyr: Metals & Mining
What I Like:
- Grupo Simec had a rough 2009, with sales falling almost in half from 2007-08 levels and profits going into the red. However, 2010 saw sales up by over $500 million from 2009 and 2011's first 2 quarters have shown similar improvement.
- This company was able to come out of the red without taking on any significant, long-term debt. Their most recent June balance sheet shows $54.35 million of short-term debt, yet no LT debt.
- The company recently removed all intangibles from its balance sheet.
- Grupo Simec's financial strength ratios are well-above average compared to others in their industry.
- This stock has recently bottomed out and only recently rebounded from its 52-week low of $6.42.
What I don't like:
- There is really nothing to complain about when performing YOY financial statement comparisons for Grupo Simec. The biggest concerns have to do with its performance relative to their competitors. For instance, Grupo Simec does not pay dividends while many of its competitors do.
- Sales growth rates have not kept up with its competition, and the profitability ratios of the company lags behind the industry average.
Recommendation: Buy This stock has performed in the low-teens in the past, and with its balance sheet and profits looking to be in order again, there's no reason this stock can't reach that level once again. However, with a weak market I can't see that level being hit any time soon. But there's no reason this stock should not rebound to its level of $8-9 from a few months ago in the near future.
Industyr: Metals & Mining
What I Like:
- Grupo Simec had a rough 2009, with sales falling almost in half from 2007-08 levels and profits going into the red. However, 2010 saw sales up by over $500 million from 2009 and 2011's first 2 quarters have shown similar improvement.
- This company was able to come out of the red without taking on any significant, long-term debt. Their most recent June balance sheet shows $54.35 million of short-term debt, yet no LT debt.
- The company recently removed all intangibles from its balance sheet.
- Grupo Simec's financial strength ratios are well-above average compared to others in their industry.
- This stock has recently bottomed out and only recently rebounded from its 52-week low of $6.42.
What I don't like:
- There is really nothing to complain about when performing YOY financial statement comparisons for Grupo Simec. The biggest concerns have to do with its performance relative to their competitors. For instance, Grupo Simec does not pay dividends while many of its competitors do.
- Sales growth rates have not kept up with its competition, and the profitability ratios of the company lags behind the industry average.
Recommendation: Buy This stock has performed in the low-teens in the past, and with its balance sheet and profits looking to be in order again, there's no reason this stock can't reach that level once again. However, with a weak market I can't see that level being hit any time soon. But there's no reason this stock should not rebound to its level of $8-9 from a few months ago in the near future.
Greetings - An Intro
So here comes yet another Stock Picking blog.
So what will we do here? We're going to try and find some hidden gems that you won't hear about on CNBC. If you're wanting analysis on Wal-Mart, Microsoft or General Motors, there's plenty of places to find it. This isn't one of them.
We're going to try and pick out some of those stocks that will get you above-market returns. These stocks are not the type you want to make the basis of your portfolio, but rather to supplement your safer stocks in hopes of getting a better overall portfolio return.
I hope I can pick some winners for you, and make some money together.
So what will we do here? We're going to try and find some hidden gems that you won't hear about on CNBC. If you're wanting analysis on Wal-Mart, Microsoft or General Motors, there's plenty of places to find it. This isn't one of them.
We're going to try and pick out some of those stocks that will get you above-market returns. These stocks are not the type you want to make the basis of your portfolio, but rather to supplement your safer stocks in hopes of getting a better overall portfolio return.
I hope I can pick some winners for you, and make some money together.
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