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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area
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To: keyners1 who wrote (23279)8/18/2006 11:34:48 AM
From: PREVIENNA2   of 37387
 
barring ta that is and was orrible the main inputs to buy that stock imho is hope that
1) Katrina work will elevate exponentially soon and it will take up a lot of slack, especially if IPII expands into LA as was discussed on the CC
2)if 25% of earnings come from hurricane resto(maybe he said katrina resto), then 25% of business will be strong for years to come. but the other 75%....there must a market for them or they wouldnt be opening new DCs.
3)seasonality: we are facing the core of hurricane season
4) outlook : albeit no guidance mangmnt clearly stated ipii's product demand remains strong and will continue to remain strong.
5)they will have 4 centers cointributing to earnings within the next 2 quarters and maybe 5 and mangmnt will close shop quickly on any underperformers. .
6) it seems that the reason of the weak in their earn growth ( shortage in some materials specifically wallboard) is very different from the decling in demand as occurred to other companies in other areas of Us
on other hand some critcal parameters are the negatives to consider too

here is a very good sythesis from yahoo board
sales growth: 17% in 2Q vs. 20.7% in 1Q
gross margin: 30.6% vs. 32.4% a year ago
rpt'd sga/sales: dn to 20.3% vs. 21.8% (that's good), but excl. acrocrete, appears sga/sales was flat y/y at 21.8%
operating margin: 9.1% vs 9.9%
eps: +8.5%

ipii appears to have gone full circle from growth to value play. i have argued before that the stock is actually a growth-cyclical. in the best of times it gets valued as a growth stock, in the worst of times like a cyclical/value stock.

the question i would ask is this. if we see a continuation of slowing topline growth rate and some further margin erosion, you could conceivably be looking at a company which generates earnings of $1.50-2.00/year for a couple years, but doesn't show a lot of 'growth'. Consequently it acts more like a cash cow. So barring other actions mgmt. might take, how would you value that stream of income, where does that put the stock price. What do others think?
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