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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (25432)	12/2/2006 11:49:53 PM
From: gcrispin	of 78746

If you look at the charts of the stocks mentioned in the link, you will see that the majority have share prices that bottomed sometime in 2003. So I imagine that they are long-term secular plays that continue to outperform in this environment. The Schwab rating system includes momentum as part of their formula so they will never be buying stocks that are bottoming. Something also mentioned in the article is the importance of cash equivalents on the balance sheet. The following is a quote from the article. Another important element is cash. "We've found that generally [stocks of] companies that have a lot of cash, relative to their market value, perform well." Some argue that a high cash level means that management doesn't know what to do with it, "but that's not what the data tell us," Forsythe says. Why? Well, unless it's an IPO, "if you have a lot of cash you've probably been earning it...and that's a good thing." This is something that served me well when I bought CKSW which I posted on Value Investing before. Message 22424714 With micro-caps I like to focus on how they are strengthening their balance sheet from quarter to quarter. One stock that I have recently purchased is pbme, another micro-cap which is generating positive cash flow and adding cash to the coffers. The company currently has .31 per share in cash for a stock that is selling at 1.08. I like the services they offer and believe it is a growing trend in health care. I have taken a small position (one-quarter of what I'm willing to invest) and will wait to see how their revenues increase as I suspect there could be choppiness due to the initiation schedules of clinical trials. Message 23063814 (Note in the post that is linked here that the yoy comparisons include a secondary offering. That's why I like to look at quarterly comparisons.)

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