CHIREX INC. (NASDAQ: CHRX)
I submit that CHIREX INC. (NASDAQ: CHRX) is a buy, based on C-A-N-S-L-I-M principles. My evaluation is as follows:
1. C = CURRENT QUARTERLY EARNINGS PER SHARE -- CHRX's current quarterly earnings per share are up a major percentage over the same quarter last year. The quarter ended 6/30/99 is up 317% over the same quarter last year.
2. A = ANNUAL EARNINGS INCREASES: LOOK FOR MEANINGFUL GROWTH -- CHRX's annual compounded growth rate of earnings is 25%.
3. N = NEW PRODUCTS, NEW MANAGEMENT, NEW HIGHS: BUYING AT THE RIGHT TIME -- CHRX is a contract manufacturing organization serving the outsourcing needs of the pharmaceutical industry. In May, 1999, CHRX acquired Cauldron Process chemistry which provides rapid response process RD for the pharmaceutical industry. On July 19, CHRX broke out of a 7 week flat-base price structure on 150% of normal volume to close up 2 1/8 to 35 5/8.
4. S = SUPPLY AND DEMAND: SMALL CAPITALIZATION PLUS BIG VOLUME DEMAND -- CHRX has 14.4 million shares outstanding and the floating supply of stock is 13.8 million. CHRX management owns 4% of the total outstanding shares. According to Daily Graphs (an Investors Business Daily service), CHRX has a B rating for accumulation/distribution, meaning that CHRX is under accumulation.
5. L = LEADER OR LAGGARD: WHICH IS YOUR STOCK? -- According to Daily Graphs, CHRX is the leader in the Chemicals-Specialty Industry Group with a relative strength of 93 (out of 100) and earnings per share rating of 94 (out of 100). The Chemicals-Specialty Industry Group has a group relative strength rating of 51 (out of 100). This group's relative strength is accelerating. This week the group is in position 88 out of 197. Last week the group was in position 98 out of 197, and three months ago it was ranked 118 out of 197.
6. I = INSTITUTIONAL SPONSORSHIP: A LITTLE GOES A LONG WAY -- According to Daily Graphs, 37% of CHRX'S floating supply of stock (37% of 13.8 million shares) is owned by funds and banks.
7. M = MARKET DIRECTION: HOW TO DETERMINE IT -- All major indexes (DOW, COMPQ, SPX, NDX, etc.) are near their all time highs. All major indexes broke out above price consolidation patterns two weeks ago. This is a BULL MARKET.
TECHNICAL ANALYSIS--
1. BREAKOUT FROM BASE BUILDING ZONE -- On July 19, price broke above a 7 week flat-base price structure on 150% of normal volume.
2. MACD BUY SIGNAL -- On July 8, MACD crossed over its signal line. MACD is heading higher indicating strength in CHRX.
3. STOCHASTIC BUY TIMING SIGNAL -- Stochastic is in the mid range and heading up, indicating upward strength. |
