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Strategies & Market Trends : Point and Figure Charting

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To: Hardline who wrote (23915)	9/29/1999 7:03:00 PM
From: Sergio H	Read Replies (1) of 34817

Hardline, our discussion took a wrong turn somewhere. It started when you asked: <https://www.siliconinvestor.com/readmsg.aspx?msgid=11374218> Message 11374218 I thought I responded to you by providing evidence of where mutual funds have taken a position in IFLO. Albeit small positions, they do represent initial institutional interest. Particularly Oberweis' position as his fund tends to be an early bird. The July Oberweiss report provides criteria for stock selection and mentions IFLO as a candidate that meets the criteria. Oberweis took a position in IFLO at the same interval that the report was released and that is why the stock is not included in the portfolio section of that report. I thought the criteria details to be particularly of interest as a tool for evaluating IFLO. Over the last few sessions, there has been large block buys on IFLO and one can make an assumption that these large trades are additional institutional buyers. I admit that it is just a theory at this point without proof. My initial evaluation of IFLO concluded that what would eventually drive up the stock price would be additional institutional buying: * THE BASICSIFLO is selling at a discount to its growth rate. PE = 22 GROWTH RATE = 41% resulting in a very attractive PEG Ratio of .53 * COMPARISON TO THE PEER GROUP AND THE MARKET IFLO is selling at lower multiples than its peer group and the market in general. Ratio IFLO Industry Sector S&P 500 P/E Ratio 21.73 59.67 43.73 36.24 Price to Sales 2.01 7.67 8.00 5.57 Price to Book 3.56 11.11 12.92 9.18 Price to Cash Flow 12.12 43.20 34.63 28.38 INSTITUTIONAL SUPPORT There is currently very low institutional ownership. As IFLO's price rises, institutional ownership will increase. Ratio IFLO Industry Sector S&P 500 % Owned Institutions 1.88 41.87 52.51 62.75 GROWTH The Medical Equipment and Supplies Industry is expected to outperform the market in the next 5 years. IFLO's growth rate is comparable to its peer industry group. Ratio IFLO Industry Sector S&P 500 Qtr Sales vs 1YrAgo 24.44 36.12 19.10 14.52 Sales/5 Yr. Growth 32.82 21.84 16.44 17.21 Qtr EPS vs 1Yr Ago 650.00 30.48 17.78 20.17 BALANCE SHEET IFLO is not burdened by heavy debt and is currently building its cash position as royalty sources increase. Ratio IFLO Industry Sector S&P 500 LT Debt to Equity 0.15 0.52 0.28 0.64 Total Debt to Equity 0.39 0.67 0.43 0.95 PROFITABILITY IFLO lags the rest of the market in bottom line profits. The bottom line numbers are expected to benefit vastly from the J & J deal and other new developments. Ratio IFLO Industry Sector S&P 500 Gross Margin 57.85 61.72 67.47 49.62 Operating Margin 9.89 14.78 20.08 18.34 CONCLUSION: Near future bottom line strength will attract institutional buyers. <My statement is that mutual funds will not flood to buy this stock because the maximum position they can take is 320 million if the market cap remains at 64 million. 200 million is the magic market cap when mutual funds start flooding to a stock. (Reference The Motley Fool Investment Guide)> Point well taken. I did not mean to imply that the flood gates are about to break. IFLO is still a ground floor opportunity. <On the topic of Wedbush Morgan: My comment was that only 1 analyst (Wedbush Morgan) follows this stock. So when they beat analyst estimates they are only beating 1 analyst's estimate. > Agreed. No argument there, but I reference Wedbush Morgan's coverage for a number of reasons. WM has been very successful in evaluating IFLO to date. IFLO is a midget sized Co. compared to the other bio/medical stocks currently in WM's stable, and it is almost remarkable that IFLO has any analyst coverage at all at this time. Perhaps indicative of what the prospects are for IFLO's future. Hardline, maybe IFLO will be eligible for the next DWA stock contest. Thanks for your comments and the definitions provided. Sergio

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