It's one thing to be bearish on techs...but here is the alternative...who needs techs? NO ONE.
SO IF NOT THE "NASDAQ," WHAT?
HERE IS THE "WHAT."
This is a follow up to our February 20th report. The comment in bold is our updated comment after each stock. There are additions to the list as well.
Here is what we said on the 20th:
"In terms of the Nasdaq Index, because it is so tech-heavy, we are suggesting that the bottom of this current decline will be around the 1750 range. We have been forecasting this for some time and for sure it was a minority opinion, and it is still a minority opinion. When it becomes safe for "technicians" to say "…we now think we will see a bottom of between today's 1825 and 1750," you can be sure we are close.
In the meantime, there is no need to fret because we have, in my opinion, a virtual wonderland of reasonably low-risk, high-reward stocks that to us is the best of all worlds…not like the market of 1999 and 2000 where all we had was high risk and high reward or as it turned out, no reward."
3.15.01 Update: Now that the Nasdaq has broken 2000, and held, we are in the midst of another tradable rally-NAZ is 2028.29 as we speak with the Dow back over ten grand. But we are not trading techs with the expectation that we are going to keep those positions…we trade them to dump on others who are fueling their cocaine-like addiction to high tech stocks fueled over the past few years by television commentators such as CNBC and MSNBC, CNNfn and other media babblers."
Let's get to it!
AEROSPACE & DEFENSE
To be included in portfolios.
Boeing [BA-59.96] now positive-accumulate sub-$60. 3.15.01 Update: $58.02 no change-we are sub $60 and that is the place.
Edo Corp [EDO-11.00] new 3.15.01- a supplier of highly engineered products for
governments and industry worldwide operating in three segments: Defense,
Space and Communications, and Engineered Materials have been growing by acquisition and it is beginning to show-we like the $9.00 base and the move to about $12. Buy this pullback.
Lockheed Martin [LMT-36.25] stable on the base at $34…we think now ready for the next move and that is toward $50. 3.15.01 Update: $37.64…is this a champ or what? No change.
General Dynamics [GD-70.59] strong developing strength and a buy. 3.15.01 Update: $69.40…no change…what bear market?
B.F. Goodrich [GR-40.47] with a nice move from $37 to 41+, the consolidation will not last long. A buy during the pullback and GR will likely change its name soon. Tire company? Not hardly. 13.5 X's earnings and 2.72% yield…get that out of CSCO! 3.15.01 Update: $39.79…no change…Buy.
Northrop-Grumman Corp. [NOC-90.00] see the cohesiveness we have between stocks in this group? A buy as well. About 10X's earnings and a yield of 1.78%. 3.15.01 Update: $90.80 and we did have a nice move to nearly $98. Now a "strong buy." We like this break.
Newport News Shipbuilding [NNS-53.40] a non-government-owned shipyard, is engaged in the design, construction, repair, overhaul and refueling of
nuclear-powered aircraft carriers and submarines for the U.S. Navy. It is positive and the fifties should produce no serious problem. But the balance sheet is always a worry. 3.15.01 Update: $53.20 the move to $57 is aborted by market conditions, but we like this in the low 50's.
Esco Technologies [ESE-21.87] ESE is a supplier of engineered filtration products to the process, health care and transportation markets. ESE also markets a broad range of RF shielding and test products and proprietary communications
systems. Little debt ESE is a strong buy on a break of $21 and we are close, aren't we? 3.15.01 Update: $24.33, you got your break of $21…for about two hours, but now the payoff for buying the pullback the stock experienced from the 23 ½ top in early February. Buy.
Hexcel Corp. [HXL-11.35] lightweight,
high-performance reinforcement products, composite materials and
engineered products for use in the commercial aerospace, space and
defense, electronics, general industrial and recreation markets. The base just sub-ten is solid and the new suggestion is attack of the mid to high teens. Buy. 3.15.01 Update: $10.75 still dribbling from the 12 ½ recent top…that's OK…continue to accumulate.
Be Aerospace [BEAV-23.25] passenger cabin interior products for and general aviation aircraft. We now rate as accumulate-we doubt a break of $20…that would be an ideal buy point, but we could be satisfied with an approach of $20 as the buy point. 3.15.01 Update: $22.88…rather immune to the market we would say…so we will say it: "…rather immune to the market [we would say]…so we will say it" Is this repetitive? Strong buy.
Aeroflex [ARXX-26.25] Buy a break of $20. We love the base here in the mid to low $20's and the recent attempt to move to $30+. Microelectronic module, integrated circuit, interconnect & testing solutions used in the satellite, wireless, wireline, cable & defense communication markets. The quarterly comparisons have been outstanding. But the tech environment moves us to caution. 3.15.01 Update: $10.13…that caution was well placed…we will eliminate from coverage.
Moog Cl A [MOG-A- 33.20] high
performance, precision motion and fluid control products and systems for
aerospace and industrial markets. Reported a decent quarter. The recent move from $29 to current prices suggest the buy point may be sub $31. But a buy. 3.15.01 Update: $36.65 here is your high-tech stock…well, do you own it? Get it done.
Mercury Air Group, Inc. [MAX-6.10] a strong buy. provider of aviation petroleum products, air cargo services and transportation, aviation information technology and support services to international and domestic airlines, general and business aviation and U.S. government aircraft. A very strong recent quarter-take a look: "For the second quarter of fiscal 2001, which ended December 31, 2000, the Company reported net income of $1,782,000 compared to $1,493,000 for the same
period last year. 3.15.01 Update: $6.62 a nice move and now the dribble to sub seven. Buy this dribble…to the "max."
For the second quarter of fiscal 2001, basic and diluted earnings per share were
$0.27 compared to $0.22 and $0.21, respectively, for the same period last year.
Revenue for the six months ended December 31, 2000 increased 57% to $248,327,000 from $158,173,000 a year ago due to increased sales from the Company's fuel sales and services and FBO segments caused by higher fuel prices and increased volumes.
Gross margins rose to $19,826,000 in the current six-month period compared to
$17,889,000 a year ago primarily due to growth in the FBO segment, which rose
43% in the current six-month period compared to the previous year. Lower cargo gross margins were more than offset by increases in each of the other four segments." This stock is at the lower end of its long-term trading ranges. Get it done.
RECREATIONAL VEHICLES
Artic Cat, Inc. [ACAT-14.94] better snow conditions lowered inventory levels to the lowest levels in three years. ACAT's new 4-stroke engine should power sales in 2002 and the company's ATV vehicles will help to level out this seasonal business. With a solid base at the ten level, ACAT appears ready to march toward $20. Let it march. No debt, lots of cash, 1.78% yield. Who needs Sun Microsystems? Not you. 3.15.01 Update: $13.94 looks cleaned out to us. No change.
CHEMICALS-AGRICULTURAL
Alcide Corp. [ALCD-30.81] research, development and commercialization of unique chemical compounds having intense microbiocidal activity, sold primarily to the dairy, health care, poultry
processing and automotive industries. For the 6 months ended 11/00, net
sales rose 59% to $8.9M. Net income totaled $988K, vs. a loss of $594K.
Given the very positive revenue and earnings comparisons, the absence of any debt. Only 2 ½ million shares outstanding and only 1.8 million in the public float. The stock is thin and a "strong buy/" 3.15.01 Update: $23.75 crunching in the base…no change-the benefit of the doubt.
Methanex Corp. [MEOH-6.06] - Accumulate. MEOH is involved in the production and sale of natural gas based petrochemical products, methanol and gasoline. For the FY ended 12/31/00, revenues increased 53% to $1.06B. Net income totaled $144.9M vs. a loss of $149.9M. A very solid base at the $5-6 level now suggest that the consolidation has likely run its course for the last six months. Now buy stock under $6.00. 3.15.01 Update: $7.38…see what we mean about this being a "bull" market. There are great stocks out there…this is an example in spite of the fact that Bush thinks the economy is "sputtering." Sputtering indeed.
COMPUTERS & SOFTWARE
IBM [115]. Positive. Need we say more? AND THAT'S IT! 3.15.01 Update: $94.56 such an obvious target for a crummy market. No change and we like buying below important decade numbers such as ten, 50 and in this case, 100.
Peregrine Systems [PRGN-29] enterprise software company that missed the tech explosion and with revenues really moving, we can now see earnings. Accumulate. 3.15.01 Update: $20.56. No change.
Microsoft [MSFT-57.31]. Negative since $107 5/16, Christmas, 1999 and more so now. Not hardly. Here are the negatives: management by aggression, Linux, Justice and far from revolutionary products. Here are the positives, cash but with a stock losing currency value…fast. [ask Yahoo [28.19] what THAT means…and ask AOL [48.36] how they turned that currency into real LT value. 3.15.01 Update: $54.00 - no change-blah.
SAP Ag Ads [SAP-44.34] Strong Buy. This German application software company. International developer supplier of integrated business application software designed to provide cost-effective comprehensive solutions for businesses. For the FY ended 12/31/00,
revenues rose 23% to EUR6.27B. Net income rose 4% to EUR626M. 3.15.01 Update: $32.79 just wrong in the short term-not immune to the tech wreck. We will hold for the moment, but looking fo' da door.
Talarian Corp. [TALR-4.94] infrastructure software that enables businesses to exchange information reliably and securely in real time, both internally and with their partners, suppliers and customers. No debt and plenty of cash the quarterly comparisons are impressive for this Los Altos based company. The price base comes as a result of a steady decline since the IPO in July, 2000 by Lehman Bros. We think it's nice to get IPO's but let's get them at a nearly 70% discount. Accumulate sub five. 3.15.01 Update: $2.81 well, I is sub five…but lifeless. Eliminate.
Riverdeep Group Plc [RVDP-24] this Irish company is step-dancing its way to very impressive gains. Provides Web-based educational software and solutions targeted at the U.S. kindergarten through high school market. For the 6 months ended 12/31/00, revenues totaled $16.7M, up from $4.5M. Net loss rose 68% to $34.9M. The base at the high teens has given us a move to the mid-twenties…it would bed nice to see a break of $20 for a buy point-that is not too likely, so accumulate the$22-24 range. Here are the step-dancing officers:
Patrick McDonagh, Chmn., Barry O'Callaghan, CEO, Gail Pierson,
Pres./COO, William H. Burke, CFO, Mary Malone, VP. US address: Riverdeep Interactive
125 Cambridge Park Drive 125 Cambridge Park Drive, Cambridge, MA 02140. 3.15.01 Update: $25.81 nice move to the $27 level. No change-constructive.
Mechanical Dynamics, Inc., [MDII-8.94] develops, markets and supports virtual prototyping solutions that allow the engineer to design a complete product by simulating a product in motion. This technology is particularly useful in the design of complex mechanisms such as cars. This gives you an idea of their client base: "During the fourth quarter, Mechanical Dynamics received cumulative orders valued at more than $100,000 from each of 22 different companies, including BMW, Bosch, DaimlerChrysler, Dana Corporation, Fiat, Ford, General Motors, Honda, Hyundai Motor Company, Kozo Keikaku Engineering, Lockheed Martin, Navistar, NTN Corporation, Renault, Ricoh, Sumitomo, Toyoda Automatic Loom Works, Toyota, Visteon, Volkswagen, Volvo, and Yulon Motor Company, among others. Significant
orders of less than $100,000 each came from a number of customers, including
Audi, Canon, Computer Sciences Corp., Dortec Industries, Government of India,
Mitsubishi, National Renewal Energy Laboratory, Nissan Forklift, Orion Bus,
Peugeot, Saab, Scania, Tremec, TRW, and United Technologies, among others." We like the product, the lack of debt, the vbase at the $6-7 level and the ability of this stock to move. Buy. 3.15.01 Update: $8.81 no change. Buy.
Portal Software [PRSF-9.19] nice crash pattern from the $80 level and that is not just one crash but about three…the most recent $20 to ten! But that gets rid of weak holders, so let's take the stock away from them and accumulate. Here is the reason: "Jan 29, 2001 (BUSINESS WIRE) -- Portal Software, Inc.
(Nasdaq: PRSF), today announced a multi-million dollar, multi-year contract with
America Online under which America Online will license Portal's Infranet(R) software platform. America Online plans to use Infranet business
management and billing software to support a wide range of services." …and other important players. Erratic earnings but earnings nonetheless and at this stage of development? We will take those earnings. Accumulate. 3.15.01 Update: $7.56 no change.
NCR Corp. [NCR-49.66] Strong Buy. This is the boring side of technology…but the technology is EVERYWHERE. Solid base at the $35-45 level…buy here. 3.15.01 Update: $43.52 still in the base. No change.
Teleflex, Inc., [TFX-46.09] ready to make the next step to the mid 50's and given the previous move $34-44…it looks likely. 3.15.01 Update: $43.07 holding in the base. No change.
Minnesota Mining & Mfg. [MMM-113.25] MMM manufactures and markets pressure-sensitive adhesive tapes,
abrasives, and specialty chemicals. MMM also markets electrical &
telecommunication products, medical devices, office supplies and major
automotive parts. The previous base at the $90-95 level set up the move to $120. It is time to accumulate stock here for the expected move $120-145 [our estimate]. No promises, Betty…[who's Betty?] 2.12% div. 3.15.01 Update: $104.51 we would like a break of $100 for a real buy point…but this is close enuf.
CONSUMER DURABLES
Lennox International [LII-11.98] New 3.15.01-designs, manufactures and markets products for the heating, ventilation, air conditioning and refrigeration markets, sold under the brand names Lennox, Armstrong Air, Bohn, Larkin, Heatcraft and others. Got squished in late '00…now that the sellers are murdered, it is time to buy.
Helen Of Troy, Ltd. [HELE-6.31] Strong Buy. Designs, develops and sells hair dryers, curling irons, hot air brushes, brush irons, lighted mirrors, hairsetters, brushes, combs, hair accessories, women's shavers, foot baths, body massagers and hair clippers and sales very strong and that is coming down to the bottom line. HELE has a rash of new products and the launch costs are behind the company. The base at the $5.50-7.00 range is complete. The Jan 10 release FYI: "Third quarter sales were $119,106,000, an increase of 33 percent from sales of $89,601,000 for the like period of the prior year. Net income for the third quarter increased 33 percent to $7,940,000 compared to $5,978,000 for the same quarter a year earlier. Third quarter earnings per share increased 40 percent to 28 cents per diluted share, from 20 cents per diluted share for the comparable period last year. 3.15.01 Update: $7.25…bear market? Not here. Just who needs JDSU?
Applica, Inc. [APN-6.56] with strong sales coming from the Black & Decker name, APN appears destined for measurably improved numbers. Strong Buy. The recent move $3.50 to $7.00 is consolidating. Buy this consolidation in advance of the expected move to double digits. Applica Incorporated is a diversified manufacturer and distributor of a broad range of household appliances for major retailers and appliance distributors. Applica manufacturers and markets products under its licensed brand names, such as Black & Decker, as well as the Windmere, Littermaid and private label brand names. The Company's manufacturing operations are located in the Peoples Republic of China and Mexico. 3.15.01 Update: $7.25 no change… very adept at ignoring the market.
La-Z-Boy [LZB-17.40] the attempted breakout to $18.50 failed last week, but this appears very temporary indeed. Buy for the move into the 20's. 3.15.01 Update: $17.23 no change at all.
Bassett Furniture, Inc. [BSET-14.81 a strong move last week and the week before and we expect very little consolidation. Buy. Book value over $21, yield over 5%. Recent results have been substandard and the company is aware of the need to reduce costs and streamline operations. We think they will be successful and we also believe the dividend is safe given the very strong balance sheet. Accumulate. 3.15.01 Update: $13.06 with a move to $16, this break makes it a strong buy.
Steelcase, Inc. [SCS-15.20] Strong Buy. Outstanding quarterly comparisons. A designer and manufacturer of products used to create work environments - includes office furniture, office furniture systems, technology products and
related products. The very stable base at the $13-15 level appears complete. We would do it now. 2.9% dividend and $11 book value. Amazon? I don't think so not with Steelcase staring us in the face! 3.15.01 Update: $12.88…out…not acceptable performance. That's the way it goes.
Actv, Inc. [IATV-5.88] and down from the recent spike to $8.00, this price and below looks like the place to buy. The base is $4.50-$6.00 and this now appears solid with the explosion in revenues. According to the company, "…it has pioneered TV/Web convergence programming with its patented HyperTV® software solution. The company also created interactive one-to-one digital television with its proprietary ''Individualized Television'' and ''Individualized Advertising''
software and programming capabilities. ACTV offers superior, practical solutions for television programmers, advertisers, cable operators, educators and consumers
looking to leverage the emergence of digital television and the broadband delivery infrastructure." And by the look of the recent revenue stream this technology is cutting edge and in demand. Profitability? Not too soon…but here is the beginning of the revenue stream. Buy. 3.15.01 Update: $4.05 no life anywhere-out.
K2 Inc. [KTO-9.31] with the best ski season in history, inventory levels for skis is becoming quite low and prices are surely firming. Revenue numbers are very encouraging and we expect that this will begin to hit the bottom line this year and next as retailers rebuild inventories. 18 ½ x's earnings with a 4.7% yield selling below book. The original spike to the upside in December, 2000 from $7.00 to $10+ has been consolidated. We expect the next leg and that began last week with the move from $8.75 to nearly ten. Accumulate this minor pullback. 3.15.01 Update: $8.44…ok, but we can do better. Out.
CONSUMER NON-DURABLES
Jones Apparel Group, Inc. [JNY-38.99] Appears ready for the next upside break - buy here. 3.15.01 Update: $37.04…no change.
Cobra Electronics [COBR-8.06] New 3.15.01 Strong Buy. This company has taken a while to get it together, but the numbers are cranking out. The recent move to $10+ was impressive…buy this pullback. COBR is a designer and wholesale marketer of consumer electronic products, primarily communications products. COBR markets products under the COBRA brand name. For the 9 months ended 9/30/00, revenues rose 19% to
$95.7M. Net income totaled $4.2M, up from $1.8M. Revenues reflect
increased retail distribution and strong demand for the new microTalk FRS
two-way radio and new 9 band radar detectors.
Elizabeth Arden, Inc. [RDEN-15.25] manufacturer and distributor and
marketer of prestige fragrances and related cosmetic products.
Church & Dwight [CHD-21.41] the recent "clunk" from the $25 level should set up the reverse but this time to the upside. Strong Buy. CHD manufactures and sells sodium bicarbonate-based products which the Company sells under the "ARM & HAMMER" trademark. The revenues show outstanding growth with erratic earnings of late. We like the acquisition of USA Detergents and rate this stock a Strong Buy. 3.15.01 Update: $21.70 no change.
FINANCIAL SERVICES-ASSET MANAGERS
Value Line, Inc. [VALU-42.44] with less than ten million shares outstanding and about 1 ½ million in the float, this stock is almost impossible to purchase. Still, we have done so for clients and urge you to accumulate when you can. VALU produces investment-related periodical publications and provides investment advisory services to mutual funds, institutions and individual clients. The economies of scale are not within this company, but it could be within a larger environment. 12.8 x's earnings, yield 2.36% and cash on the balance sheet is almost ½ the market value. Why not buy it? 3.15.01 Update: $41.75 no change. Strong Buy and unreal value-look at the cash on the balance sheet.
T. Rowe Price Associates not our favorite, but beaten down from the mid 40's to make it attractive, so that's what we'll call it…attractive. 3.15.01 Update: $34.06 but still not attractive enuf to buy…try the $20's.
Stilwell Financial, Inc. [SV-36.76] murdered in the Nasdaq sell off, poor Janus Funds are in the tank. The stock is suffering and that will likely continue...but there is a price at which we are interested and that is a break of $25. Avoid for the moment. 3.15.01 Update: $34.06 we want this…but we want it sub $30.
Neuberger Berman Inc. [NEU-82.09] Strong Buy. The consolidation of the $60 to 83 level is complete and we are now ready to attack triple digits. Strong Buy right here for that attack. NEU is an independent investment advisor and,
through its subsidiaries, provides clients with an array of investment
strategies and products. 3.15.01 Update: $65.75 a heart attack to be sure. Buy the heart attack.
John Nuveen Co. Class A [JNC-56.95] not our favorite, but worthy of accumulation. JNC specializes in the sponsorship, marketing and management of investment product, & in municipal & corporate investment banking
services. No debt-with steady revenue and earnings increases. 3.15.01 Update: $53.18 no change-accumulate.
Franklin Resources [BEN-43.44] a very solid base at the $38-40 level and the move from 40 to 47 now appears complete. Strong Buy. [Note: my spouse will likely own this stock as a result of Franklin's purchase of Fiduciary Trust common stock which she owns -we will treat this as her business. 3.15.01 Update: $39.38 in the base…continue accumulation.
Eaton Vance Corp [EV-30.48] buy as this consolidation now appears complete, i.e., the move $24-32. Excellent numbers in terms of revenues and earnings. 3.15.01 Update: $29.64 - no change.
MISC.
Dover Downs Entertainment [DVD-12.28] New 3.15.01 Strong Buy. DVD owns and operates a multi-purpose entertainment complex conducting NASCA & IRL Auto racing, pari-mutuel harness horse racing, wagering & video lottery machine operations in DE. For the 6 months ended 12/31/00, total revenues rose 7% to $124.5M. Earnings rose 19% to $15.9M. Revenues reflect increased sale of video lottery machines
and increased attendance at the Dover Downs Int'l Speedway. Earnings
benefited from improved gross margins.
We are expecting a move that will test the recent high and that should be successful...
Churchill Downs [CHDN-28.50] New 3.15.01 with the base at the mid-20 level and with revenues up 40% and net up 28% for the last year, we think this base is worth buying. CHDN conducts pari-mutuel wagering on Thoroughbred and Standardbred horse racing at its facilities in KY and IN. CHDN also owns an investment company to oversee its investments. For the FY ended 12/31/00, revenues rose 40% to $362M.
Genlyte Group Inc. [GLYT-27.38] new 3.15.01 - designs, manufactures and sells lighting fixtures for applications in commercial, industrial and residential markets. For the FY ended 12/31/00, net sales increased 3% to $1.01B. Net income increased 11% to $36.3M. The company is becoming more efficient-for sure and the mid 20 base is supportive. Accumulate.
North American Palladium [PAL-7.50]. New 3.15.01 - this Canadian company is in the business of exploring and mining platinum group metals. For the FY ended 12/31/00, net revenues totaled C$101.9M, up from C$39.2M. Net income totaled C$60.8M vs. a loss of C$5.2M. Revenues reflect the benefit of higher palladium prices and increased palladium production as a result of processing higher-grade ore. Net income reflects lower operating costs & higher tax benefit. The quarterly comparisons are impressive, but investors must be aware that palladium prices can have wide ranges in price. The price base at the $8.00 level has supported two runs at the $12 range and we think that can occur again and that the test could be successful. Buy.
AXXel Knutson
www.TradingWeapon.com
axxel@blast.net
This report or comment is published solely for information purposes. It may be a part of a published research report of www.TradingWeapon.com. ["Tradingweapon.com" is the business name for AXXel Knutson, who is a Registered Principal of an independently owned office of Supervisory Jurisdiction [OSJ] with First Allied Securities, Inc. Tradingweapon.com offers all of its securities business through First Allied Securities, Inc., a member of the NASD/SIPC. Bear Stearns Securities Corp. is the clearing agent for First Allied. Securities. Inc. It is not to be construed either as an offer to sell or the solicitation of an offer to buy any security or the provision of or an offer to provide investment services in any state where such an offer, solicitation or provision would be illegal. Any opinions expressed herein are statements of our judgment on this date and are subject to change without notice and we may not update that change to you. First Allied Securities, Inc. its affiliates and subsidiaries and/or their officers and employees may from time to time acquire, hold, or sell a position in the securities mentioned herein although Axxel Knutson does not hold any position long or short in any of the stocks that he speaks about. Nor does Knutson, or First Allied accept fees or securities in any stocks that he speaks about from any public company. Additional information is available by requesting the Newsletters of AXXel by dropping your email address at the following web site: www.TradingWeapon.com The newsletters are without charge of any kind and we suggest that you read the disclaimers that are an integral part of the letters. tradingweapon.com located at 197 Mountainview Road, Warren, NJ 07059. TEL: 908-647-5750. First Allied Securities is a NASD and SIPC member. First Allied clears its securities transactions through Bear Stearns Corp. Manage the risks…the profits will take care of themselves and the absence of diversification and the use of margin to "position build" is nuts. |
