Good mention of COMS in Barron this week, rated one of the Jan effect candidate :
"Thank You, IRS"
December's tax-loss selling can create January's winners
By Jay Palmer
Monday, December 29, 1997
Bitter winds are blowing down the
canyons of New York, and Wall Street has received its first dusting of
snow. It's that time of year when savvy investors' thoughts turn to
tax-loss selling -- the culling of underperforming stocks to generate
losses to offset capital gains.
As a result, the final stretch of every calendar year often sees the
prices of already underperforming equities pummeled anew, sometimes
brutally.
Often, a shellacking is well-deserved. But in certain instances, the
year-end purging can create bargains, as stocks with no fundamental
problems are tossed into the trash bin. In the opening weeks of each new
year, so the theory goes, buying by investors with an eye for value should
push up the prices of these issues. Traders call this the January Effect
or, more graphically, a form of "dead-cat bounce."
Jeff Warantz, a senior analyst at Salomon Smith Barney, has run a
computer screen, which we reproduce here, to identify beaten-down equities
that appear to be fundamentally attractive. Specifically, Warantz searched
for companies whose shares are more than 20% below their two-year average
price. Right now, in comparison, the Nasdaq and the S&P 500 indexes are
more than 4% and 17%, respectively, above their two-year averages.
To ensure liquidity, Warantz also eliminated stocks with market caps of
less than $300 million.
Most important, he lists only issues that are rated "buy" or
"outperform" by Salomon Smith Barney and whose annual earnings growth over
the next five years is projected to be 15% or better by the firm's
analysts.
Companies are:
coms
aam
abrx
fdc
gml
feet - Just for feet
knt - Kent Electronics
mme
nscp
pair
ppod
plh
phl - Planet Holywood
pmts
sks
schl
stjm - St Jude Medical
rays - Sunglasses Hut
tca
tlz
tkn
Of the 21 companies, only six sell at a prospective multiple higher than
the forecast earnings growth.
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