Hi, Steve, Fred, ToySoldier DJBeino et al!
I am new to this thread but have been following the discussion on the prospects of NOVL with a lot of interest since I have a long position, including options plays. I particularly enjoyed your postings Fred and ToySoldier. I differ with you Fred in as much as I think that the train is ready for departure now. I wanted to bring to your attention ,for commentary, an article by Ted Murphy in thestreet.com yesterday which I paste below. It shows that as NOVL is starting to gain momentum it is starting to show up in the radars of the street.
Regards
Victor Danti
By Ted Murphy
Special to TheStreet.com
3/24/98 11:03 AM ET
My best-performing selections last year, including Intuit (INTU:Nasdaq), Best Buy (BBY:NYSE), United Health (UNH:NYSE) and Apple (AAPL:Nasdaq), were highlighted as depressed stocks with stabilizing trends in forward earnings estimates. Now the depressed stock screen is turning up a pair of interesting software companies -- Novell (NOVL:Nasdaq) and Broderbund Software (BROD:Nasdaq).
Broderbund, down 75% from its high, looks particularly
attractive. Downside is limited by strong brand names (Living
Books, Myst, Carmen Sandiego) and a clean balance sheet --
the company carries more than $4 a share in cash on the
books and no debt. Earnings and margins are depressed, but
over the last six months estimates have been trending higher.
In lieu of a catalyst, I point to the dynamic nature of the
software, educational and entertainment industries.
Depressed Stocks with Recovering Earnings
I began focusing on depressed earnings back in 1992 after I'd
missed an outsized move in Caterpillar (CAT:NYSE). The
only statistical criterion that could have highlighted Cat prior to
the move was a screen on low price to good earnings, with
good earnings calculated as strong margins on current sales.
No other ratio, including price-to-estimated earnings,
price-to-book, price-to-sales or price-to-cash flow, would have
worked.
The depressed stock screen below searches for stocks
meeting the following criteria:
Earnings on strong margins -- good earnings -- at least 1.5
times greater than the 12-month forward consensus estimate
of earnings. Good earnings are calculated as current revenues
times the 80th percentile of net margins from the last seven
years of quarterly observations.
Stock price in the lower half of the two-year high-low range.
We are seeking depressed stocks.
Positive growth in the 12-month forward earnings estimate
line over the last six months. We are looking for stabilizing
fundamentals.
Positive earnings revisions during the last month. Again, we
are searching for a bottoming trend in fundamentals.
Stock price greater than 10 and market capitalization greater
than $300 million. In sifting through deeply depressed stocks,
I prefer reasonably large companies.
The table below lists the three companies passing these
criteria out of my 4,000-company database.
Depressed Stocks with Recovering Earnings
Tue Mar 24 07:55:31 1998
03/23
Est
Est
Good
Good
6Mo
MktCap
Tkr
Price
EPS
P/E
EPS
P/E
EPSGr
($Mill)
NOVL
10.63
0.28
38.3
0.62
17.2
56.2
3,732
BROD
22.81
1.03
22.0
2.16
10.6
41.9
474
ADVNA
22.50
2.74
8.2
5.18
4.3
6.7
409 |
