The Magic 25 (Best Stocks to own in 1998) in review:
Portfolio was started Nov. 18th of last year. 4 biggest losers are victims of the "Asian Flu"... Elbit, Procom, and Qualcomm holdings are being reduced, and the 4th biggest loser, Molecular Dynamics is still rated a buy on hopes of their genetic scanners selling well in Japan. Following is quote from article...
"As of February 11th, the portfolio was down 1.4% from its start on Nov. 18th, versus a gain of 8.7% for the S&P 500 and 3.8% for the Russell 2000. Twelve stocks are up; thirteen are down. Still we have impressive winners: CMG Infor-mation Services (Up 93%), Medical Manager (Up 38.2%), and Modtech (28.8%).
The Magic 25 paradox, though, is that the companies that crushed earnings estimates, including Actrade, ADFlex Solutions, Movado and Tandy Brands Accessories, have barely budged, yet companies that disappointed, including Lightbridge, Molecular Dynamics, and Procom, have been hammered. Eventually the market will reward earnings strength and strong fundamentals. When it does, we'll scoop up the returns."
The Magic 25 is as follows...
Actrade (ACRT) Trade Acceptance Drafts (TADs) are used by companies to finance transactions. First half of fiscal 98 (ended Dec 31st)
sales were up 249% from same period last year. 2nd qtr revs up 160%, earnings rose 117%. Rating - Buy Target - $40
ADFlex Solutions (AFLX) Flexible circuit boards. Beat 4th qtr estimates by a penny. Sales up 16%, earnings up 620%.BancAmerica/Robertson Stephens analyst Keith Dunne
predicts annual earnings of 40%. Rating - Buy
Advanced Digital (ADIC) Newer networking products selling well, along with tape libraries. Was selling at about 16 times 98 earnings estimates of $1. Considered a value play here.
American Coin (AMCN) Acquired Tejas Toy for 2.2mil in Jan. They now have 5,000 of those skill crane machines you see in malls,
restaurants and supermarkets. Foothold in Texas will
serve as basis for expansion into the Southwest.
Bio-Technology General (BTGC) Stock got knocked for a 23% loop when FDA withheld approval of pill for low testosterone in men. FDA has invited them to reapply after further tests. Oxandrin (treats wasting in AIDS patients) sales helped them earn .28 a share in 97. Another drug, BioLon was approved for eye surgery in February.
CMG Information (CMGI) Sumitomo will invest $10 mil to help develop business in Japan. INTC and MSFT are already shareholders.
Cognitronics (CGN) Strong relations with Nortel and Siemens. Analyst from Ladenburg/Thalmann forecasts 30% growth in 98 and eps
of $1.30 on 34mil in sales. Editors say more like $1.50.
Elbit Vision Systems (EVSNF) Company sees "struggle" in 98... Sell.
Jetform (FORMF) Newest product is InTempo, which facilitates transmission of electronic forms across corporate networks or the Internet. Seen as undervalued, rated a buy with target of $21.
John Hancock (BTO) Great safe haven. They invest in U.S. banks. Buy Lightbridge (LTBG) Missed 4th qtr earnings and stock fell 24% because they had to write off $1mil in sales/management services. AT&T said services were "outside of the contract", so revenue was written off as "uncollectible". However, 97 revs were up 37% and
customer base grew from 53 to 70. Rated a Buy.
Lucent (LU) Torched estimates for 1st qtr by .20 Upside still 20%.
Buy Medical Manager (MMGR) 97earnings rose 89%, revs up 28% to 81mil. Buy
Modtech (MODT) California continues to battle overcrowding in schools. MODT makes modular, relocatable classrooms. Target - $30
Molecular Dynamics (MDYN) Competition from Fuji, but genetic scanners will be in demand from biotechs and sales will increase.
Movado (MOVA) Check 4th qtr earnings. Estimates were .28 to .30
NACT Telecom (NACT) World Access bought 67% in Jan. Has offered $17.50 per share in World Access stock to purchase remaining
shares. Still rated a buy, even if they're not bought out.
Procom (PRCM) Asian flu victim. They say hold, but I wouldn't...
Qualcomm (QCOM) Bottom fishing is not recommended...
Satcon (SATC) 1st qtr revs (ended 12/31/97) increased 73% to 3.7million. Now in talks with meat producers. New RIBS technology will detect bacteria in meat and other foods. Could add 8 to 10 million in 98.
Sepracor (SEPR) Filed on Feb. 5th to sell $165mil in debs that convert at $47.37. Within hours, the total placement plus a $24mil overallotment option had been snatched up. New agreements with drug
companies (including Janssen Pharma, a sub of J & J) have been fueling the fire. Rated a Buy.
Tandy Brands (TBAC) New products being sold under Haggar label, scarves and socks at Dillard's, and Jones New York belts. Editors say
shares could hit $24 this year.
Transcrypt (TRII) Shares hit in Feb over delayed earnings announcement. Phone system was down, so they couldn't get news out on time. They missed est by a penny, but sales increased 431% over year ago period. Multimillion contract with Minneapolis supposedly in the works. Also bidding on 5 major and 11 smaller contracts in the Fitst quarter. Shares should rise.
Trimble Nav. (TRMB) Low profit Army contract put off higher margin sales, but demand for global satellite positioning devices still strong.
Vista (VINF) Databases for property assessment. Supposed to reverse split 1 for 2 in attempt to gain street recognition from higher share price. They call it a buy.
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