Full version of Earnings Plays for the week of May18-May 22,1998
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Results of "Earnings Plays" from May 11 - May 18, 1998
TWMC +3 5/8 in 1 day
AMAT +2 3/8 in 1 day
NMGC + 1 7/8 in 1 day
DG + 2 1/4 in 2 days
ANF + 2 1/2 in 2 days
BKE + 4 in 3 days
PSUN+3 1/2 in 1 day
AGTX + 3 in 3 days
WFMI + 3 in 2 days
GMSTF +1 1/2 in 1 day
FGCI +2 in 1 day
"Earnings Plays" for May 18 - May 22, 1998
This newsletter is geared to short term traders (2-5 days), intermediate term (up to 5 weeks) and the daytrader. Each week we will analyze the entire market to determine which stocks are the most likely to rise. These stocks will be in the form of "Watch Lists" We will give you daily updates that you can access from our website. The stocks we choose will be BOTH fundamentally sound and be in good technical shape
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IMPORTANT:
While discussing the plays we will be using criteria I call techno-fundamental criteria. We are looking for the optimum balance between technical and fundamental criteriafor our earnings plays. We are interested in companies with high return on equity, earnings acceleration and velocity. Accelerating quarterly earnings is probably the best single predictor of an explosive price move. Of course we need technical analysis to determine when the precise moment to enter the stock will be.
The graphs show you at a glance when a combination of criteria are met and the company is in the highest quadrant (over 95th percentile) of any particular criteria. These companies are the best bets for either an "Earnings Surprise" or a run up in price in anticipation of an earnings surprise. I will call this an "Anticipatory Upswing" that is, the stock will be punctuated by gains the day earnings come out because traders feel the report will be positive thereby running up the price. "EGRP" and "DIMD" were examples of companies that had this run up the day before earnings.
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A number of this weeks' stock choices are high growth stocks that are
undervalued. I've used combinations of indicators to find undervalued stocks that also gave the highest return on equity, highest gross margins, lowest price to book value ratios. Some of the stocks have strong charts or charts that look to be reversing. Some of them have PEG under 1.00. For the graphs I continue to combine indicators to find the technical position of the stock compared with the the rest of market. Analyst sentiment is also combined different criteria into one indicator.
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In this newsletter I searched for companies with the highest earnings acceleration of in the past quarter and the highest PROJECTED velocity over the next two quarters. That is because I don't want stocks whose earnings have been revised downward for the next quarter or two. I want them with earnings acceleration going forward. Then using "value indicators" I tried to see if some of these stocks are also "undervalued". In the cases that I found they were undervalued I indicated that in the stock analysis.
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There are many ways to determine a stock's real "VALUE". I consider the relationship of current P/E to relative P/E, relative price/book value ratio, and something called the "Least-Squares Deviation 3-Year" in determining if a stock is fairly priced. Best scenario is a company whose current P/E ratio is lower than its average P/E ratio. This company is a candidate for being called "undervalued" Cross checking with analysis programs on the Internet like YHOO's Finance, Vector Vest, StockSmart will confirm your scan results. "Least Square Deviation" will be examined in detail on the "Education" section of "MarketGems" web site.
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Earnings Plays for Monday, May 18, 1998
TLXN - TELXON CORP COM
Earnings for last quarter in the 92nd percentile for all stocks. Earnings going forward next quarter projected to increase by 2300%. Moving Average 10-day breakout.
MODA - MODACAD INC COM
Earnings growth in last quarter very high. Very high Price/Sales Ratio.
ModaCAD develops, markets, and licenses 3-D rendering, modeling and virtual reality software for a broad variety of applications to the commercial, consumer, e-commerce and OEM marketplaces. ModaCAD holds two patents on its proprietary rendering technology and distributes its products to more than 33 countries worldwide.
LOS ANGELES (March 18) BUSINESS WIRE -March 18, 1998--ModaCAD Inc. (NASDAQ:MODA ) Wednesday announced record revenues for the year ended Dec. 31, 1997.
Net sales increased 32 percent to $4,449,857 in 1997 from $3,370,222 in 1996. The company also reported net income of $354,275 or 7 cents per share (6 cents per share fully diluted) on 4,800,918 weighted average shares outstanding vs. net income of $645,435 or 20 cents per share on 3,247,766 weighted average shares outstanding for the fiscal year ended 1996.
ModaCAD, Inc. (Nasdaq NMS:MODA ) Wednesday announced that it has entered into an agreement with Seventeen Magazine, the leading monthly magazine for young women aged 12-24, to participate in its upcoming e-business fashion solution that is being co-developed with Intel Corporation.
Seventeen will provide editorial content related to fashion, health and beauty as well as entertainment topics for the teen market segment of this innovative fashion content manager which is designed to personalize on-line shopping experiences in a rich 3D environment for young women.
Additionally, Seventeen will aid in the dissemination of this e-business fashion application through a unique polybag distribution of this software at newsstands as well as other Seventeen sponsored events.
Seventeen has a large monthly circulation of more than 2.8 million readers and is known in the industry as "junior Vogue." The magazine was the very first to be created for teenagers over fifty years ago and remains the leader in the field today appealing to both high school and college audiences.
Joyce Freedman, chief executive officer of ModaCAD said: "As our first editorial content partner, Seventeen's role is key to providing fashion-related information to our subscribers. We are creating an on-line magazine presence for Seventeen that will enable this popular magazine to broaden its exposure to the influential teen market via the internet.
CMOS - CREDENCE SYSTEMS CORP COM
CMOS is a 'value' and 'growth' stock. It's EPS is projected to be in the 3 digits next quarter and the quarter reporting. (MACD) indicates a BULLISH TREND but other indicators are bearish. Support is at 26.39 and resistance at 28.50. CMOS can have a good day or two in anticipation of a positive earnings report. I would NOT suggest holding this through earnings. 213% increase in EPS for reporting quarter and 160% current quarter.
EARNINGS PLAYS FOR TUESDAY, MAY 19, 1998
DELL - DELL COMPUTER
(MACD) indicates a BULLISH TREND.. Volume/price indicators show DELL is under DISTRIBUTION. Support is at 82.12. DELL should be a very good play on anticipation of a good earnings report.
56% earnings growth vs. same quarter last year.
DH - DAYTON HUDSON
Increase in EPS growth this quarter in 88th percentile. 19% eps growth versus same quarter last year. 2 upward revisions in earnings in last 30 days.
(MACD) indicates a BEARISH TREND, but the Relative Strength is bullish. Stochastics are a bit overbought but all moving averages are pointing upward. Should be closely monitored for possible 1-2 day hold before earnings.
DE - JOHN DEERE CO
5/08/98 - JOHN DEERE CREDIT $150 MILLION NOTES RATED 'A' BY FITCH IBCA -- John Deere Credit Inc.'s (Credit) $150 million 6.125% notes due May 30, 2003 are rated 'A' by Fitch IBCA. This issue is guaranteed by Deere & Co., whose senior debt is rated 'A'. Deere's rating strengths include its strong position in the North American agricultural equipment manufacturing market, innovative new product flow, and strong returns and creditor protection. Rating concerns center on the increased competitiveness of Deere's core markets and the maturity of the agricultural cycle in North America. In addition to the parent's guarantee, the rating reflects Credit's strong asset quality, solid risk-adjusted capitalization, and good profitability. Rating concerns revolve around Credit's concentration in Deere equipment and the cyclicality of the farming industry
CNS - CONSOLIDATED STORES CORP.
200% increase in earnings versus same quarter year ago. 20% increase in next 3-5 years.
NEWS: 1) 5/07/98 - CONSOLIDATED STORES CORPORATION REPORTS APRIL RETAIL SALES OF $329.3 MILLION -- Consolidated Stores Corporation (NYSE: CNS) today reported retail sales for the five weeks ended May 2, 1998, were $329.3 million, a 14.6% increase compared to retail sales of $287.5 million for the same period of fiscal 1997. Retail sales for the first quarter of fiscal 1998 increased 5.9%, to $811.6 million, compared to retail sales of $766.7 million in the 1997 period. Comparable store sales for all stores open two years at the beginning of the fiscal year, increased 9.1% for the month, and 0.5% for the first quarter
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KSS - KOHL'S
36% increase this quarter versus same quarter last year. (MACD) indicates a BEARISH TREND
Relative Strength is NEUTRAL. Price is above resistance of 43.25. Should be watched before earnings come out for possible pullback. Close to 52 week high. Could be good for an intraday trade.
LOW - LOWE'S
20% earnings growth this quarter vs. same last year. 2 positive earnings revisions in last 30 days. (MACD) indicates a BEARISH TREND, and stochastics indicate it is overbought. Price is above resistance of 69.50. It could be good for a daytrade. It's been on an uptrend, could pull back by Tuesday
Earnings Plays for May 20, 1998
ASYST TECHNOLOGIES INC.,
62% increase in EPS. 27% increase in earnings going forward. Chart is mixed.
HD - HOME DEPOT
Stock broke STOCK broke DOUBLE TOP (Bullish) Point & Figure Chart Formation on Thursday. PRICE IS ABOVE RESISTANCE OF 70.37 WHICH IS BULLISH
ADI -ANALOG DEVICES
Nice company. PEG of 1.06 was recently upgraded from 1.6 to 1.4. 25% growth going forward. Fundamental rank of 97. Analysts' opinion rank of 94.
Earnings Plays for Thursday, May 21, 1998
BEAS - BEA SYSTEMS INC
256% increase in EPS this quarter. (MACD) indicates a BEARISH TREND with relative Strength bearish, and volume/price indicators show BEAS was under DISTRIBUTION going into Thursday. Good gains on Thursday, May 14 should propel this stock.
NMG - NEIMAN MARCUS GROUP
(MACD) indicates a BEARISH TREND. Chart is bearish at this point, but should reverse before earnings come out for NMG on Thursday. PEG of 1.07. 15% increase in earnings this quarter. 15% earnings growth is 15% going forward.
PRLS - PEERLESS SYSTEMS
57% growth in eps. 50% growth going forward next 3-5 years.
ADSK - AUTODESK
(MACD) indicates a BULLISH TREND, but the volume indicators show the stock is under DISTRIBUTION. All moving averages (10,20,50) are bullish and moving upwards. 420% increase in earnings per share for the quarter compared with same quarter last year.
SMOD - SMART MODULAR
36% growth in EPS this quarter. PEG = 0.61. 30% a year projected growth going forward. Moving ndicates a BULLISH TREND. Volume/Price indicators show SMOD is under ACCUMULATION. Stochastics indicate SMOD is OVERSOLD. Resistance at 26.50.
Chart pattern indicates a WEAK DOWNWARD TREND. 4 earnings surprises in the last 4 quarters, EPS of 98. SMOD Should be good for some price movement around the time of the earnings report.
HAZ - HAYS WHEELS
3 strong buys, 3 buys HAZ has done very well last quarter as an 'earnings play'.Current vs. Year Ago Change 159% . Excellent PEG of .64. EPS change last quarter in the top 93% percentile for the entire market and going forward projections are for earnings in the top percentiles. EARNINGS VELOCITY which is perhaps the best criteria of an earnings play for HAZ is in the 95th percentile for all stocks.
(MACD) indicates a BULLISH TREND. Relative Strength is BULLISH and the price is above resistance of 38.10. HAZ will not be reporting until 5/21, so it has ample time to retreat, or continue the upward trend. Either way this should be watched 1-2 days BEFORE earnings for price acceleration.
ZLC - ZALES
(MACD) indicates a BEARISH TREND, but the other indicators are bullish.
STOCK broke DOUBLE TOP (Bullish) Point & Figure Chart Formation on Thursday, May 14.
Earnings Plays for Friday, May 22, 1998
RAYS - Sunglass Hut International Inc.
Close to 52 week high and chart might be topping. Current vs. year ago change is 400%. Stock should pull back before Friday. 10, 20, 50 day moving averages are bullish. PEG is 1.12 and growth rate is 15% going forward. Just got upgraded with one more strong buy from 3 to 4.
MTIC - M T I TECHNOLOGY
(MACD) indicates a BEARISH TREND, Relative Strength is BULLISH. Support at 14.25 and resistance at 16.25. Current quarter vs. Year Ago Change 113%. Fiscal Year March '98 181% increase versus year ago. PEG .81. 27% growth rate for next 3-5 years.
NEWS - ANAHEIM, Calif., Feb. 18 /PRNewswire/ -- MTI(TM) Technology Corporation (Nasdaq:MTIC ) today announced the unveiling of its new Customer Response Center. With its staff of highly qualified technical support analysts specially trained to implement and manage MTI's new "First Call" support program, MTI is creating a new storage industry standard for customer service. The Customer Response Center is designed to complement MTI's Gladiator(TM) family of highly redundant, fault tolerant storage systems.
RCMT - RCM Technologies Inc.
6 strong buys, 32% increase in earnings this quarter versus same quarter last year rising to 43% in the next quarter. PEG of .91. Earnings raised in the last 2 weeks from 1.01 to 1.03
NEWS - PENNSAUKEN, N.J., March 2 /PRNewswire/ -- RCM Technologies, Inc. (Nasdaq:RCMT ) today announced record first quarter financial results for the quarter ending January 31, 1998.
For the quarter ending January 31, 1998, the Company reported revenues of $37.2 million and net income of $1.8 million ($.22 per share diluted) as compared to revenues of $21.2 million and net income of $781,000 ($.16 per share diluted) for the same quarter in 1997. First Quarter January 31, Percent 1998 1997 Change Revenues $37,232,000 $21,151,000 +76.0% Gross Profit $9,150,000 $5,099,000 +79.4% Gross Margin 24.6% 24.1% Operating Income 3,079,000 1,355,000 +127.2% Operating Margin 8.3% 6.4% Net Income $1,773,000 $781,000 +127.0% Net Margin 4.8% 3.7%
Leon Kopyt, Chairman and CEO of RCM, commented: "We are excited that RCM continues to post record operating results and a strong upward growth momentum. We are particularly pleased with the increase in our margins and continuation of an impressive internal growth rate.
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