Great day, picked some up at 17 1/2...
Here's a pretty good article,
2000 PICKS November 16, 1998
Small-Cap Survivors
Software Systems and
Temp Employment Stay Afloat
by Raymond Sammak
It hasn't been a kind year for small-cap stocks. In fact, only 15 of approximately 700 small-cap mutual funds tracked by Morningstar are up for the year. However, there now appears to be a silver lining. Since hitting a 52-week low of 310.28 on October 8, the Russell 2000 small-cap index has gained approximately 20%, and the S&P 500 has advanced approximately 12% from its low over the same period.
Despite its significant retracement, the Russell 2000 is still down 20% from its July peak of 463.64. Because small caps led the market lower, the question on many analysts' minds is will they now lead their larger brethren higher? The answer is: not necessarily.
Historically, there appears to be little or no correlation between small-cap stocks and the S&P 500, at least on the upside. In fact, several times in the past there has actually been an inverse relationship between the Russell 2000 and the S&P 500. Furthermore, reviews are mixed as to whether this latest upsurge in the Russell 2000 is just a short-term phase or the beginning of a significant recovery for the heretofore battered and bloodied index.
Just What the Doctor Ordered
Medical Manager Corp. (MMGR), based in Tampa, Fla., designs, markets and implements physician practice management software systems. These systems meet the financial, clerical and administrative needs of physicians throughout the United States. In July, the company added five new dealerships as part of an ongoing strategy to consolidate distribution activities and increase profit margins in large urban areas such a Los Angeles, Phoenix and El Paso. Medical Manager has now acquired more than 30 dealerships in the past 15 months.
Total revenues for the company rose 52% in the third quarter to $35.2 million compared to $23.1 million for the same period in 1997. Net earnings rose 79% to $4.49 million versus $2.5 million in 1997. These results follow an impressive second quarter during which sales rose 47% to $30.6 million.
Coming Soon to Your Browser
Broad Vision Inc. (BVSN), based in Redwood City, Calif., creates software systems that allow businesses to reach their customers on a one-to-one basis via the World Wide Web. Using Broad Vision software, business managers are able to tailor their Web sites to the specific needs and buying patterns of individual visitors to the sites.
American Airlines, for example, introduced a Broad Vision-designed system in June that allows the company to reach the 31 million members of its frequent flyer club with personalized marketing messages.
Broad Vision's personal appeal has born fruit as its customer base has tripled in the past year while revenues have nearly doubled. Fortune 500 companies now realize they can save hundreds of thousands of dollars and valuable lead-time by turning to a company like Broad Vision rather than developing personalized software programs in-house. Other Broad Vision clients include Citicorp (CCI), Eastman Kodak Co. (EK), France Telecom (FTE) and even rival IBM Corp. (IBM).
Broad Vision recently announced record profits for the third quarter. Revenues increased 88% to $13.4 million from $7.2 million for the third quarter in 1997. Net income for the same period was $1.8 million versus a net loss of $1.7 million a
year earlier.
Consensus estimates call for earnings of $0.13 per share for fiscal 1998, increasing to $0.40 per share for fiscal-1999.
Answering the Call
GeoTel Communications Corp. (GEOC), based in Lowell, Mass., is a worldwide provider of customer-interaction software systems that enable companies to deliver superior and cost-effective customer services.
The company recently reported record financial results for the third quarter of 1998. Revenues soared 134% to $12.08 million from the $5.15 million posted for the third quarter last year. Net income rose to $2.50 million, or $0.09 per share, for the third quarter compared to $1.48 million, or $0.05 per share, for the third quarter of 1997. These results reflect a two-for-one stock split on September 22, 1998.
GeoTel recently added Excel Communications Inc. (ECI), Northwest Airlines Corp. (NWAC), Prudential Corp. Plc (PPLCY), Sprint PCS and Telecom New Zealand to its client list. The company now services 416 call-answering customer service sites.
Edward R. Jackson, an analyst with Piper Jaffray Inc., recently reiterated a "strong buy" on shares of GeoTel Communications Corp. Herbert L. Tinger, an analyst with First Albany Corp., also reiterated a "strong buy" on the stock with a price target
of $30.
Temporary Solutions
Westaff Inc. (WSTF), which changed its name from Western Staff Services on Sep. 24, is a provider of temporary staffing services to businesses, government agencies and health-care organizations in the United States and internationally. It maintains a network of more than 425 company-controlled franchise offices in the United States, Europe, Australia and New Zealand through which it provides a broad range of temporary staffing services, employing more than 200,000 workers annually. The company, based in Walnut Creek, Calif., is marking its fiftieth anniversary this year. In 1997, Western Staff posted total sales of $576.8 million.
In July, 1998, Western Staff announced its acquisition of substantially all the assets of The Personnel Connection Inc., headquartered in Dallas, Texas. With annual sales of $36 million, The Personnel Connection represents Westaff's largest acquisition to date. In August, Western Staff acquired N.C.-based Career Temporaries Inc., with annual sales of $5.6 million. Consensus estimates call for current fiscal-year earnings of $0.89 per share, which are expected to rise to $1.07 per share for fiscal-1999.
In late August, Prudential analyst Kevin Dyches upgraded Western Staff to a "strong buy" from "accumulate," with a twelve-month price target of $22. The shares were trading recently at 10 3/8, with an attractive price-to-earnings ratio of 12.9x and a dividend yield of 10.67%.
This report is based on data from sources we consider to be reliable but it is not guaranteed as to accuracy and does not purport to be complete. This report is not to be construed as a representation or as an offer to sell or buy any security mentioned. From time to time, Raymond Sammak may have a long or short position in the securities highlighted in this report.
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