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Biotech / Medical : GUMM - Eliminate the Common Cold -- Ignore unavailable to you. Want to Upgrade?

To: froche who wrote (1027)	10/5/1999 12:35:00 AM
From: DanZ	Read Replies (3) \| Respond to of 5582

Frank, I noticed that you posted on the CANSLIM thread a few weeks. It seems to me that GumTech has many attributes that William O'Neil looks for in a CANSLIM stock. Here is a run down. I typed a description for each category from Mr. O'Neil's book entitled How To Make Money in Stocks. They gave me the book when I subscribed to IBD a few years ago. C = Current quarterly earnings per share Mr. O'Neil writes: "The common stocks you select for purchase should show a major percentage increase in the current quarterly earnings per share (the most recently reported quarter) when compared to the prior year's same quarter." While GumTech doesn't qualify at the bottom line (earnings), they do qualify at the top line (revenue growth). Revenue growth is over 100% quarter to quarter. A = Annual earnings increases Mr. O'Neil writes: "The annual compounded growth rate of earnings in the superior firms you hand pick for purchasing stock in should be from 15 to 50%, or even more, per year." Again, GumTech doesn't qualify on earnings, but their one year growth in revenue is 40% and their five year growth in revenue is 28%. If Zicam and nicotine gum do well, the one year growth rate could exceed 500%. N = New products, new management, new highs Mr. O'Neil writes: "In our study of greatest stock market winners from 1953 through 1990, we discovered more than 95% of these stunning successes in American industry either had a major new product or service, new management, or an important change for the better in conditions of their particular industry." Quite obviously GumTech meets all the criteria here. They have many new products, a new management team, a new strategic plan that is working, and the stock made a new high at 15 1/16 a few months ago. It's inching back towards that high now. S = Supply and demand: Small capitalization plus volume demand Mr. O'Neil writes: "If you are choosing between two stocks to buy, one with 10 million shares outstanding and the other with 60 million, the smaller one will usually be the rip-roaring performer if other factors are equal." GumTech has about 7.5 million shares outstanding and meets this aspect of the CANSLIM system. L = Leader or Laggard Mr. O'Neil writes: "The 500 best-performing listed equities for each year from 1953 through 1990 averaged a relative price strength rating of 87 just before their major increase in price actually began." I don't subscribe to IBD anymore, so I don't know what their RS rating is for GUMM. I would imagine it's good, however, since the stock has outperformed the market most of this year. GUMM's price change is 185% of the market this week, and it has been hovering around this area for a while. I = Institutional sponsorship Mr. O'Neil writes: "It is, therefore, not always as crucial to know how many institutions own a stock as it is to know which of the better ones own or have purchased a particular stock in the last quarter. The only important thing about the number of institutional owners is to note the recent quarterly trend. Is the number of sponsors increasing or decreasing?" The number of institutions holding shares in GUMM has been increasing, so it meets this criteria. I think the institutional sponsorship will increase much more next quarter after the second round of clinical studies are completed. M = Market direction While the S&P 500 has been flat most of this year, the longer term direction is up. All in all, I think that GUMM is a prime candidate for a CANSLIM stock. What do you think? Thanks, Dan