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Strategies & Market Trends : Disciplined Investing, especially the NAIC way -- Ignore unavailable to you. Want to Upgrade?

To: - with a K who wrote (373)	1/30/2003 6:05:59 PM
From: The Philosopher	Respond to of 469

I've liked LNCR for a while, I own it, our club owns it. I haven't seen any reason for it not to still be a fine stock. The SSG and PERT-A are holding up excellently. Our official club growth projection is 15% even though its historical growth has been better than that -- the TTM sales growth per the SSG has never been under 15%, and generally in the higher teens, and earnings growth has been much better than that, though we don't ever predict earnings growth higher than sales growth unless there is some really compelling reason to do so, like they dropped a major low margin product line that would bring their overall margin up. Using a low of 10.4, which is its 2000 low, it is just in the bottom of the Hold zone using 25-50-25 zoning. If we adjusted the low to a more current figure -- we look at those possible changes once a year when the 10-K is out -- we might increase that somewhat. Value Line has it at a timeliness rating of 1, and that was back when the price was 32. There is no news update since their report dated December 27, so fairly recent. Yahoo doesn't report any news other than their statement that they have no information as to why the stock moved, which was reported to have been on "healthcare rumors." Maybe something about medicare or medicaid reimbursement changes??????? I have no idea. I know of no reason why it's not still a solid growth stock. I think it's in a good industry, solidly managed, and with good prospects. Now, of course, some news will come out that shows it's really an Enron in disguise and make me look like a fool!

To: - with a K who wrote (373)	2/1/2003 11:54:47 PM
From: The Philosopher	Read Replies (2) \| Respond to of 469

Here are two suggestions for stocks for you to look at. I have just done preliminary looks for my club, and am recommending them both for further study. They are King Pharmceuticals, KG, and Biomet, BMET. Would be interested in having folks here look at them and letting me know what you think of them. Here's what my preliminary report to the club says: KG - King Pharmaceuticals King is a biotech company with such rapid growth that I had to add two scales to the SSG front page. Recent sales growth has slowed to only 41%. Even so, its stock price has plunged from a high of 46 in 2001 to a yearly low today of $14.68. This despite a PERT-A that is still remarkably robust. Because it is at a relatively low price, with a PE of only 12.8 (compared with historical PEs in the 70s), it would be hard to get this stock out of the buy range. Even using only a 10% growth rate (first call projects 20.9, NAIC datafile calls for 20%), a 25 high PE, and a 7 low, allowing it to lose half its current value, it still comes out a buy up to $16.10, with a u/d of 3.7. S&P gives it a Five Stars Plus. Value Line only gives it a 3 Timeliness rating, but for long term prospects projects 3-5 year annual return of 37-50%. (We are looking for 15% average.) The company has made several acquisitions which should add to long term growth prospects. They just released an estimate that raises their projected EPS for 2003 to a range of $1.60 to 1.78. This would be an increase of 20% to 34% over S&P's projection for 2002 of $1.33, which itself was an increase over 34% over 2001. Insiders were selling when it was in the 40s, I guess they knew that wasn't sustainable, but they aren't selling now. I am recommending it for level 3. BMET - Biomet I really got a string of biomed companies, for some reason. This one makes surgical implants for knee and hip replacements and related medical stuff. This is another company with picture perfect SSG lines, good solid 15% growth since 1992. If you want to see the nearly perfect SSG page one, this is your baby. Pretax profit on sales is also one of the prettiest lines of figures you'll ever see – And this one even has a dividend which they've increased ever year since they started paying it in 1997. It's a small dividend, and S&P and NAIC differ on how much it has been, but it yields less than 1%, but it's there and increasing. They've been paying steadily just under 10% of earnings as their dividend. And they can afford to keep paying it – they've got $150 million in cash and no long term debt. From all one can tell this is a beautifully managed company in an industry that as the population ages will only keep prospering. You might want to call it a niche company, but it's got a billion dollars in sales, which is a pretty good sized niche. Value Line likes it – they give it a 1 for Timeliness, a 2 for safety, Just because I'm who I am, I dropped the growth rate to 12% for a first look, but I kept the slightly high average high PE of 34. The low is a problem here, too, but for a first look I used the price dividend will support, which is also about the severe market low hit in 2000. On those figures, and a current price of 27.91, it's just into the hold range, which starts at 26. Being even a wee bit more liberal, giving it 13% growth (which according to Value Line is still conservative but matches S&P's textual analysis, though below First Call's 15.1%) and raising the low to the projected low of 17.7 nudges this into the buy zone, just. This stock will not be a barn burner, but it looks to be a really solid stock that will balance out some of our riskier ventures, especially if we follow the Whidbey philosophy and put in a buy at a price we think it will make at some point in the next six months. I'm recommending it for a level 3, and will order the annual report and 10-K.