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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (40049)	8/14/2003 5:19:09 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69249

Top Companies Often Show Terrific Inventory Turnover Wednesday August 13, 11:01 am ET By Jonah Keri Investor's Business Daily At first glance, an efficiently run company may not look all that sexy. Firms that get more widgets out the door often do so quietly, underneath individual investors' radar. Institutional investors notice, though. These big-money investors - the lifeblood of the market - know that strong companies often show the highest inventory turnover in their industries. When institutions spot this, they'll snatch up shares by the truckload, causing the most efficient stocks to take flight. And on Wall Street, there's nothing sexier than a highflying stock. A high turnover rate usually means strong demand for a company's products, which is good for earnings. The firm might also be managing lean supply, lowering the risk of having to sell goods at fire-sale prices, or even writing them off. Inventory turnover is the number of times a firm's raw materials, work in process and finished goods get replaced during a year. Daily Graphs subscribers can find this information at the top of stock charts in the print version of Daily Graphs. To calculate this figure yourself, divide yearly sales by average inventory (the sum of inventory at the start of the fiscal year plus inventory at the end, divided by two). There are no hard and fast guidelines on how many inventory turns a year make for the most efficient companies. But generally, the more the better. Be aware that only companies that produce tangible products can report inventory turns. HMOs, insurers and other service-oriented firms don't have a calculable figure. Also, different products lend themselves to faster turns than others. To get a better gauge of a company's efficiency, stack up its turns vs. rivals in the same industry. Finally, remember that inventory turns constitute a secondary indicator when evaluating a stock. Use earnings growth, sales growth, profit margins, evidence of institutional support, the stock's price strength relative to its peers and the rest of the market, and industry group strength as primary indicators. IBD screened for companies with EPS and RS Ratings of 80 or higher as of the start of the year. Each firm also turned over its inventory at least six times a year. We compiled a list of 10 companies that meet these criteria, found in the table above. They range from clothing retailer Chico's FAS to electronic components maker Nam Tai Electronics.