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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Patrick Slevin who wrote (9327)	5/6/2008 6:32:25 PM
From: John Pitera	Read Replies (1) \| Respond to of 33421

SDA-- very bullish situation... as you point out. very bullish chart, the margins are 7%, The Brazil is a key growth country in the BRIC paradigm (Brazil, Russia, India and China) The 6.20 cents of earnings are share a delicious and I could not believe the PE on Yahoo, but feel much better with James Altucher citing the numbers in the Financial Times this past week. comfirming the ebitda at under 4. and Renaissance Tech has a nice position in it. it looks like they are giving shares of this away. (very shrewd stock selection Mr Slevin..... kudos) John I like the fact that super hedge fund, Renaissance Technologies, owns about $50m of the company and that it trades at just under four times ebitda. ---------------------------------- A case of checks and imbalance By James Altucher Monday Apr 28 2008 21:45 continued from previous page I'm willing to bet that sociopathic behaviour is more prevalent in an office or on Wall Street than elsewhere. There's always another sucker out there willing to be duped by charismatic behaviour. Which leads to the question: can we buy any stocks that benefit from this? Protection, for an employer or an investor, often involves nothing more complicated than a background check. The grandaddy is ChoicePoint (NYSE:CPS) , which last year conducted 9m background checks. It is about to be acquired by Reed Elsevier, provider of the Lexis Nexis database. Reed has a price/earnings ratio of 11 and a 2.6 per cent dividend, and with the CPS acquisition nearly under its belt, is an interesting buy. Another company I like in the background check space is Adminstaff. The company has almost a third of its market cap in cash, no debt and a forward p/e of just 12, and analysts expect a 10 per cent increase in revenues. First Advantage, also in the sector, trades at just 10 times cash flows. Investors may worry that if the US is in recession and there is high unemployment, these companies may be in jeopardy. But unemployment has risen only slightly in the past year and, with the Fed aggressively cutting rates, it's likely that the market has discounted these companies enough. Adminstaff is 40 per cent down from its recent highs and has a strong cash cushion of $210m (on a market cap of $650m) - more than enough to survive any difficulties. This column is a two-for-one. I was on CNBC's Squawk Boxto talk about stocks that could benefit from rising food prices. First off, why are food prices rising? There are three reasons. First, demand from China, India and the rest of the developing world has increased as farmers move to cities to make their fortunes as something else. Second is the ethanol scam. Governments worried about rising oil prices are subsidising ethanol production, which makes corn prices artificially high and encourages farmers to grow corn rather than other crops that used to be more profitable (for instance, tobacco). Third is the tendency of the entire world to get more obese. The market has thrown out the baby with the bath water. A company such as food distributor Sysco (NYSE:SYY) has raised dividends for 30 straight years, kept costs lean, expects 10 per cent revenue growth next year, trades for just eight times earnings before interest, taxes, depreciation and amortisation, and yields 3 per cent even though it is down 20 per cent from recent highs. As farmers overwork fields to squeeze maximum profit out of the soil, the need for diesel mechanics is going to rise. Universal Technical Institute trains diesel mechanics to work on farm equipment and demand for its schools is high. UTI, like Adminstaff, has a third of its market value in cash, no debt and trades for less than five times ebitda. Forget about the US food producers and packagers such as Tyson Foods (NYSE:TSN) . High food prices have squeezed margins down to about 2 per cent. But check out the "Brazilian Tyson", Sadia. The dollar still has some strength across South America, and this has allowed Sadia (NYSE:SDA) to keep its margins at about 7 per cent. I like the fact that super hedge fund, Renaissance Technologies, owns about $50m of the company and that it trades at just under four times ebitda. A coffee and doughnut will cost you $1.25 (up from last year's $1) on the corner of Broadway and Wall Street. But I don't think it's possible to invest in those guys. james@formulacapital.com --------------------- btw........and this stock UTI that James A mentions has a really really pronounced downtrend in place, bottom fishing is dangerous. JJP