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Strategies & Market Trends : Lizard King's Trading Swamp -- Ignore unavailable to you. Want to Upgrade?

To: Steven Ivanyi who wrote (6566)	5/2/1998 10:08:00 AM
From: James Wright	Read Replies (1) \| Respond to of 7396

Although this is my first post on this thread, I have been active on other threads and have a proven track record of picking companies just before they break out on strong upswings. A fellow investor suggested my stock picks might be of interest to Lizard King. So here it goes . . . After having monitored Neomagic Corp. (NMGC) for nearly a month, I recently started buying. (This is one of my two latest picks after successfully highlighting companies such as LGWX, THNK, LEAP and several others since the beginning of the year before they went up 40% or more over the next several weeks.) For those who follow my stock picks, let me explain why I think NMGC is a great buy. NMGC is beginning to break out of its base of around 21 on high volume and no news (always a good sign -- it means that a stock is more likely to enjoy sustainable price increases.) In addition, its next quarterly report is due May 14th, so newly begun breakout likely is in anticipation of soon-to-be-released numbers as well as solid fundamental and technical factors. NMGC is the leading supplier of integrated graphics chips for laptop computers. The three largest laptop manufacturers all use NMGC's chips, and NMGC's customer base keeps growing. Thus, it dominates its field with cutting-edge technology. It also was recently voted by its peers as the best managed fabless chip manufacturer, and reportedly is branching out to into other areas like chips for digital photography that will use its innovative technology. For you IBD fans, NMGC has a respectable and growing EPS rank of 74 and RS rank of 75 with a group RS rank of 73. The Acc/Dist is A. The company's growth in earnings and revenues are amazing. Quarterly earnings and revenue growths have consistently been over 150%, and in some cases over 1000%, during the last two years. For example, in the last quarterly report it had profits of 0.24 per share on revenues of 44.7 million, up from profits of 0.05 per share on revenues of 16.3 million during the prior year's quarter. And the beauty is that revenues and earnings growths have been not only dramatic but steady -- in fact, every quarter for the last two years has exceeded the prior quarter's numbers. The company also has an amazing $2.58 cash on hand per share! NMGC has a small float of 9.7 shares and mutual funds own only 22% at this time. Thus, there's a lot of upside potential as institutional buyers start discovering this company. The only risk I see is that one of the big boys (Intel, National Semiconductor, Motorola, etc.) may try to shove NMGC aside and take over its market niche. However, this seems unlikely due to the patents that NMGC holds. Although there was a lot of fear a month ago that Intel was going to compete head to head with NMGC, it didn't happen. Frankly, given NMGC's dominance in its market, its patents, and its large cash on hand, it would make more sense for a larger company to acquire NMGC than to compete. (I hasten to say, however, I have no knowledge of any takeover interest.) Do your own research and check out NMGC -- it looks like a winner.

To: Steven Ivanyi who wrote (6566)	5/2/1998 10:13:00 AM
From: James Wright	Respond to of 7396

Here's my other current stock pick. In fact, this company is such a great ground floor opportunity that I had to create the SI thread for it. SIRN manufactures and sells women's swimwear, casual wear and intimate apparel under the brand names Hang Ten, Liz Claiborne, Anne Klein, Jezebel and others. It has an IBD EPS rating of 73 with an RS rating of 97 (as of May 1998) and has a float of only 2.7 million shares with total outstanding shares of 4.65 million. Book value is 2.25 per share and it currently is trading at around 7. Although in a highly cyclical market, SIRN's EPS for the quarter ending March 1998 were 0.80 on revenues of $23.5 million, verses a quarterly EPS of 0.48 on revenues of $18.2 million from the prior year. With a 67% EPS growth rate and a 29% revenue growth rate, SIRN beat the consensus EPS estimate of 0.44 for the last quarter by a whopping 82%. According to the company's press release on its record earnings (see biz.yahoo.com ), it looks like SIRN will enjoy continued high earnings. As a result, SIRN easily should blow away the projected earnings of 0.16 for the fiscal year ending in June 1998, and the 0.47 earnings estimate for the next fiscal year. Simply adding the +0.36 earnings surprise from the recent quarter to the FY 1998 estimate of 0.16 and the FY 1999 estimate of 0.47 (without any other upward adjustments) gives a PE ratio of only 13.5 for this year and a leading PE of only 8.4. Using a more realistic PE of 25 sets a target price for this fiscal year (ending June 1998) of 13, and a target price of 20.75 during the next fiscal year (starting June 1998). Continued upside earnings surprises will push these targets even higher. SIRN has been trading over the last three weeks in a base of between 6 and 7 (even after the recent earnings report) on exceptionally heavy volume after having risen from 4 over the prior three week period. It has been under heavy accumulation, and looks like it is about to break out into another strong upward move. Nonetheless, the stock has not yet been discovered by the broader investment community and presents a great opportunity to get in before the likely coming flood. Finally, one reason to expect continued upside earnings surprises is SIRN's recent adoption of new technology by APTX that allows consistent color matching for digital production runs utilizing an electrostatic printing device. (See biz.yahoo.com .) With this new technology, SIRN will be able to make "just-in-time" retail stocking a realistic option in apparel merchandising, potentially eliminating millions of dollars in inventory costs and write downs.