*AV*--Today's report
Radar Trader Newsletter
High Tech Commentary-- Scan List
September 9, 1998
OPENING COMMENTARY FOR SEPTEMBER 9, 1998 - Andrew Vance
It's beautiful day in the neighborhood, as Mr. Rogers would say. Looks like my comments on today's rally came to pass and with a vengeance. The Dow Jones Industrials soared 380.53 points, or 4.98%, to 8020.78, its largest increase ever in point terms. This momentum had to be spurred on by Alan Greenspan's hint last Friday that the Fed might consider lowering interest rates. The Nasdaq Composite, which rose 94.34 point or 6.02% percent, to 1660.86 also showed record point gains. I guess we got some of the money off the sidelines. My "prediction" was more let's say a historical fact that the Dow seems to do perform well the, Tuesday after we come back from our Labor Day holiday. Friday was the day to start shopping for stocks as was evidenced by the late afternoon slight recovery.
Now that we saw today's rally in the stock market, we should be very careful not to fall into a Bear trap. We have a triple witching Friday coming real soon and a makings for a nice Tech Options Friday Takeout by the Big Boys again. Remember last month's discussion of this. Protecting profits should be the uppermost thought in your minds right now. The DOW is not headed for 9000 again, at least not right away. If you have a few profits, let them run but have some very stringent stops in place.
Is about time to start thinking about getting into the small caps again. A few analysts believe that there may be additional downside still as October rolls around. Fund managers may repeat last year and pick the worst performing stocks within their holdings to liquidate in order to offset taxable gains on other holdings- If this group does take several hits late this fall, it could make for some attractive stock sale prices for the year, yielding some real bargains for value investors.
We had a bunch of electrical storms tonight that required the shutting down of my equipment even though it is properly protected. I just do not want to take those types of chances. Therefore, this portion of the newsletter will be brief.
TIMELY TOPICS AND STOCKS
DY(30-1/4, -1 7/8) - was able to exit my position yesterday without incurring too much damage to exit this stock with a significant gain. More stock in the float usually means more dilution, given the low daily trading volume.
MTZ(17-7/8, +2-1/2) - up over 16% today and looking like it turned a corner. As I exited DY, this company became a hotter prospect. Both MTZ and DY have similar businesses and do not, as yet overlap to the extent that we could call them fierce competitors. DY has prospered as MTZ has faltered. Between El Nino, the death of the CEO, and a political issue in Spain, MTZ seemed to have run into a brick wall. This is a very thinly traded stock by anyone's standards but the news today regarding their current situation in Brazil is worth reading. This release occurred after the market was closed and was the only news since August 26th. Gee, another run up prior to the news being released.
9/08 - 6pm EDT - Statement by MasTec Regarding the Current Situation in Brazil
MasTec has been asked for an assessment of the impact on MasTec of the emerging markets situation that was triggered by the currency devaluation in Russia and has
affected other markets, specifically Brazil. biz.yahoo.com
CYMI(12, +3/4) - given all the "bad press" related to the late Thursday filing of a lawsuit and the Silicon Investor message board concerns over MILBERG WEISS FILES CLASS ACTION SUIT AGAINST CYMER INC. AND ITS OFFICERS AND DIRECTORS ALLEGING MISREPRESENTATIONS AND INSIDER TRADING, it was nice to see a positive movement in this stock.
CYBG(1-5/16, +1/8) - this barely covers the spread for a stock that was trading as high as $18 in the April-May timeframe. Stock is down 90% as CYBERGUARD CORP. NAMED IN A LAWSUIT FOR ALLEGEDLY OVERSTATING ITS INCOME AND INFLATING ITS STOCK PRICE. (Friday after the close)
IRIDF(34-3/8, +1 _) - Iridium is delaying the start of commercial telephone service for its global communications system and will also postpone some other services while technicians fine-tune its satellite-based wireless network.
MER(66, +4 5/16) - will report in this morning's WSJ that emerging-markets losses of about $135 million will cut its net income in July and August to an estimated $102 million.
RST SCAN LIST COMMENTARY FOR SEPTEMBER 9, 1998
We had 11 stocks make the cross referenced list today, but more importantly, many are recent repeat members of the list. Even with the wonderful run up today in both the NASDAQ and DOW composites, most of these stocks out-performed the indices. At this point in time I would like to firmly establish the true meaning of the positional trader or investor.
My investment universe extends beyond the stocks discussed in this newsletter. You see some of these "other" stocks mentioned outside of this section in both the opening commentary, timely topics, or from the Radar Room. I keep focused on the stocks that appear on the list in this section. Therefore, you only see the intersection of my universe and the RST Scan List here.
LGTO(49-7/8, +7 7/8) - stock traded up close to 19% today but opened up 3-1/4 of the total 7-7/8 for the day. It was possible to participate in this run up today, as LGTO traded close to 2.5X average daily volume. This stock was mentioned favorably a few days ago on 9/3/98 (LGTO(44, +4)-SoundView Financial Group added LGTO to their focus list yesterday during market hours. ON the flip side, they dropped PLAT(20-15/16, +1/2) from their focus list. LGTO also announced on Monday that they were the first Enterprise Storage Management Software Provider to receive Baan Certification. LGTO, therefore was an 11% gain in 5 days after firist appearing here. LGTO also made it on the list on 8/18 and 8/19 at higher prices but was deemed not worthy of mention until 9/02. LGTO is just about $1 away from its 52 week high of $51 which is stupendous given the present market values of other stocks.
ETEC(31, +1 _) - has been very favorably mentioned in at least 4 articles since 8/26/98 to the present. A great deal of discussion has occurred both inside and outside of this section. ETEC traded close to 1.5X average daily volume and was discussed in the mid to higher 20s as a decent company with prospects. This has presented at least 10% profits since it was highlighted to the readership less than 2 weeks ago. No news on this company other than what was already brought forth in previous newsletters.
DBRSY(14-7/8, +1 3/8) - another repeat performer in this section, going back to 8/19/98 but not discussed in this section until a week ago 9/02/98 when the price was at 12-1/2 and just an honorable mention. In this one week timeframe we have seen just under a 20% return on a potential investment. No news worth discussing except that DBRSY goes ex-dividend today.
PAIR(9-3/4, +1 11/16) - on lower than average volume, PAIR moved up over 20% today. I would love to say this is a tremendous feat worth celebrating in the streets about, but I cannot. This stock is still trading at least 50% of where it should be at. This is supposed to be a comfortable $22-$25 stock and not a single digit stock. PAIR is profitable and sports a ridiculously low 12.60 PE ratio making this a steal of a deal as it comes off its 7-3/8 low for the prior year. The chart is not a good one and today's run up is just one point in time which may not signal its recovery. As for me, I am long in this stock and have taken actions to avail myself of some of the bargain pricing in this stock. Therefore, I openly admit to a personal bias here. I should also note that PAIR was discussed on the following dates (8/18, 8/19, 8/23, 8/24, 8/25) when it was in the $10-$13 range. I think I was actually whining about the stock back then.
IFMX(4-15/32, +7/16) - traded over 2X average daily volume and trading just $1 above its 52-week low and 6-1/4 below its 52 week high. Like ORCL, I have been watching and waiting for this stock to perform. I believe IFMX is a first time participant in this section with only a favorable mentioned by CS First Boston on 9/02/98. Other than a headline stating "Informix Dynamic Server Powers New Web Site for Australia's Department of Communications and Arts, there has been no timely news.
AVNT(14-3/8, +1/2) - definitely a stock we talked about yesterday and worth re-reading. This stock has not been able to gather much steam out of the starting block. It appeared on the Prosearch list on 9/01 at 12-7/8 but did not get much press until yesterday. Call this an opportunity not responded to in a timely manner.
TECD(44-1/2, +2 3/8) - trading on lower than average volume, TECD managed to advance by just under 15% with less than half of it eaten up prior to the open. However, this was discussed last Thursday and Friday, allowing the astute reader to participate while the markets were queasy prior to the 3 day weekend. TECD has been part of the master list for 5 days since 8/18/98 and has traded as low as 36-3/4 to today's 44-1/2, providing some very nice day trading for some folks last week.
Tech Data To Deliver IBM Netfinity and PC Server Support, From Assembly To Technical Training Tuesday, September 8, 1998 12:50 pm
biz.yahoo.com
MXIM(34-1/2, +4 7/16) - one of my more favorite Specialty IC Manufacturers and subject on conversation from 8/18 through 8/20 when it was trading between $33 and $35 on average volume. MXIM took its biggest hit on 8/31 when the rest of the market tanked. MXIM got down into the 27-1/2 range, losing close to $4 in value. Trading was lower than normal for the 3 days prior to yesterday, trading less than 50% of average daily volume. All of a sudden, BOOM, we have a 1.5X average daily volume day and recover every dollar lost in the recent major market reversal. Not bad getting back to square #1, given how far we still have to go. MXIM has solid earnings and a decent PE (25.5) and should not have been dumped on by the street. Then again, it might not have. Careful scrutiny seems to indicate a very high employee ownership in this company relative to its peers. Now that we are even with the previous newsletter pricing, it may still be worthwhile to revisit the write ups of the time period mentioned. MXIM is actively involved in silicon based Analog circuitry. MXIM was up 14.8% and still $8 below its 52-week high.
VTSS(32-3/16, +4 «) - amazing that not only does another of my favorite Specialty IC Manufacturers make the list, but it seems that it has gone up almost the same percentage as MXIM. At a 16.3% gain, with about half of it coming at the open, this GaAs based IC provider for the wireless communications sector. A flight to quality certainly looks as if it occurred today in the Specialty IC chip sector with both these stocks. VTSS is trading just $5 below its 52 week high. Earlier today, just prior to the open, VTSS announced that it expanded its ATM and SONET/SDH Physical Layers Product Line for networking and wireless communications. VTSS has been discussed in the 8/18-8/27 timeframe when it was trading between $30 and $35, making today's close almost smack in the center of that trading range. Some of the analysts have been giving a favorable nod during this same timeframe.
NOTE: I would like to take this opportunity to point out that the prudent investor is able to keep invested in the beaten down semiconductor sector by carefully leveraging investment dollars in the CORRECT companies while the others flounder and try to regroup. I see this as the investments tied to DRAMs and Storage Devices versus the Specialty companies that transcend these cutthroat areas.
ADPT(12-1/4, +1 «) - I would like to say that every dog has its day and it was about time these guys had a decent one. This stock is not for the feint of heart. One look at the chart and you would think it fell off a cliff. The stories are too numerous to discuss the fall from $18-$20, where this stock probably belongs. Whether it makes it back to its historical high level of 54-1/4 is anyone's guess. However, an ineffectual CEO who has been ousted and replaced by one of the founders, an abortive attempt to acquire Symbios Logic, and a few bad acquisitions that are being closed down and written off, haven't helped this stock. I will say that they are taking the right measures so far to rectify their dilemma. As a matter of fact, the anticipated Layoff of 50 people in a non value added business unit should occur this morning. All in all, these guys need time to recuperate and rejuvenate themselves. It was nice to see this 14% rise today and with a few more points, some of the employee stock options might be worth something. These options are critical to retention down the road. In certain cases, the lack of better positions and the hopes of making some coin off the options are the only 2 things keeping critical skills within certain organizations. ADPT is a large holding that has been average down a few times waiting for the revival. I have been extremely prolific on this stock since at least 8/17 and going up to yesterday's newsletter (8/17-8/21, 8/31, 9/02, 9/04, and 9/08), making this one of the more talked about stocks for me. Then again, a slight bias does exist as the stock traded down from $14 to $10 and back up to the present level. Some very nice trades were done in this range of prices.
ORCL(21-5/8, +15/16) - when will we ever see this guy move to the land of Milk and $30 that it achieved this past April. A steady decline in value since that time, with a few spurts up to get our hearts beating faster. Looks like we have been on the "Hope" campaign from 8/21-8/24 (trading downward), with a repeat performance that started yesterday. ORCL is trading just $4 above its 52 week low and has hit the market with yet another day's barrage of news releases. Can't say they aren't trying, even though most have little substance. The one worthy of linking to is listed below.
Oracle dives deeper into Linux news.com
AND NOW A WORD FROM THE RADAR ROOM:
I am almost convinced, from what I am reading that the purchase of certain selective energy shares might be appropriate for the following reasons.
1. The recent market volatility has created a shift toward value-oriented or yield-bearing equity investments.
2. The Energy sector is selling near the low end of its five-year relative P/E range, making attractive yields available.
3. Share prices are sensitive to the underlying commodity. The 4-month-old price floor is close to $12, there is some healthy US demand, we are entering the winter heating season, and marginal OPEC production discipline suggest that the worst may be over.
4. Since the beginning of the slide in commodity prices was almost one year ago, earnings per share comparisons should be improving into early 1999.
I have mentioned XON before, looking for a bottom and then turnaround but I would assume that any short-term market weakness might also lean towards accumulating shares of ARC (domestic)and MOB (Int'l)
Brooks Automation (ERKS), Smart Modular (SMOD), SpeedFam (SFAM), among others enabling technologies like Cymer(CYMI) are being added to some mutual/money manager funds to position then for a recovery. I would add IPEC, CFMT, DPMI, PLAB, and ATMI to this list, just off the top of my head.
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Prosearch 5.0* Top Stock Report 09/08/98
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11> LGTO - LEGATO SYSTEMS INC COM .DSO
Price= 49.9 ( 95) AvgVl= 747.0 ( 97) 1-Dy = 118.7 ( 98)
2-Dy = 116.3 ( 95) 3-Dy = 113.3 ( 92) 4-Dy = 124.6 ( 96)
16> ETEC - ETEC SYSTEMS INC COM .DSO
Price= 31.0 ( 90) AvgVl= 365.5 ( 94) 1-Dy = 105.9 ( 78)
2-Dy = 113.2 ( 92) 3-Dy = 106.8 ( 82) 4-Dy = 113.2 ( 88)
19> DBRSY - DE BEERS CONSOL MINES LTD A D
Price= 14.9 ( 66) AvgVl= 810.2 ( 97) 1-Dy = 110.1 ( 91)
2-Dy = 117.8 ( 96) 3-Dy = 119.0 ( 96) 4-Dy = 118.4 ( 93)
24> PAIR - PAIRGAIN TECHNOLOGIES INC COM .INT
Price= 9.8 ( 34) AvgVl= 1214.9 ( 98) 1-Dy = 120.9 ( 98)
2-Dy = 131.6 ( 99) 3-Dy = 122.8 ( 97) 4-Dy = 108.3 ( 79)
26> IFMX - INFORMIX CORP COM .DSO
Price= 4.5 ( 14) AvgVl= 1606.3 ( 99) 1-Dy = 110.8 ( 92)
2-Dy = 112.6 ( 91) 3-Dy = 106.7 ( 81) 4-Dy = 109.1 ( 81)
47> AVNT - AVANT CORP COM .DSO
Price= 14.4 ( 64) AvgVl= 334.0 ( 94) 1-Dy = 103.6 ( 64)
2-Dy = 121.6 ( 97) 3-Dy = 111.9 ( 91) 4-Dy = 110.5 ( 84)
49> TECD - TECH DATA CORP COM .DLD
Price= 44.5 ( 94) AvgVl= 398.4 ( 95) 1-Dy = 105.6 ( 76)
2-Dy = 105.0 ( 70) 3-Dy = 112.8 ( 92) 4-Dy = 112.6 ( 87)
52> MXIM - MAXIM INTEGRATED PROD INC COM .ESE
Price= 34.5 ( 91) AvgVl= 1486.9 ( 98) 1-Dy = 114.7 ( 96)
2-Dy = 115.7 ( 94) 3-Dy = 111.9 ( 91) 4-Dy = 111.0 ( 85)
57> VTSS - VITESSE SEMICONDUCTR CORP COM .ESE
Price= 32.2 ( 90) AvgVl= 1196.3 ( 98) 1-Dy = 116.2 ( 97)
2-Dy = 117.0 ( 95) 3-Dy = 112.2 ( 91) 4-Dy = 112.4 ( 87)
60> ADPT - ADAPTEC INC COM .DCS
Price= 12.3 ( 55) AvgVl= 2008.2 ( 99) 1-Dy = 113.9 ( 95)
2-Dy = 115.9 ( 95) 3-Dy = 113.3 ( 92) 4-Dy = 106.5 ( 74)
64> ORCL - ORACLE CORP COM .DSO
Price= 21.6 ( 82) AvgVl= 6934.6 ( 99) 1-Dy = 104.5 ( 69)
2-Dy = 113.4 ( 92) 3-Dy = 106.4 ( 80) 4-Dy = 105.1 ( 69)
SPECIAL FEATURE
I mentioned yesterday that I thought I noticed a preponderance of Medical Sector Stuff (Biotech, Pharmaceuticals, Health Care etc) and thought it would be interesting to cull them out of the list. We have 18 stocks that made the list. I just happened to glance at the telecom stocks while I was putting the Medical stocks in the list and was surprised to see 11 stocks. Between the two groups we have about 45% of the list in those 2 sectors. No further discussion on this subject, just a friendly observation of what the list seemed weighted with.
Biotech - Health - Pharmaceutical
4> ADAC - A D A C LABORATORIES COM .MED
Price= 30.6 ( 90) AvgVl= 369.7 ( 94) 1-Dy = 111.3 ( 93)
5> BTGC - BIO TECHNOLOGY GEN CORP COM .DBI
Price= 5.3 ( 16) AvgVl= 385.6 ( 95) 1-Dy = 106.2 ( 79)
7> CEPH - CEPHALON INC COM .DBI
Price= 6.4 ( 20) AvgVl= 339.5 ( 94) 1-Dy = 118.3 ( 97)
8> BMET - BIOMET INC COM .MED
Price= 33.6 ( 91) AvgVl= 909.2 ( 98) 1-Dy = 105.9 ( 78)
9> CHIR - CHIRON CORP COM .DBI
Price= 16.4 ( 71) AvgVl= 695.3 ( 97) 1-Dy = 106.0 ( 78)
14> QHGI - QUORUM HEALTH GROUP COM .HEA
Price= 20.6 ( 80) AvgVl= 675.9 ( 97) 1-Dy = 107.8 ( 85)
27> BCHE - BIOCHEM PHARMA INC COM .DRE
Price= 20.3 ( 80) AvgVl= 833.5 ( 97) 1-Dy = 111.7 ( 93)
33> MRVT - MIRAVANT MEDICAL TECH COM .MED
Price= 10.1 ( 37) AvgVl= 332.1 ( 94) 1-Dy = 125.7 ( 99)
38> IDPH - I D E C PHARM CORP COM .DBI
Price= 24.0 ( 84) AvgVl= 420.5 ( 95) 1-Dy = 110.9 ( 92)
39> PSSI - P S S WORLD MED INC COM .MED
Price= 17.6 ( 74) AvgVl= 449.1 ( 95) 1-Dy = 111.9 ( 93)
41> AVEI - ARTERIAL VASCULAR ENGR COM .MED
Price= 43.5 ( 94) AvgVl= 1277.0 ( 98) 1-Dy = 107.4 ( 84)
44> MEDQ - MEDQUIST INC COM .SER
Price= 26.1 ( 86) AvgVl= 202.4 ( 90) 1-Dy = 108.8 ( 88)
45> ISIP - ISIS PHARMACEUTICALS INC COM .DBI
Price= 9.8 ( 34) AvgVl= 249.4 ( 92) 1-Dy = 109.8 ( 90)
48> LIPO - LIPOSOME CO INC COM .DRE
Price= 4.9 ( 15) AvgVl= 204.9 ( 90) 1-Dy = 132.2 ( 99)
50> LGND - LIGAND PHARMACEUTICAL INC CL .DRE
Price= 7.0 ( 22) AvgVl= 323.7 ( 94) 1-Dy = 116.6 ( 97)
53> GENZ - Genzyme General COM .DBI
Price= 28.9 ( 89) AvgVl= 1037.8 ( 98) 1-Dy = 111.8 ( 93)
55> INCY - INCYTE PHARM INC COM .DRE
Price= 21.3 ( 81) AvgVl= 550.0 ( 96) 1-Dy = 111.1 ( 92)
61> ALKS - ALKERMES INC COM .DRE
Price= 12.9 ( 58) AvgVl= 203.9 ( 90) 1-Dy = 109.5 ( 89)
TELECOM -NETWORKS
1> NEON - NEW ERA OF NETWORKS INC COM .DSO
Price= 44.5 ( 94) AvgVl= 227.2 ( 91) 1-Dy = 115.0 ( 96)
2> ELNK - EARTHLINK NETWORK INC COM .INT
Price= 36.0 ( 92) AvgVl= 759.1 ( 97) 1-Dy = 115.6 ( 96)
12> COLTY - C O L T TELECOM GROUP PLC A D .TLO
Price= 40.3 ( 93) AvgVl= 210.4 ( 91) 1-Dy = 105.9 ( 78)
13> CLNTF - CLEARNET COMM INC CL A NON VT .TMC
Price= 7.4 ( 23) AvgVl= 281.2 ( 93) 1-Dy = 113.4 ( 95)
15> WCLX - WISCONSIN CENTRAL TRANS COM .RAI
Price= 16.3 ( 71) AvgVl= 636.3 ( 96) 1-Dy = 106.5 ( 80)
17> GMSTF - GEMSTAR INTL GROUP LTD ORD SH .FST
Price= 38.6 ( 93) AvgVl= 666.0 ( 97) 1-Dy = 110.5 ( 91)
34> TCOMA - TELE COMM INC/TCI GROUP A CL .BCA
Price= 37.9 ( 93) AvgVl= 4312.3 ( 99) 1-Dy = 104.8 ( 71)
51> MMWW - Metamor Worldwide Inc COM .SER
Price= 27.6 ( 88) AvgVl= 234.3 ( 91) 1-Dy = 109.4 ( 89)
56> APAC - A P A C TELESERVICES INC COM .SER
Price= 3.5 ( 11) AvgVl= 252.7 ( 92) 1-Dy = 108.6 ( 87)
63> CMVT - COMVERSE TECHNOLOGY INC COM .DCS
Price= 43.0 ( 94) AvgVl= 910.9 ( 98) 1-Dy = 112.4 ( 94)
65> LCCI - L C C INTERNATIONAL INC COM .TES
Price= 7.4 ( 23) AvgVl= 219.6 ( 91) 1-Dy = 105.3 ( 74) |
