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Biotech / Medical : ESCMF makes equipment to remove varicose veins! -- Ignore unavailable to you. Want to Upgrade?

To: Michael Baron who wrote (103)	10/22/1998 2:20:00 PM
From: Ariella	Respond to of 119

Dear Michael, I am enthused. Wall Street occasionally throws diamonds at us, but you have to be sharp-eyed and not subject to panic when everyone else is hysterical to have the courage to pick them up. ESCMF is considered to be one of the Israeli blue chips. So is NICEY. First NICEY pre-announced an earnings warning and its stock tanked. Then an analyst at Smith Barney "felt" the tone of conversation with ESCMF wasn't good and downgraded hours before the actual Q3 pre-announcement came out after the market close. With everyone so nervous in general in the market, and nervous after the NICEY debacle, it was like someone yelling "fire" in a theater. Everyone raced for the exits. Those that didn't make it out the first afternoon pummeled the stock the second day. Result? A 75% share price decline over a 15% revenue decline. I bought some stock the first day, saw it cut in half the second day and then bought 9 times more shares on day 2 because the shareholder behavior seemed nutty and I believed it would correct itself. 18 trading days later, I'm sitting on a 40% gain in the second set of shares after accounting for the loss in the first set, more than sufficient to neutralize the first set of shares' loss and leave plenty left over. ESCMF ended up with the 15% revenue decline, but beat revised eps estimates handily. It's got a much wider machine profile (cosmetic use - 50% of sales; hair removal, 10% of sales -- are two largest categories) than most naysayers think, and sells machines to plastic surgeons, ear/nose/throat physicians for treatment of ear infections; and to ob/gynecologists for treatment of endometrial bleeding; I've even found a website about their product for vets accuvet.com. Obviously, not a one-product company. I am not concerned about the lawsuit because it's really tough to prove such things and it will take quite a while before anything happens. Most likely, I'll sell shares in a couple of months. They do have to watch price pressure from competition in hair removal from, for instance, CLZR, which makes lower priced machines. But since ESCMF has a gross margin of 66% (more when not in the slower summer season), I figure they can be more competitive. In terms of trading, we've got the psychological factor of those analysts with egg on their face now. Of course, as the price edges up, they will have to come back in because their clients will feel rather whipsawed ("how come you sold us out at bottom and the stock is now up?"). So, I figure we'll make it back to 13 or 14 near term and that's when I'll get off. I don't care if it's going to 20 because doubling is all I'm after. I've got plenty of other ideas too. For instance, GICOF (Gilat Communications Ltd), the dominant provider of satellite-based communications services in Israel and a leading developer and provider of interactive distance learning (IDL) systems worldwide. standardpoor.co.il <-- enter ticker on home page for very detailed stat sheet Standard & Poors- gicof 194.90.153.131 <--GLOBES carries quarterly figures for the stock Today's Quotations - Israel's Business Arena -gicof GICOF is growing by leaps and bounds. It was spun off from Gilat Satellite, an Israeli blue chip that now sells for $45/share and which is up 10 points in the last 10 trading days. GICOF has 4 strong buys on Zacks research (actually it's ranked number 1 out of 47 in telecom/wireless industry), is expected to earn .50 this year and .70 next and sells for 6 1/2. Its stock price fell along with the Russell 2000 this year, but it's up 58% in the last 10 trading days since the turn in the market and volume continues at strong pace. Easy double bagger (or more) into next year. You heard it here first ;-) Good luck and do remember to do your DD. -Ariella