March 26, 2007

Grey Wolf

From the Fool:

Grey Wolf, a Houston-based drilling company, is another low-priced stock for which our CAPS players have high expectations. With a fleet of 118 premium rigs and operations in some of the most potent natural gas markets -- including the Gulf Coast and South Texas -- it's not too hard to see why.

In the most recent quarter, Grey Wolf's net income surged 38% while revenue rose 18%. The company also produced $288 million in operating cash flow and ended the year with $230 million in cash on the balance sheet. As improvements in the level of drilling continue to increase, Grey Wolf should only benefit from the long-term trend of rising day rates. Even Little Red Riding Hood would have no trouble picking this one out.

Currently, the company trades at a P/E of 7 and a PEG of 0.75, indicating the wolf is reasonably priced and has plenty of room left to hunt. For example, these two CAPS All-Stars drill right to the heart of Grey's matter:

* slbutton: "Let's look at some numbers: ROE of 48%; shares are trading at a little over twice book value with diluted EPS of nearly $1. On the fuzzy, non-quantitative end of things, I like the fact they're using refurbished rigs -- I like management to have a fiercely cheapskate mentality."
* stephenjpauls: "Long term I think GW will continue to grow and should see big gains by Q4 2007. Some have speculated that GW is ripe to be purchased by a larger company. The company continues to maintain, improve and add bigger/better rigs to keep competitive."

March 22, 2007

Life Time Brands- Turn It Around

From the Fool:

One of my favorite ways to play the turnaround game is to wait patiently for a high-growth company to take a huge cut in price after disappointing Mr. Market with one of its earnings forecasts. This way, I have more confidence that the drop in price was caused by previous investors' rampant enthusiasm rather than a business with deteriorating fundamentals.

Lifetime Brands, for example, took a huge 20% cut last December after lowering its revenue forecast by about $30 million. The small-cap kitchenware company has since recovered from the drop, but the shares are still well off from the 52-week highs it set last May. But, although the one-year stock chart looks ugly, Lifetime's portfolio of businesses is anything but.

Lifetime owns some of the most well-known brands in the housewares industry. Through several acquisitions, Lifetime has built a portfolio of names that include KitchenAid, Cuisinart, Hoffritz, and Farberware. Not a day goes by that I don't chop, seal, serve, or scoop with at least one of their items. By leveraging these brands and redesigning thousands of products, Lifetime has been able to grow sales at an average rate of 27% over the past five years.

If you prefer growth of the organic sort (as most Fools should), Lifetime was able grow its wholesale operation 14% in 2006 without the aid of acquisitions, while management expects growth in 2007 to be fueled primarily by new products and by widening its existing brands. CEO Jeffrey Siegel believes 2007 earnings per share will clock in between $1.40-$1.70, while revenue is expected to be in the $540 million to $575 million range.

And that, dear Fools, leads us back to the issue of price. At current levels, Lifetime's stock is trading at about 11 times forward earnings and half of 2007's expected revenue. Additionally, Lifetime has a PEG of 0.60, which takes into account longer-term growth. Price multiples are far from perfect, but they're often good "eyeball" screens for finding compelling bargains.

On the surface, anyway, Lifetime's stock looks cheap and seems like an attractive bet to bounce back -- especially for a company with so many well-recognized names. Here are three CAPS All-Stars who also find Lifetime's brand power provoking:

* dymaxian: Cuisinart and KitchenAid. These two names are known by almost everyone who cooks for themselves, and are coveted by everyone who watches The Food Network. They get free advertising on Iron Chef and Emeril. If you spend any significant time in the kitchen, you either have or want this name on your countertop. Why not put them in your portfolio? Especially as undervalued as they currently are?
* austinhippie: LCUT products like KitchenAide [sic] and Pfaltzcraft [sic] will continue to be beloved household items for years to come and with our population getting larger, the company has room to grow. Twenty years from now we will look at this company and see a market giant.
* TheStillMan: Just following the lead of Buffett. Great brand names create a moat.

Calamos Asset Management- On Sale

From the Fool:

The turning point?
I've often heard it suggested that when looking at mutual fund managers, you should seek out the ones that have put up sustained returns over the long term. Last year's hottest fund often ends up showing that its returns were just a one-year aberration, and middling returns from managers who have a good track record can turn out to be a fluke in the opposite direction. I would speculate that the Calamos Growth Fund, which has produced 16.7% average annual load-adjusted returns since its 1990 inception, might be having that sort of short-term issue. And though there's certainly more to Calamos' business than the one fund, a turnaround in the fortunes of its biggest fund could go a long way to boosting results.

A number of CAPS All-Stars have gotten behind Calamos, including razormd, who is ranked in the top 3% of all CAPS players. razormd shares:

"[Calamos is an] overlooked investment manager - 'the little engine that could' with steady earnings progress since coming public a few years ago. It traded as high as 44 last year and has now built a base around 26 over the past nine months. It looks like a reasonable prospect for a good return over the next few years."

Olin and its Dividend

From the Fool:

Olin (NYSE: OLN) is a small-cap materials company that currently yields 4.9%. If you don't think that sounds sustainable, consider that the company has paid a dividend for 80 consecutive years. That's a dividend dynasty on par with the likes of Procter & Gamble (NYSE: PG) and Ingersoll-Rand (NYSE: IR). Moreover, at eight times earnings, it trades at a discount to its industry average.

Small Cap- NEOGEN

From the Fool:

Once again, our CAPS database manages to stick a five-star rating on a little-known stock growing at an impressive clip. Neogen, a leading provider of food and animal safety products, has seen its revenue increase in 59 of the last 64 quarters, while the company has posted profits for 55 quarters in a row. That's part of the reason it's regularly named by Forbes magazine as one of the 200 Best Small Companies in America.

Through its food safety and animal safety divisions, Neogen develops diagnostic test kits to detect all sorts of harmful things like foodborne bacteria, food allergens, and mycotoxins. As fellow Fool Anders Bylund notes, Neogen owns a solid patent-protected portfolio, making competition virtually nonexistent.

In the latest quarter, Neogen posted a 26% increase in net income on 21% revenue growth -- and these CAPS players detect similar bacteria-free growth in the future:

* SomeKindaFool: "This is one of those small companies with lots of room to grow. Food safety and animal health testing are their core businesses, both of which have a great deal of potential upside these days. Like most small companies, the stock price has not been steady. It has had its ups and downs, but if you plan to hold for a couple years or more, it should provide good price appreciation."
* empirefool: "Strong management in an undeservedly beaten down sector. Although the company is considered a bio-tech they're involved in the very boring business of animal feed testing. The Company has a sound acquisition strategy and consistent ROIC. Unfound by analysts."

Zacks- Buy SGP to $28

From Zacks:

Though Schering-Plough (SGP) has performed well since its upgrade to a Buy roughly a year and a half ago, Zacks senior pharmaceuticals analyst Jason Napodano, CFA sees even more room for upside in the next six months. We pulled the following from his most recent Buy report:

“Schering-Plough is engaged in the development, manufacturing and marketing of pharmaceutical products around the world. The company focuses on prescription drugs, animal health, foot-care and sun-care products. Lead products include its antihistamine franchise Claritin/Clarinex and a cholesterol-lowering joint-venture therapy treatment (Vytorin) with Merck (MRK).

“The turnaround is complete at SGP. The company should deliver the highest four-year earnings growth rate in the large-cap pharmaceutical industry. Valuation becomes attractive based on recovery EPS [earnings per share] in 2008 and 2009. The company recently announced it will acquire Organon Bio for $14.4 billion in cash/debt/equity. We recommend investors buy the name up to $28.

“Our Buy rating is based on the strong earnings growth and attractive valuation based on recovery 2009 EPS of $1.44 – without Organon. Based on this 2009 EPS, the stock is currently trading at 17.0x earnings. This is a premium to the 13.5x 2009 EPS at which the rest of the large-cap pharmaceutical group trades. However, Schering-Plough will see EPS growth in 2009 of nearly 14%, over twice that of the peer-group.”

ValuePlays Bullish on Owens-Corning

Value Plays is bullish on OC who trades at six times earnings right now.

March 15, 2007

Options Express Raises Dividend

Options Express, a MF Stock Advisor Selection raised its dividend last week.

March 14, 2007

Berkley Set to Outperform

From Zacks:

With a pullback in share price due partly to an overall downturn in the market, W.R. Berkley (BER) represents a good buying opportunity. We checked the latest Buy report issued by Zacks senior insurance analyst Eric Rothmann for some details:

“Results for 4Q06 were basically in line with expectations. W.R. Berkley continues to enjoy a broadening of premiums, underwriting profits and investment income. Consequently, the company is positioned to continue generating an above 20% ROE [return on equity]. While the shares trade at a significant premium valuation to its peer group, we think this premium is warranted and reflects Berkley’s substantially superior historical and projected ROE. In turn, we think the stock can outperform the group with less downside risk.

“We adjusted our 2007 earnings expectation and installed our 2008 earnings expectation to reflect 4Q06 results. At the current price level, the shares of W.R. Berkley trade at 1.87x its 4Q06 book value of $17.30 per share, well at the upper-end of its 10-year historical 0.9x to 2.1x range and a substantial premium to its peer group, although the multiple has contracted from 2.85x about a year ago and the 2.30 2.40x range of late. On a forward price/earnings basis, the company is also trading at a premium to its peer group. We believe the shares deserve to trade at a premium given the company’s superior and relatively consistent ROE.”

March 8, 2007


Schering-Plough (SGP) growth rate is expected to reach near 50%

March 5, 2007

21st Century Holding

21st Century Holding appeared in an article on micro-cap stocks.


Schering-Plough showed up on a screen at the Fool

AHGP: Undiscovered Growth

From the Fool:

Alliance Holdings and its minuscule 0.66 PEG ratio, which suggests a steep discount, that interests me most. Mix in a 4.4% dividend yield and overwhelming bullish sentiment in CAPS, and I start to salivate.