September 26, 2007

Coeur D'Alene Mines

These long-term opportunities can earn you the greatest profits. Coeur D'Alene Mines burrows in the earth for silver, and with supplies getting scarce, silver prices could rise. You buy metals as a hedge against inflation, and with the Fed willing to risk such inflation to save the economy from recession, this might be a stock to buy. While we've heard that before about silver and its cousin gold, Coeur D'Alene has unique properties that may make it ripe for growth.

CAPS investor sam07 believes that the troubles the company faced earlier this year are now behind it, and that Coeur D'Alene has made strategic acquisitions to position it for the future:

CDE has taken a beating in the last few months, paying high premiums to replenish its silver reserves for the years to come and encountering environmental setbacks. Costs, increasing environmental concerns and rarity make it harder and more expensive to mine, for everybody in the industry. They've just been hit harder than their competitors this year; everything happened at the same time.

CDE is in a simple market: mine silver, sell silver. As long as they have silver, they have cashflow. The company is in place, the clients are there, the management is there. With the matter of the reserves settled for now, money will keep coming in. They didn't pay a premium for nothing; these reserves will be worth it in the long run.

CDE will within a few years emerge as the silver world leader. A metal for which there will always be demand. Wait for a good entry point. Undervalued stock right now but you might have it for even cheaper in the months to come ...

Flamel Technologies

Is a MF Hidden Gems pick

September 20, 2007

Potential for ISIS

After a marginal appreciation in the share price of bio-medical company ISIS Pharmaceuticals Inc. (ISIS), Zacks senior bio-medical analyst Jason Napodano, CFA, reiterates his Buy rating on the shares. The following excerpts explain his position:

“We are reiterating our Buy rating on Isis Pharmaceuticals and increasing our price target to $17. We believe that antisense technology represents an exciting and potentially revolutionary platform for developing therapeutic candidates to treat a wide range of diseases. In our view, antisense as a platform is today where biologics were ten years ago. Our financial model forecasts profitability in 2010.

“Although it is still at an early stage, antisense technology as a platform for developing drugs reminds us greatly of the promise of biologic drugs over a decade ago. Potential mechanisms such as siRNA, RNAi, alternate splicing, and micro RNA have the potential to change how we treat disease in the years to come.

“Isis exited the second quarter in 2007 with cash and equivalents of $202.7 million. We note this does not yet include the $26.5 million from Alnylam or the $45 million from Ortho McNeil. As part of the Ortho McNeil transaction, Isis will repurchase the equity in Symphony GenIsis, Inc. Operating burn for the full year 2007 should be around $45 million based on our financial model.

“We currently forecast well over $200 million still on the books at the end of the year. Our $17 target is derived by discounting our 2011 EPS of $1.55 back to present day at 20% using a 25x multiple.”

September 6, 2007

Abraxas Petroleum

Is a Lynch Holding

Miller Industries

Miller's time?
For value investors, nothing's sweeter than when the shares of an industry-leading business suffer a nasty, seemingly unwarranted haircut. While a plummeting stock in itself doesn't automatically warrant a buy, it's often a pretty profitable place to start looking. On Aug. 7, Miller Industries, a small-cap producer of towing equipment, piqued the interest of many investors in our community when its stock spiraled down by a heartbreaking 25%.

The shares have yet to recover -- in fact, it's down another 5% since -- but according to several CAPS Fools, it's simply a matter of time before Miller bounces back. Let's take a closer look, shall we?

Despite a market cap of $205 million and virtually nonexistent analyst coverage, Miller happens to be the world's largest producer of vehicle towing and recovery equipment. Naturally, this doesn't exactly sound like the sexiest business to be in, but a quick glance at Miller's financials shows that it really isn't a bad business to be in, either. In each of the past three years, Miller has generated returns on capital of roughly 20%, and it has grown cash flow from operations at a compounded rate of 49% over that period.

Of course, it's the future that counts with investing, which is exactly why Mr. Market has recently soured on the stock. Though Miller reported second-quarter revenue and pre-tax income growth of 18.4% and 20.4%, respectively, Co-CEO Jeffrey Badgley depressed investors by forecasting lower sales for the rest of 2007. Badgley cited a lack of additional follow-on orders and general concerns about the economy as the primary reasons for his bearishness.

Sure, the short-term prospects for Miller aren't exceptionally bright, but for investors willing to take a longer-term horizon, there are a few good reasons why Miller should at least make it to the watch list.

For one thing, Chairman and Co-CEO William G. Miller continues to own roughly 12% of the company -- something we Fools always like to see. More importantly, though, is that MLR has a rock-solid balance sheet with a measly debt-to-equity ratio of 5.1%.

Betting on a turnaround is always a tricky proposition, but at the very least, you'd like to see a history of strong financial performance, heavy insider ownership, and a solid financial position to help survive any extended slowdown -- all of which are characteristics that Miller Industries exhibits.

Now, let's hear from a pair of bargain hunters in our own backyard ...
GunnarVagotis is among many CAPS Fools who don't agree with Mr. Market on this one:

On a day where almost anything is working, this stock is down 28% on not-great-but-still-decent earnings report. Anyway, they paid a lot into taxes compared to last year. But sales, margins, etc. all look fine on this stock. I don't see anything in the numbers to indicate that a 30% pullback is warranted.

And CAPS player WeeValue sums it all up:

This one seems to have a high probability of success. I would not be surprised to see Miller drift a little lower until the short term order dip is filled. In the event that a business slump is prolonged, I imagine that the capital upgrades could be delayed and the balance sheet is strong enough to weather the storm.

Peter Lynch also owns the stock