March 31, 2008

Many Reasons to Buy Schering-Plough

There are several articles out today that give very compelling arguments for picking up shares of Schering-Plough. Seeking Alpha's article is titled "4 Reasons to Buy Schering-Plough" which references the post made by Notable Calls, who writes "In the mid- to high teens, they believe that the shares will have priced in the removal of Zetia and Vytorin from the model, and this valuation could represent a floor."

March 28, 2008

FARO Is Attractively Valued

From Zacks:

FARO Technologies, Inc. is seeing strong demand for its products despite a tough economy. The stock has rebounded strongly from its lows in January, but is still attractively valued at a PEG ratio of 1.1. Earnings estimates for this year have risen nine cents to $1.50 over the past month. All three covering analysts have raised their guidance.

Full Analysis

FARO Technologies, Inc. (FARO), together with its subsidiaries, designs, develops, and manufactures software-based three-dimensional (3D) measurement devices for manufacturing, industrial, building construction, and forensic applications.

The company offers articulated electromechanical measuring devices, such as Faro Arm, a combination of six or seven-axis, instrumented articulated measurement arm, a computer, and software programs; Faro Scan Arm, which provides customers the ability to measure their products without touching them and offers a seven-axis contact/noncontact measurement device with integrated laser scanner; and Faro Gage, an accuracy version of the Faro Arm product.

In mid-February, the company reported strong fourth-quarter results that sailed past expectations. Net income for the fourth quarter was $8.4 million, or 50 cents per share, an increase of $4.7 million, compared to $3.7 million, or 25 cents per share, in the fourth quarter of 2006. Analysts expected 31 cents per share.

Sales for the fourth quarter of 2007 were $59.2 million, an increase of $15.3 million, or 34.9%, from $43.9 million in the fourth quarter of 2006. New order bookings for the fourth quarter of 2007 were $65.4 million, an increase of $15.6 million, or 31.3%, compared to $49.8 million in the year-ago quarter.

"Once again, the FARO team around the world demonstrated its ability to perform," stated Jay Freeland, FARO's President and CEO. "Sales growth for 2007 was above the target range of 20-25% that we have been communicating all year. As always, fourth quarter sales were particularly strong with all three regions growing more than 20%."

"2007 was a tremendous year for FARO combining significant growth with great productivity, several new products and fantastic execution. Although there is clearly increased economic pressure globally, particularly in the U.S., we continue to see strong demand for our products. As such, in 2008 we are maintaining our guidance ranges of approximately 20% - 25% top line growth and gross margin of 58% to 60%," Freeland concluded.

These results have allowed the stock to bounce strongly off of its January lows around $20. FARO has posted an average surprise of 34% over the past four quarters. Earnings estimates for this year have risen nine cents to $1.50 over the past month. All three covering analysts have raised their guidance. The stock is attractively valued at a PEG ratio of 1.1x.

March 26, 2008

$12 Price Target on China Fire & Security

Zacks has a small write-up on China Fire & Security:

"As the leader in China's industrial fire safety market, China Fire & Security Group, Inc. (CFSG) is well-positioned to leverage the growth potential in this market. Its revenue and earnings have exceeded the market consensus for three consecutive quarters since the market began covering this company in July 2007.

We believe that CFSG can grow its earnings 30% annually for the next five years. We don't think its current price fairly reflects the company's growth prospects. So we are maintaining our Buy rating on CFSG's stock.

Revenues for 2007 increased 44.1% to $46.8 million compared to $32.5 million for 2006. During 2007, the company fulfilled 274 total solution and product sales contracts compared to 221 contracts in 2006. Gross margin for 2007 was 54.9%, up from 50.0% in 2006. Net income was $16.8 million for 2007 as compared to $7.0 million for 2006, representing an increase of 9.8 million or 141.1%. Fully diluted GAAP EPS were $0.61 for 2007 as compared to $0.28 of 2006.

The company expects that revenues in 2008 will be at least $66.6 million, an increase of 43% above 2007. Net income will be at least $22.3 million, an increase of 32%, and earnings per share are expected to be at least $0.78.

The stock is currently trading at 9.9x our estimate for fiscal year 2008 earnings per share, which is much lower than the industry mean. The stock is currently trading at 7.8x our estimate for fiscal year 2009 earnings per share, which is far lower than the industry mean. Using a P/E multiple of approximately 12.6x our fiscal year 2009 earnings per share estimate yields a target price of $12.00, which we believe reflects the company's growth prospects."

Zacks last wrote on CFA on February 2nd, where they initially gave the company a $15 price target.

March 25, 2008

Jessica Alba and Revlon

Seeking Alpha has an article about a possible turnaround at Revlon that features Jessica Alba at the center of their new marketing campaign. The article mentions that if all goes well, and if the company continues to post a profit, the stock could reach $3 "over the next few quarters."

Of course, a company such as this who is on shaky ground is not without risk. As one of the commenters point out: "Omitted is Revlon's ugly balance sheet with a more than 2 to 1 ratio of liabilities to long-term assets and long term debt of $1.44B vs. just $889M in total assets. Revlon has had only 1 profitable quarter in its last 32 and has seen its share price fall steadily since Perelman financed the purchase of Revlon with over $700M in junk bonds (back in 1985 for $58/share), from which it has never recovered. REV shares involve far more risk than is alluded to here."



March 21, 2008

AstraZenca Waiting to be Found

The Stockmasters has a write up on the U.K.'s second largest drug manufacturer, AstraZenca. This company is close to its 52 week low, has 10 drugs in Phase 3 Trials and their lineup of 12 drugs rake in more than $1 billion a year in revenue. Plus, this stock pays a 5% dividend. HSBC just upgraded the stock with a $51 price target.

March 19, 2008

On Universal Display

Universal Display is a MF Rule Breakers pick. The Fool recently did a write-up on the company here. This is a stock that I have been watching for the better part of a year. I don't know at which point it became a MF Rule Breaker, but it has yet to have its "break out" period like Akami has.

Adobe is 50% Too Cheap?

The Fool has a write-up on Adobe who just reported their first quarter results, which they declare to be "brilliant." They go on to say that the company should be worth 50% more than the $35 the company currently trades at.

March 18, 2008

Acusphere: High Risk, High Reward

Zacks has an article on struggling drug maker Acusphere, that paints a fairly positive outlook. They believe the shares will see $1.00 soon and that the fair value of the shares right now are $5.00:

"Management at Acusphere (ACUS) provided a brief update on the timeline for the NDA filing and potential partnership on the fourth quarter conference call. Manufacturing aspect validation has been achieved, allowing for the planned NDA filing to take place by late April 2008.

In the meantime, Acusphere remains in active discussion with potential U.S. partners for Imagify. We are hoping a deal can get done in the second quarter to provide much needed non-dilutive financing. Our $5 price target is based on our belief that Imagify is real, and that Acusphere will eventually secure a partnership for the drug in the U.S.

Although we don't expect to see this level anytime soon, even $5 would be significantly undervalued if Imagify, a potential billion-dollar product, does get approved in early 2009. We are looking forward to the NDA filing in late April 2008.

It is a high-risk event (60/40 in-favor of approval), but we think Imagify can be approved in early 2009. Our financial model below forecasts U.S. sales of Imagify in 2012 of $529.5 million. Based on an estimated U.S. royalty rate of 25%, royalties from Nycomed from Imagify sales in Europe, and finished product supply reimbursement from both partners, we see Acusphere being in position to deliver $1.53 in EPS in 2012.

If we apply a 20x multiple to our 2012 estimate, and then discount back to present day at the aggressive rate of 40% to account for the 60/40 odds of approval, we arrive at a fair-value of $5. The current market capitalization is only $20 million. Acusphere should exit the first quarter 2008 with $14 15 million in cash, a $20+ million manufacturing facility, and a potential blockbuster product nearing an NDA filing.

We expect Acusphere to secure an upfront payment for Imagify in the U.S in the next few months greater than the current market capitalization. We believe this will get the stock moving back up over $1 regardless of the reverse split."

March 17, 2008

Sigma Designs Bounce?

Notable Calls has a piece on Sigma Designs, a stock that has been featured at the Fool for a while now:

"I do like SIGM here for a bounce. Although the analyst community isn't as positive on the stock as the trader expected them to be, I feel most of the bad stuff is priced in at current levels.

Here is a quick overview of comments:

- Piper Jaffray is definitely the most cautious firm out there lowering their tgt to $25 from $39 while maintaining Neutral rating. PJ notes the midpoint of management's FY09 revenue guidance implies $80M-$95M in quarterly revenue for the last three quarters of FY09. Whil they believe in the growth of the IPTV market (8M units in `07 and 14M units in `08) as well as the Blu-ray DVD player market (1M units in `07 and 5M units in `08), they believe the company would need to achieve nearly 95% market share and stable pricing in these markets to hit its $325M (midpoint) revenue target for FY09.

Many investors may argue that a $25 price target and assumed P/E multiple are too low. However,Sigma's consumer IC peer group trades with an 11x CY09 P/E multiple. As time passes, if they feel confident in Sigma's revenue recovering from Q1 FY09, and if they see little progress made by competitors, they may re-evaluate their stance.

- RBC Capital is maintaining their Outperform rating while lowering tgt to $30 from $35. Firm notes Motorola just bought too much product last quarter and it's evident in Sigma's inventories which increased 40% sequentially from $18.9M to $26.3M.

Demand overall, in their assessment looks healthy for IPTV and if anything total unit growth should display strong positive trends for the full year. The growth however will be lumpy and Sigma will often times have to do as STB makers request, who in turn are doing what the carriers demand. Sigma has almost $9 in cash/share.

- ThinkEquity says SIGM reported Q4 in-line, but guided for a 2008 that will be back-end loaded because MOT ordered too many set-tops for AT&T in recent months. This should correct itself in about a quarter, and the year's $300-350 mln guidance was in-line with firm's previous $329 mln est. Firm has made insignificant changes to their full-year ests, resulting in a mostly unchanged valuation. U.S.-centric political risk aside-which is significant, given the risk for higher taxes, more regulation, inflation, assault on free-trade principles, "soaking" the rich, an anti-business climate, etc. Firm believes SIGM will prove to be one of their very best investment ideas for the next 12 months."

March 14, 2008

More on Omniture: $30 Price Target

I was able to find out more about Omniture today. I found an article at the Stock Masters that describes what the company does, who its largest clients are, and more importantly the price targets that different analysts have on the company.

The three most recent analyst updates have a target of $32, $27, and $28.

$20 Price Target on Isis

Zacks has a $20 price target on ISIS. From the article:

"We are reiterating or rating on Isis Pharmaceuticals (ISIS) of a Buy and increasing our price target to $20. We believe that antisense technology represents an exciting and potentially revolutionary platform for developing therapeutic candidates to treat a wide margin of diseases. In our view, antisense as a platform is today where biologics were ten years ago. The company’s leading candidates are mipomersen (w/Genzyme Corporation (GENZ)) for high cholesterol and ISIS-113715 for diabetes, along with several other proprietary and partnered programs for oncology, inflammatory disease, asthma, and viral infections. Our financial model forecasts profitability in 2010.

Thanks to various collaborations, Isis has put itself in constant position to receive developmental milestone. The company sees no need to re-tap the financial markets in the next five years. In that regard, in five year we see Isis as cash flow positive, so there may never be a need to re-tap the financial market. Isis exited 2007 with $193.7 million in cash and securities. Adding the $150 million from the Genzyme equity investment, the $175 million up-front payment from Genzyme, and the $20 million equity investment form Abbott Labs (ABT) and Isis is sitting on over $500 million in cash.

We note this level does not include another potential $20 million from Abbott before July 31, 2008, and potentially another $175 190 million by July 31, 2009. Management expects to exit 2008 with over $450 million still on the books. Couple all that cash with the potential that mipomersen is a blockbuster and several other compounds are moving nicely forward, and Isis looks like the premier small-to-mid cap biotechnology company in our universe. We see Isis as uniquely well-positioned for a very successful future. We are keeping our Buy rating and $20 price target on Isis Pharmaceuticals. We find it comforting that Genzyme recently agreed to acquire 5 million shares of Isis at $30 per share - $10 above our near-term target."

March 13, 2008

Stocks to Watch: Omniture

I ran across Omniture while reading the Fool. This is a young company (went public in 2006) that the Fool has selected as one of their "Stock Advisors." It was originally discovered in this article.

I wasn't able to find out much about the company. They are listed as a company that provides "online business optimization software." It sounds like they manufacture website analysis software.

Is American Eagle a Bargain?

The Fool has a write-up on American Eagle Outfitter's 4th quarter results. They still appear bullish on the company despite its poor performance:

"However, American Eagle Outfitters is currently trading at only 10 times trailing earnings, which certainly sounds like a bargain price for a retailer that may have slowed down somewhat in recent months. Sluggish or not, American Eagle strikes me as a quality business with plenty of growth potential, a popular brand, cash on the balance sheet, and no debt. A 41% drop in the company's stock price over the last 12 months seems quite overdone, and a great opportunity for long-term investors. "

Stay Away from Men's Warehouse

The Fool has an article on the Men's Warehouse after the retailer announced their 4th quarter results. To summarize:

"Men's Wearhouse used to be a well-run retailer; now it has seriously lost its way. Management gave guidance of fiscal 2008 earnings of around $2.00, but I don't have much confidence in the outlook. Until management figures out how to integrate the tuxedo rental business, and stem the tide of declining sales, I suggest you avoid this company."

Other authors have been bullish on the company and its prospects, but that was before this earnings announcement. Let's see if any new articles surface over the next week.

March 11, 2008

CAPS Player Buys Cemex

One of the participants in the MSN Strategy Lab is a CAPS player, who makes his stock picks based on the highest rated stocks at the Motley Fool's CAPS database. His most recent pick is Cemex. From the article:

"About 38% off its 52-week high of $41.36 per share and trading at a trailing price-to-earnings ratio of only 9.7, I'm finding shares of Cemex rather attractively priced at the moment."

The full article is here.

March 10, 2008

On Copart

I ran across this article on Copart while reading the Fool today, who reported a disappointing second quarter. Copart has been a business I have had my eye on for a while, but they seemed a little too pricy. The dip in the stock may prove to be a good entrance point.

I drive by the Copart corporate headquarters in Fairfield, CA every day on my way into work. A banner advertising IT jobs has been hanging prominently from the roof of the building for several months now. This is a company that is growing, and they are attempting to draw high-tech talent to their workforce in order to fuel their growth.

As the article points out, Copart was just awarded a patent for their trading platform, and they have just opened several new facilities in the U.S. and are beginning to establish themselves in the U.K. This may be a very good time to get into Copart indeed.

March 7, 2008

Ameristar Casinos

Ameristar Casinos is a MF Hidden Gems pick. They hit a new 52 week low today.

Hidden Gem: Atheros

Atheros is a MF Hidden Gem recommendation. Doing a little more research, I found an old article from Jan. 11 at Zacks that gave the stock a $34 price target. The stock hit a new 52 week low today at $22.63.

Notable Calls with Price Targets on Marvell Technology

Notable calls has an article that contains two analyst price targets for Marvell Technology. One is $16 and the other is $19. The full article is here.

March 6, 2008

Zacks Bullish on FARO

From Zacks:

ARO Technologies, Inc. is seeing strong demand for its products despite a tough economy. The stock has rebounded strongly from its lows in January, but is still attractively valued at a PEG ratio of 1.1. Earnings estimates for this year have risen nine cents to $1.50 over the past month. All three covering analysts have raised their guidance.

Full Analysis

FARO Technologies, Inc. (FARO), together with its subsidiaries, designs, develops, and manufactures software-based three-dimensional (3D) measurement devices for manufacturing, industrial, building construction, and forensic applications.

The company offers articulated electromechanical measuring devices, such as Faro Arm, a combination of six or seven-axis, instrumented articulated measurement arm, a computer, and software programs; Faro Scan Arm, which provides customers the ability to measure their products without touching them and offers a seven-axis contact/noncontact measurement device with integrated laser scanner; and Faro Gage, an accuracy version of the Faro Arm product.

In mid-February, the company reported strong fourth-quarter results that sailed past expectations. Net income for the fourth quarter was $8.4 million, or 50 cents per share, an increase of $4.7 million, compared to $3.7 million, or 25 cents per share, in the fourth quarter of 2006. Analysts expected 31 cents per share.

Sales for the fourth quarter of 2007 were $59.2 million, an increase of $15.3 million, or 34.9%, from $43.9 million in the fourth quarter of 2006. New order bookings for the fourth quarter of 2007 were $65.4 million, an increase of $15.6 million, or 31.3%, compared to $49.8 million in the year-ago quarter.

"Once again, the FARO team around the world demonstrated its ability to perform," stated Jay Freeland, FARO's President and CEO. "Sales growth for 2007 was above the target range of 20-25% that we have been communicating all year. As always, fourth quarter sales were particularly strong with all three regions growing more than 20%."

"2007 was a tremendous year for FARO combining significant growth with great productivity, several new products and fantastic execution. Although there is clearly increased economic pressure globally, particularly in the U.S., we continue to see strong demand for our products. As such, in 2008 we are maintaining our guidance ranges of approximately 20% - 25% top line growth and gross margin of 58% to 60%," Freeland concluded.

These results have allowed the stock to bounce strongly off of its January lows around $20. FARO has posted an average surprise of 34% over the past four quarters. Earnings estimates for this year have risen nine cents to $1.50 over the past month. All three covering analysts have raised their guidance. The stock is attractively valued at a PEG ratio of 1.1x.

Hidden Gem: Barrett Business Services

I discovered Barrett Business Services in this MF article. The company has a strong balance sheet and good growth prospects. Seeking Alpha also has a write up on the company here.

March 5, 2008

Marvell Technology Can Soar

Interesting article about Marvell Technology Group. If they get back on target, they can have revenue growth of 30-50% over the next three years. The full article is here.

Notable calls also has a $21 price target on the stock.

A VmWare Upgrade

Pacific Growth Equities initiated coverage on VmWare with a "buy." Revenue in 2008 is expected to grow 50% over the 1.33 it reported in 2007. The full article is here.

March 3, 2008

JAKKS Pacific: Worth $38 a Share?

According to this article at the Fool, they estimate JAKKS Pacific to be worth $38 a share.

Sears Break-up Value $250 a Share?

According to this post, Whitney Tilson said the break up value of Sears Holdings is $250 a share.