Why I Added Haemonetics and BE Aerospace to My Portfolio

I must be a glutton for punishment.  After having sold two of my positions earlier Monday, I started looking at the lists of top % gainers to see if I could find any new candidates for the portfolio, utilizing my new reduced investment size strategy I discussed in the previous entry.

The first stock that appeared to fit my usual criteria for inclusion in my blog and my own trading portfolio was Haemonetics (HAE), and I purchased 50 shares at $51.54. This purchase was determined as 1/2 of the average size of my remaining positions. HAE closed at $52.38, up $2.79 or 5.63%, on the day.

Briefly, Haemonetics reported 2nd quarter results on Monday for the quarter ended September 27, 2008. Revenue climbed 20% to $145.9 million, and earnings came in at $14.8 million or $0.57/share up from $11.2 million or $0.42/share last year.  This exceeded expectations of profit of $0.52/share on revenue of $136.3 million according to analysts polled by Thomson Reuters.

The company also went ahead and raised guidance for fiscal 2009 from $2.38 to $2.44/share, up from prior guidance of $2.33 to $2.43/share. It also expects revenue growth of 12 to 14% from a prior range of 10 to 13% expected revenue increases.

The "Five-Yr Restated" financials from Morningstar.com appear solid, and the stock looked good to me, so I added Haemonetics to my portfolio. 

Again using my reduced position size strategy, I found BE Aerospace (BEAV) on the top % gainers list and decided to purchase 215 shares of BEAV at $11.19.  BEAV actually closed at $9.74, down $0.02 for the day.  (BEAV appeared to be trading at $10.99 after hours, so it was not clear whether I will be clearing this stock out of my own portfolio or not).

With BEAV at $9.74, this would represent a loss of $1.45 or 13% since purchase.  This is still above my 16% loss limit with these last five holdings, but just barely above a sale.

What drove the stock to the top % gainers list (at least when I was looking at it) was the announcement of 3rd quarter results on Monday, with revenue climbing 37% to $587.8 million.  Net income came in at $51.8 million or $0.54/share up from $44.5 million or $0.48/share last year.  Analysts had been expecting earnings of $0.53/share, so they exceeded analysts expectations.

The Morningstar.com "Five-Yr Restated" financials on BEAV appeared relatively solid. It was my hunch that purchasing shares of an airplane interiors manufacturer might well be the benefit from the declining oil price.  I hope that wasn't a stretch!

Anyhow, that brings you up to date.  I shall continue to do the impossible, swim upstream against this bear market like the most dedicated of Salmon.

Disclosure: The author owns HAE and BEAV.