Small Caps Worth a Look: UIS, SIRI, LUV, SLAB, KIRK 15 comments
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Kirkland's, Silicon Laboratories, Southwest Airlines, Sirius XM Radio, and Unisys have floated to the top.
The one thing I love more than a stock success story is a stock success story that nobody saw coming. These frequently come from the small cap segment of the market, and almost as frequently, these stocks start out their journey as penny stocks. I've got five such stocks to consider today... two are true penny stocks (four, if you go back to February's prices), and four are 'small' by most everyone's definition. Yet, I think all five could pack a large punch for portfolios.
In no particular order, I've got 'that feeling' about Unisys Corporation (UIS), Sirius XM Radio Inc. (SIRI), Southwest Airlines Co. (LUV), Silicon Laboratories, (SLAB), and Kirkland's, Inc. (KIRK). Let's take a quick look at each one.
Unisys Corporation (UIS)
Monday's headlines tell you a big chunk of all you need to know about this IT company... "Unisys sees swing to pre-tax profit".
The company is looking for income of somewhere between $30 million and $55 million for its Q2 - which is much better than the $5 million loss taken for Q2 of the prior year. Not bad, but that's not the compelling part either.
Unisys' cash on hand? $427 million. Unisys' market cap? $588 million. At the very least this penny stock is an interesting cash value play.
Analysts have expected the company to do pretty poorly recently (last four quarters), and Unisys didn't disappoint - by falling short of even well-tempered estimates. Turning a profit in Q2 may be a bigger sign that they've finally figured things out in terms of expense control; revenues have been off, but the company didn't cut expenses all that well most of that time. Things seem a little different now though.
Sirius XM Radio Inc. (SIRI)
From an investor's point of view there continues to be plenty of things not to like about Sirius. The financing is relatively toxic, sales are still dwindling, and expenses are still high. After last quarter though, I have to wonder if there's finally a light at the end of the tunnel.
Even taking the Motley Fool's almost-creepy love affair with Sirius out of the equation, the market really wants to like this stock. That's why it's up to the high 30-cent level from February's roll in the hay with 12 cents. Though in a bearish swing now, the selling has been light.
And results? Last quarter (Q1), the company turned an operating profit... the first I can recall. (Correct me if I missed another one). Net losses are still in store for a while - I never said the light at the end of the tunnel was close. I think investors are starting to get on board for the long haul though... finally.
Southwest Airlines Co. (LUV)
Mea culpa.... I wasn't a fan of the airlines a few weeks ago, but I'm starting to come around. Did it have a lot to do with rising oil prices? Yeah, but it also had a lot to do with sheer bearish momentum. Both of those challenges have been knocked out of the way since then (at least for the time being).
Some of the facts aren't quite as encouraging. Take total airline traffic for instance; it was down (again) in June. That includes Southwest's service, though Southwest's numbers fell the least.
And speaking of numbers, it's not like LUV has been getting any love when it comes to financial statements. The P/E for the last twelve months is a hefty 94.3. Ouch.
So what's to like then? LUV is a dual-play..... one's a bet on a recovery, and the other's a bet on one of the better-run airlines. I'm not the only one thinking that way though. The forward-looking P/E for Southwest is 19.4.
Above all else though, as I look at the chart over the last few days, I see something I haven't seen in a while - buying interest. Could LUV be turning the corner?
I'm still not totally convinced airlines are back in business (literally and metaphorically), and I'm not entirely sure Southwest is the best of breed. If had to guess and invest money though, LUV would be one of the ways I'd go.
Silicon Laboratories Inc. (SLAB)
It's no secret I've been a big fan of semiconductor stocks for a while; I devoted an entire article to them back on July 6th. That was a take on semi manufacturers though, and specifically excluded semiconductor equipment and materials stocks. Today's the 'material and equipment' salvo, with Silicon Laboratories leading the charge.
And sure, it's another recovery play.
The recent past isn't necessarily a whole lot to look at.... it's an expensive stock, and there aren't really any 'non-recurring' charges to blame. The future looks a heck of a lot brighter than the past, however.
Not that analysts are always right, but if Silicon Labs does indeed earn $1.44 per share this year and $1.88 next year, the forward-looking P/E rolls in at less than 20.0. And just for the record, the company has topped analyst expectations for the last four quarters. They're probably low-balling, but it seems to work.
The stock took a big hit last week, and then simply resumed the uptrend that's been driving it higher for weeks.
Kirkland's, Inc. (KIRK)
The best part about Kirkland's is that the stock has gained 284% since February. The worst part about Kirkland's is that the stock has gained 284% since February.
I love momentum, but that kind of runup would intimidate even the best or most naive of investors. This freakin' thing was a penny stock just a few months ago, fer cryin' out loud.
Just for the record, this is as much an industry-wide (home furnishings) play as it is a Kirkland's play. It's just that KIRK happens to also be one of the best-looking bananas in the bunch. The trailing P/E as well as the forward-looking P/E both come in at just a little over 14.0.
But won't an economic recovery (and the likely real estate recovery to accompany it) put the kibosh on redecorating, as euphoric consumers just buy new homes and do major remodels instead? Maybe a little, but I don't expect to see that kind of recovery for a while; Kirkland's is still sitting pretty.
My only hesitation here is the chart... it looks very overbought now. This is one I'd wait to enter on a dip.
Disclosure: No positions.
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This article has 15 comments:
You obviously dont read them then. Ironic. I do. And I would call it creepy against the company. Weird. Maybe your mistaken. Id call it a love affair of coverage, but I would call it bearish coverage, at best. Evil coverage more like it.
www.fool.com/search/in...
As for excessively (and moderately) bullish comments from the Fool....
www.fool.com/investing...
www.fool.com/investing...
www.fool.com/investing...
www.fool.com/investing...
Never let the facts get in the way of a good argument.
Thanks for replying.
I must be a more "sophisticated" reader than you. As you cant see the bias, nor the timing issues of there articles. Rick A. is a closet bear on the company. Issues just enough bullish teasers to always claim "being right" about the company. MF is a joke, and linking there articles to make your point weakens yours. If you think MF is bullish on SiriusXM, I have some GM stock you may like to buy from me. I can go over each article to prove my point, but it would be for you, not for me. THe readers here know that the MF is a joke. If you want to think otherwise, like I said, maybe you want to buy some GM stock from me too.
"Buzz matters. Few are talking about the streaming application that launched through Apple's (Nasdaq: AAPL) App Store just 11 days ago. It's gone from being the second most popular free app in Apple's iTunes storefront to a still-respectable fifth. But the fadeout will continue. Rare are the apps -- among them Facebook, Pandora Music, Google (Nasdaq: GOOG) Mobile, and AT&T's (NYSE: T) account tracker -- that remain fixtures on the Top 25 list.
The app may generate new interest if Howard Stern is added, or if it takes a page out of the Netflix (Nasdaq: NFLX) playbook by making itself available at no additional cost for existing subscribers. But Sirius XM is well-served by keeping the press releases rolling, to maintain its flagship satellite-based service relevant"
Got in the no Howard, and got in the app dropping, and will continue too. Nothing to do with his article whatsoever. Be like me writing any article about Google Earth, and mentioning that they lost market share, and then told us why. You could say, well its a bullish article on Google. Went over google earth nicely. The "draw the reader in hook" was only to deliver negative information. I see this TIME AND TIME AGAIN with the Fool. But most of there articles are just downright negative. You want to debate this further wtih me, ill be right here.
I would never deny that the MF has been pounding SIRI recently. Go back in time though.... even when the company was entering a toxic financing situation, the MF's chorus was still singing its praises. Not so much lately, but before and during, it was creepy. The description is an opinion word, of course. You may describe it as odd, or quirky , or not creepy at all. Whether it's creepy to everyone else or nobody else though, it's mostly irrelevant relative to everything else.
I also agree that the MF is late to most parties. I don't know that I would call the MF a joke though. I agree with some of the sentiment posed here, though the site has value in many regards. Some criticism is deserved, some is not. Life is gray.
I too agree that they're a little too promotional at times, and occasionally over the top in terms of 'advertorials'.
Even when they're not, they usually leave themselves an 'out' in terms of a recommendation. Welcome to the industry. When one of their picks is right, it's the investor who's a genius for heeding the advice. When one of their picks is wrong, it's the author who's an idiot. Investors can rationalize inconsistency like that.
I'm not exactly sure how linking to their articles weakens my argument. You made a broad, sweeping statement, and I illustrated that the statement wasn't as broad and sweeping as you implied. If you want to argue opinions, great. If you want to argue whether information exists or not, you'll be doing that alone.... we both have other things to worry about.
Bigger picture, I have to confess I'm kind of baffled that the discussion has mostly focused on a half sentence about the Motley Fool's opinion, while the rest of the article above has been untouched. Tangent? Is there an ego agenda at play here? I don't know...I'd just rather argue the pros and cons of my picks, which is where money is made and lost.
On Jul 17 08:48 AM relmar2003 wrote:
> Author...
> Thanks for replying.
> I must be a more "sophisticated" reader than you. As you cant see
> the bias, nor the timing issues of there articles. Rick A. is a
> closet bear on the company. Issues just enough bullish teasers to
> always claim "being right" about the company. MF is a joke, and
> linking there articles to make your point weakens yours. If you
> think MF is bullish on SiriusXM, I have some GM stock you may like
> to buy from me. I can go over each article to prove my point, but
> it would be for you, not for me. THe readers here know that the
> MF is a joke. If you want to think otherwise, like I said, maybe
> you want to buy some GM stock from me too.
On Jul 17 08:53 AM relmar2003 wrote:
> I did it anyone one the first one. Heres WHY he really wrote the
> article. TO hammer this point hom, as it was close to the Iphone
> release. See my unsophisticated friend, timing is everything.<br/>
>
> "Buzz matters. Few are talking about the streaming application that
> launched through Apple's (Nasdaq: seekingalpha.com/symbo...)
> App Store just 11 days ago. It's gone from being the second most
> popular free app in Apple's iTunes storefront to a still-respectable
> fifth. But the fadeout will continue. Rare are the apps -- among
> them Facebook, Pandora Music, Google (Nasdaq: seekingalpha.com/symbo...)
> Mobile, and AT&T's (NYSE: seekingalpha.com/symbol/t) account
> tracker -- that remain fixtures on the Top 25 list.
>
> The app may generate new interest if Howard Stern is added, or if
> it takes a page out of the Netflix (Nasdaq: seekingalpha.com/symbo...)
> playbook by making itself available at no additional cost for existing
> subscribers. But Sirius XM is well-served by keeping the press releases
> rolling, to maintain its flagship satellite-based service relevant"
>
>
> Got in the no Howard, and got in the app dropping, and will continue
> too. Nothing to do with his article whatsoever. Be like me writing
> any article about Google Earth, and mentioning that they lost market
> share, and then told us why. You could say, well its a bullish article
> on Google. Went over google earth nicely. The "draw the reader in
> hook" was only to deliver negative information. I see this TIME
> AND TIME AGAIN with the Fool. But most of there articles are just
> downright negative. You want to debate this further wtih me, ill
> be right here.
and you get paid to write this fluff...
Sometimes - in the interest of brevity and trying to help investors make money (without muddying the waters) - I have to group things efficiently. Were it relevant or material to the commentary, I wouldn't mis-classify anything. In this case, I was more concerned with getting the idea publicized than I was interested in adding more words that didn't add anything material to the write-up.
If it makes ya' feel better though, everyone, LUV isn't a small cap. LUV has gained 24% since the article was published though.... and that's the reason I get paid to write this 'fluff'.
On Jul 23 05:26 PM mr research wrote:
> FYI ... Southwest is not a small cap stock.
>
> and you get paid to write this fluff...
On Aug 23 11:21 PM tugturf wrote:
> Your analysis or lack of it on Krik is creepy.(Yes, I’m getting to
> like that word too. Most analyses seem to be afraid of it for the
> reasons you point out but the time has come and I'm in!!!...