Daniel Nathel

Best and Worst Performers YTD

I noticed TurboChef was on the worst performing list and I just posted a briefing about them on my blog...and below. If you like this article check out my blog where I highlight stocks that travel under the radar of the free financial media at DanielNathel.Blogspot....

After hours price as of 02.28.08 - $8.54; Conference call scheduled for 03.03.08 at 4:45 pm.

TurboChef Technologies (OVEN) is a tough call, but it deserves a little more than the cold shoulder before they announce their quarterly earnings on Monday. If the ticker and the company name are not enough of a hint, TurboChef specializes in speed cooking technology. Their narrow market focus and the increasing demand for food cooked fast offers an opportunity for strong economic growth. Unfortunately, from 2004 to 2006 there income statement would prove otherwise, with revenue consistently declining from over $70 mil in'04 to under $48 mil in '06. Don't be mistaken though, they have been on the up and up, and in the 9 months beginning last January they already reported over $52 mil in revenue.

OVEN lost about 50% of its market value just in '08, mainly because news broke that Starbuck's, one of their top 3 customers, reported that they would phase out their hot sandwich offerings in the fall (they were stinking up their coffee shops) and they just couldn't recover from the down trading market. Volume has been on the rise recently and the price started following this week making an upward move of about 10%.

Their are a ton of risks associated with OVEN including a history of negative earnings, there is not really a direct competitor to compare them against, 60% institutional ownership, almost 38% is held by insiders, 18% of the float was short at the end of January and the list goes on. But, there is some upside potential in the short run, if not long, for at least a ride on the rebound if they report good news Monday.

I say long run because they make good, expensive, speed cooking products that should spread globally over time; as they have in the US. They also offer an extremely upper end speed cooking oven for residential kitchens (that I am sure has had a tough time selling along side of the new home starts) that will probably not be so uncommon in the future. To top it off, the consensus of analysts covering OVEN expect earnings to be a positive 3 cents for the last quarter of '07 and to stay out of the red rising to .19 cents for the fourth quarter of '08.

If you are interested in purchasing shares of OVEN check out some of the other players in the cooking equipment market including Middleby Corp. (MIDD) and companies that you feel operate with similar demand, but don't expect OVEN to move in sync with them (because of their R and D focus). Most of those guys did good recently and I think the upside potential should out way the downside risks, which look like they have already been factored in, for Mondays conference call.

Disclosure: I may, or may not, invest in or trade shares of OVEN, but I currently have no position in the company.