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  • Possible 10% Gains in a Day 2 comments
    Aug 22, 2010 11:36 PM | about stocks: SAFM, TUES, FMCN

    Two companies reporting earnings Monday are:


    Sanderson Farms (NASDAQ:SAFM) – Before the open

    Tuesday Morning (NASDAQ:TUES) – Before the open

    Focus Media (NASDAQ:FMCN) – After the close


    Sanderson Farms (SAFM) is a poultry producer http://finance.yahoo.com/q/pr?s=SAFM with top competitors Pilgrim’s Pride (PCC) and Tyson’s Food (NYSE:TSN) in the chicken industry. http://finance.yahoo.com/q/co?s=SAFM+Competitors  Comparing it to its competitors, it seems to be holding up well.  Year over year quarterly revenue growth, trailing gross margin, and trailing operating margin is higher than that of its competitors.  Its trailing P/E of 7.96 is close to that of PCC (7.41) and much lower than that of TSN (52.10).  The only red flag is the price/sales, which is more than double that of its competitors.



    Quarterly Rev. Growth

    Trailing Gross Margin

    Trailing Operating Margin

    Trailing P/E

    Trailing P/S

    Sanderson Farms






    Prilgrim’s Pride






    Tyson’s Food







    Its revenue/share of $91.72 makes the company seem undervalued considering that its shares closed at $43.16 on Friday. http://finance.yahoo.com/q/ks?s=SAFM+Key+Statistics  However, the 11.70% short interest in the stock could place negative pressure on the stock.  Then again, if the company surprises when it reports, there could be a short squeeze propelling the stock higher.  And clearly analysts expect the stock to up with an average price target of $60.67 and a buy initiated by Morgan Joseph on August 20th. http://finance.yahoo.com/q/ao?s=SAFM+Analyst+Opinion  That August 20th buy initiation can also propel the stock higher in the very immediate term.  Insider trading looks good with no insiders selling.  http://moneycentral.msn.com/investor/invsub/insider/trans.asp?Symbol=SAFM 


    Looking at its earning history, the company has surprised four quarters in a row. http://finance.yahoo.com/q/ae?s=SAFM+Analyst+Estimates  Plus, the current earnings estimate of $1.87 is lower than the year ago earnings of $2.12. http://moneycentral.msn.com/investor/invsub/results/hilite.asp?Symbol=SAFM  From the chart, it is clear that each quarter’s earnings this year is better than last year’s numbers.  The economy is clearly better this year than last year.  Therefore, sales should be higher this year.  Using these trends, it seems likely that the company will surprise when it reports earnings Monday morning.  As a bonus, the stock has fallen considerably recently and could jump 10% or more if the company surprises.  Its strong fundamentals make a gamble on its earnings report less of a risk.  Even if it disappoints, it could still be a long term value play.


    Tuesday Morning (TUES) is a closeout retailer of home furnishings, house wares, gifts, and related items. http://finance.yahoo.com/q/pr?s=TUES  The housing market is not doing well, but people are still spending on renovating their home, which may spell well for the company.  Still, this company looks a gamble.  Revenue of $19.64 per share says that the company may be undervalued at the current price of $3.59. http://finance.yahoo.com/q/ks?s=TUES+Key+Statistics  Insider holdings are 6.1% and falling.  Taking a look and comparing it to its top competitors shows the company’s only advantage over its competitors is its very low price/sales. http://finance.yahoo.com/q/co?s=TUES+Competitors  Analysts on average estimate the company to earn $0.03 per share, a 175% growth rate. http://moneycentral.msn.com/investor/invsub/analyst/earnest.asp?Symbol=TUES  Insider trading seems to be bearish with many insiders selling. http://moneycentral.msn.com/investor/invsub/insider/trans.asp?Symbol=TUES  Watch to see if the company does surprise.  If it does, this stock could skyrocket.


    Focus Media (FMCN) is a Chinese advertiser. http://finance.yahoo.com/q/pr?s=FMCN  The company’s stock is not cheap, with a forward P/E of 15.48 http://finance.yahoo.com/q/ks?s=FMCN+Key+Statistics and a price/sales of 4.92.  The stock has been on the tear over the last year, rising over 100%.  It surprised analysts 3 times out of 4. http://finance.yahoo.com/q/ae?s=FMCN+Analyst+Estimates  The average analyst estimate is $0.23 a share, up from $0.22 a year ago.  Based on these numbers, I believe the company will surprise despite the slowing Chinese economy.  However, there could be limited upside even if the company does surprise, since the stock has already increased considerably.

    Disclosure: None at the moment
    Stocks: SAFM, TUES, FMCN
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Comments (2)
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  • Michael Bryant
    , contributor
    Comments (7354) | Send Message
    Author’s reply » Well, I was wrong on Sanderson's Farms. It disappointed earnings. Tuesday Morning surprised. I expect it to go higher for, say, three days in a row. I am watching Focus Media, which will report after the close.
    23 Aug 2010, 09:54 AM Reply Like
  • Michael Bryant
    , contributor
    Comments (7354) | Send Message
    Author’s reply » And..............Focus Media topped expectations. www.reuters.com/articl...
    23 Aug 2010, 10:57 PM Reply Like
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