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Fama and French proved out that Asset Allocation accounts for 96% of typical investment returns. I need to constantly remind myself that it is about asset allocation, not individual company picks. Buffett is an asset allocator, not just a stock picker. I have decided to pursue the Magic Formula... More
  • (CIMT) Is A Great Value, Strength And Growth Stock 0 comments
    Jan 30, 2013 4:03 AM | about stocks: CIMT

    I started with the standard micro magic, mechanical screening metrics to get down to a handful to review.

    Buffett wants something undervalued, so I screen PE<15 and PS<3. That gets the Finviz population down to 988.

    Next, I want Greenblatt happy by getting something performing with the assets it has. ROA>10% and ROE>5% gets down to 248 stocks.

    Graham would want financial strength. So LTD to Equity <.01 and Current ratio >1.5. That gets us down to 129 stocks.

    O'neil would want canslim with solid growth. 5 yr sales growth >10% with 5 yr EPS growth >30% should help prove that out. Price >$2 to avoid penny stocks. That gets us down to 14 candidates.



    o. Ticker Company Sector Industry Country Market Cap P/E Price Change Volume
    1 CIMT Cimatron Ltd. Technology Technical & System Software Israel 68.08M 4.85 7.32 0.00% 432,704
    2 CVU CPI Aerostructures Inc. Industrial Goods Aerospace/Defense Products & Services USA 92.52M 8.33 11.08 0.27% 18,658
    3 POZN POZEN Inc. Healthcare Drug Manufacturers - Other USA 163.37M 3.85 5.39 0.56% 67,039
    4 SKUL Skullcandy, Inc. Industrial Goods Industrial Electrical Equipment USA 190.58M 7.13 6.92 0.87% 417,398
    5 CXDC China XD Plastics Company Ltd. Consumer Goods Rubber & Plastics China 200.70M 3.08 4.22 0.00% 15,862
    6 YONG Yongye International, Inc. Basic Materials Agricultural Chemicals China 282.52M 4.58 5.59 -1.41% 125,442
    7 PWER Power-One Inc. Technology Diversified Electronics USA 477.34M 5.87 3.93 1.55% 1,496,444
    8 HITK Hi Tech Pharmacal Co. Inc. Healthcare Drugs - Generic USA 500.33M 14.29 37.45 1.11% 64,089
    9 BPI Bridgepoint Education, Inc. Services Education & Training Services USA 560.96M 4.31 10.39 -3.44% 166,680
    10 KLIC Kulicke & Soffa Industries Inc. Technology Semiconductor Equipment & Materials USA 884.09M 5.56 11.78 -8.33% 4,144,687
    11 DECK Deckers Outdoor Corp. Consumer Goods Textile - Apparel Footwear & Accessories USA 1.42B 10.02 40.38 -3.05% 1,384,314
    12 CRUS Cirrus Logic Inc. Technology Semiconductor - Specialized USA 1.83B 12.10 28.43 -1.49% 2,059,043
    13 MOS The Mosaic Company Basic Materials Agricultural Chemicals USA 26.40B 14.39 62.01 -0.56% 2,416,224
    14 AAPL Apple Inc. Technology Personal Computers USA 430.34B 10.39 458.27 1.88% 20,334,276

    Next, I looked for moat, potential for growth, having financials reported somewhere other than China, avoiding banks and drug cos.

    Just for an aside, my biggest holding is still solidly on the list . . . AAPL. If someone finds a value/strength/growth stock with such a strong moat, let me know. If I wasn't overweight AAPL, I'd get more.

    The candidate that comes in next for me is the smallest market cap. CIMT. Here is a solid, cash rich company growing in CAD/CAM and has been referenced all over the boards related to 3D printing.

    So let's make sure we aren't missing something. Why is this stock so cheap and do we expect it to grow for us in the future.

    One knock against it is that it is Israeli based instead of US based. My research says that Israel follows international GAAP or IFRS. I also see plenty of Israeli tech start ups later purchased by the likes of Paypal, 3M. I won't put it in with China for financial reporting.

    Another knock is that it has only been over $50M market cap for 2 weeks after a recent runup. It falls below scope for most professional money managers.

    It is reasonably illiquid, so buying in without a level two screen might get you fleeced. Careful on the way in. Also, I wouldn't suggest any trailing safety stops. Any big elephants jumping in the tub will create quite a bit of volitility.

    CIMT is a solid company from "the numbers". If you want to know its products, competitors, etc. please look elsewhere. I prefer to just make an objective assessment.

    If anyone sees a better candidate up there on the list, feel free to let me know.


    Disclosure: I am long CIMT, AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Stocks: CIMT
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    Jan 31, 2013
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