F3Q09 Earnings Call

September 3, 2009 5:00 pm ET

At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

F1Q09 Earnings Call

March 5, 2009 5:00 pm ET

Q4 2008 Earnings Call

December 9, 2008 5:00 pm ET

Money managers clean up portfolio holdings before the end of their tax year. Over 48% of US mutual funds close their books between late October and December. Managers sell stocks with large losses to avoid reporting them on their year-end report to shareholders. This causes downward pressure on stocks trading within their portfolio(s) that are at or near 52-week lows. Once the selling subsides, these stocks have historically experienced a price reversal. That said, investors should exercise due diligence before buying any of the companies listed below by analyzing any potential shift in a company's fundamentals and other factors such as sector weight and risk tolerance.

Here are the screen parameters used to select the following "sells" from funds:

On Thursday, September 4 after-hours, Cooper Co.’s (COO) reported Q3 earnings of $0.39 per share or $17.9 million on $285.9 million vs. $0.18 per share or $8.1 million a year ago. Excluding restructuring costs, COO would have earned $0.67 per share or $31.5 million vs. $0.71 per share or $33.7 million a year ago. Analysts were expecting $0.65 per share on $285.2 million, beating earnings estimates and revenue targets. On September 5, shares closed at $34.01, down $2.16 or 6% on 1.84 million shares traded (over 3x the average daily volume).

I wear contact lenses and I had to see if they were from CooperVision, and they were! I didn’t even know that until I checked. I have to wear the toric lenses for astigmatism. When I visited the corporate site, it mentioned that 160 million people or 50% of the world’s population still need vision correction, 33 million people already wear contact lenses, and the rate of growth for lens wearers increases 4% per year. As more countries become industrialized, I expect the number of lens wearers to increase. If you had money and you wear glasses, you would get contact lenses. COO opened up a direct sales office in China in July 2007 and Hong Kong in March 2008, giving COO plenty of opportunity in the future.

F3Q08 Earnings Call

September 4, 2008 5:00 pm ET

Q2 2008 Earnings Call

June 5, 2008 5:00 pm ET

F1Q08 Earnings Call
March 6, 2008 5:00 pm ET

Executives

Looking at the list of stocks, a few themes emerge. Nearly all these stocks are in very competitive industries. The competition is so fierce that any mistake—a flawed product, a failed acquisition, or a botched sales strategy—can involve a tough recovery.

Cooper Companies, Inc. (COO)

F4Q07 Earnings Call

The firm thinks COO's operational challenges will prevent a takeout in the near term. Meanwhile, they believe COO is vulnerable to significant market share erosion, particularly in torics, because it lacks a widely available SiH lens. COO has struggled to ramp its manufacturing for the Biofinity SiH lens, resulting in a year-plus delay in the full-scale U.S. launch of the spheres. While COO says it is on track to meet its revised capacity goals for Biofinity spheres by H2:07 — a view the Street appears to accept wholeheartedly — the company has offered few metrics to support this claim, leaving room for a possible negative surprise.

- Citigroup notes that despite a top-line that grew 7% year-over- year, expenses were considerably ahead of their thinking leading to the EPS shortfall. Cooper held share in the quarter growing 4% ahead of modest worldwide contact lens market growth of 3%. Cooper continues to benefit from the shift to daily disposable use with the market expanding to 11% in the quarter (vs. a 5% decline in spherical lenses ex-single use).

While management reiterated prior guidance of $2.55-$2.75 (incl. options expense), Citi notes that there are various near-term challenges to the company's ability to execute and meet guidance. They believe the company will likely need to continue its increased sales efforts to promote new products and drive the shift to daily disposables. Nonetheless, given the continued strength in the daily disposable market the firm is raising F2007 revenue by $5m to $926m; however the quarterly miss drives EPS down $0.17 to $2.34. FIrm ups their target price to $55 from the $48 prior as calendar year 2008 EPS estimate rises to $3.27 from $3.23 prior. Maintains Hold.

INSIDE TRACK: Buy or Sell Sign? Why It's Hard To Tell at Cooper

Highlighted companies: Yahoo! (YHOO), Google (GOOG)

There are other companies that could be affected by this -- here is a partial list: