wax

http://waxink.blogspot.com/

8 Comments

    • Housing Market Tracker - Construction Job Loss Impact [view article]
      What is it with this Cramer guy?

      If he were as brilliant as everybody seems to think he is, why isn't he home with his growing investment balances instead of all over the internet with his growing ego?

      Wax       Feb 10 07:56 AM
    • Strong Year For DSP Designer CEVA [view article]
      Here's a stock trading at about $13.25 that to me has a reasonable value of between $4 and $5.

      The company generated a whopping net operating profit of about 2% over the prior 4 quarters, and based on a recent close of $13.22, the stock has overhead resistance at $12.99, first support at $10.26, and second support at $8.70.

      Now explain to me one more time what is supposed to impress me about this stock?

      Wax       Dec 26 08:47 PM
    • Chipotle Mexican Grill: Does the Growth Justify the Price? [view article]
      From a discussion board post 10/25/07. As far as I'm concerned, nothing has changed.

      Wax

      ...The stock closed yesterday at $123.55, down $3.58, which seems like a pretty good drop to me, but what struck me is unless you are a momentum/short term investor, why would you want to own a stock with a PE of 75, and more specifically why would you want to own this stock?

      I don't mean to put you on the spot, and it's really none of my business why you want to own the stock, I asked because as an investor, you have to put things into perspective, and the first question any investor should ask is why am I buying this stock? What do I want an investment in this stock to do for me?

      To me there are only two answers. The first answer is short term price appreciation. I'm buying this stock because I believe that momentum is going to drive the stock price higher over the shorter term.

      The second reason is long term price appreciation with a reasonable expectation of capital preservation.

      I poked around some and found that with yesterday's close, the stock has overhead resistance at $133.63, meaning from current levels the stock has an upside potential of about 5-6%.

      In addition, the stock has first support at $112.26, meaning from current levels the stock has initial downside risk of about 11-12%, and second support at $83.19, meaning from current levels the stock price has the potential to decline by about 35%.

      I also took a look at some of the company's historical pricing. I found that for period ending 01.26.06, the stock price closed at $42.20 on volume of 7,184,700 shares. As the volume falls pretty dramatically after this, I assume that the company's shares came out of lock up around that time, or the company's IPO came out, or something along those lines.

      I notice that the stock price and volume don't fluctuate much until the period ending 04.30.07, when the stock price jumps to $78.37 and the volume spikes to 1,534,800 shares traded.

      This general trading/volume range remains until period ending 07.30.07, when again the volume increases to from 686,600 shares, to 1,1182,200 shares and the price moves from $81.50 to $97.90.

      The next week, same thing and the week after that the volume decreases but the price continues to increase. And that is the current pattern for the stock.

      Which brings me back to my original question of what do you hope an investment in this stock will do for you?

      If I were going to invest in the stock of this company it would be as a short because to me, the only place the stock price can go is...down.       Dec 26 05:54 AM
    • Three Smallcap Stock Picks [view article]
      No offense, and no disrespect to Mr. Byrne, but why would anybody pay any attention to a guy whose investment philosophy is to invest in stocks that pay high dividends in order to avoid picking losers?

      Buying a stock because the dividend yield happens to be high is fine, but yield is function of price, so assuming the dividend amount stays the same, the yield will go up or down depending on the price.

      Let's look at the first pick, Traffix, Inc. (Nasdaq: TRFX). The company lists itself as an internet media and marketing company that provides end-to-end marketing solutions for its clients. I have to tell you, when I visited the company's website that I came away with the impression that if this company went out of business, at least half of the spam I get would stop.

      At any rate, I did look at the company's latest annual financials which were for the period ending 11/06 and I have to say I personally wasn't very impressed.

      The company's direct costs are 63% of sales, and their selling and administrative expenses are 30% of sales. Taxes eat up another 2% of sales, and dividends consume another 6% of sales, leaving absolutely nothing for a rainy day.

      NOTE: Please do not freak out, the reason it doesn't total 100% is because of rounding.

      On a value investing basis, I estimate that a reasonable value for the stock is $7, with a buy target of $3.50, a first sell target of $6.75, and a close target of $7.50.

      On a fundamental investing basis based on the latest 10-K filing of 11/06, the stock has a PE of 35, a Return on Invested Capital of 10%, Free Cash Flow of $0.23, a Tangible Book of $2.36, and pays a cash dividend of $0.01 per share.

      On a short term investing basis, based on a recent close of $6.11, the stock has overhead resistance at $7.39, a 28% increase from current levels, first support at $6.05, a 1% decline from current levels, and second support at $5.71, a 7% decline from current levels.

      So all of this brings me back to the company's investment philosophy, investing in stocks that pay high dividends to avoid investing in losers.

      Now admittedly I'm not the sharpest pencil in the box, but it just seems to me that if the one penny per share dividend that Traffix, Inc. pays is considered a high paying dividend by Mr. Byrne, it might just be that his client base dies off before they are able to determine how well his investing philosophy actually works.

      Wax       Dec 25 10:03 AM
    • The Long Case for KBR, Inc. [view article]
      There is no unrecognized value in KBR, Inc. (NYSE: KBR). None. Or at least I didn’t recognize any value. As the matter of fact, the stock is probably a little overpriced at its recent close of $35. But hey! That's just my opinion.

      While the company does seem to have a huge backlog of work, as the article points out, all of that work may not convert to sales because it may not all get funded. So to me, the backlog of work has no value; plenty of potential, but no value.

      I took a look at the company's latest 10-K, for fiscal year ending December 2006 and based on that information, was able to determine that to me, the stock has a reasonable value in the $28-$30 range.

      If I wanted to own this one, which at the moment I don't, I would set a buy target at $14, a first sell target at $27 and a close target at $30.

      From a fundamental perspective, based on my calculations and information from the company's December 2006 10-K, the company has Free Cash Flow of $0.77, Return on Invested Capital of 7%, a Tangible Book Value of $10.70, and a PE of 53.8. Are you ready to buy yet?

      For the traders, based on a recent $35 close, the stock has first resistance at $39.31, and first support at $29.56, meaning at current pricing levels there is 60% more downside risk than upside potential. How about now? Wanna own some of this one?

      I suppose an article showing up at Seeking Alpha by the folks at Value Investing Insight should grab headlines, after all how else will VII sell newsletter subscriptions?

      Wax       Nov 21 06:52 AM
    • Nabors Is Richly Undervalued - Barron's [view article]
      I did a back of the napkin thing for Nabors Industries, Ltd. (NYSE: NBR) based on the company's 2006 10-K numbers and came up with a reasonable value estimate of $54-$62.

      Curious, I found that the stock closed yesterday (08.21.07) $28.98 and had first resistance at $31.55 (200 day), second resistance at $31.89 (50 day), and support at $27.05 (52 week low). That's not much wiggle room for a company in the oil field services business.

      Based on my reasonable value estimate I would set a buy target at $27. Normally I would set a first sell target at $52, but because there is so much market volatility at present and because I think this volatility is going to be with us for the next 18-24 months, I would set a first sell target, the point at which I would sell off half of my shares, at $41, and be completely out of the stock at $56.

      I have to admit that I like the company, and current management, in place since 1987, has done an adequate job. Were I to be a buyer of the stock, it would probably be 1.5% position for me. But alas at the moment, a buyer I am not, and the reason is because I can't work out an answer to what I consider to be a basic question.

      How do you increase shareholder value in an industry that is as mature as the oil industry? If Nabors' management can figure that out, I may have to rethink my valuation of the company. With almost $6.25 of free cash flowing directly to equity, and a trailing twelve PE of 8.5, the company seems poised to dominate it's industry, and yet it doesn't. Why?

      For those that have the time to dig into this company, the folks willing to put forth the effort to contact the investor relations folks at Nabors, it may indeed prove to be extremely profitable. [sigh]


      In the mean time I'll be here, watching the price go up, and telling all my friends at the pub, how this one got away.

      Wax       Aug 21 07:05 AM
    • Barron's Debunks Cramer [view article]
      The only thing wrong with the picks Cramer comes up with is the price. If you waited until the price of the picks he rants about fell by about 50%-60%, you would end up owning very solid companies at very attractive prices. So while I'm not a Cramer fan, never have been and never will be, the companies he picks are usually great companies. He just needs to work on his valuations a bit.

      Wax       Aug 20 05:21 AM
    • Bradley Pharmaceuticals: Reality Check, Please [view article]
      From my CAPS portfolio.

      Wax

      Pitch by: wax 9/30/06 1:41 PM
      Reply | Report this post

      My reasonable value estimate is $40


      Pitch ReplyReply: wax 11/01/06 6:23 AM
      Reply | Report this post

      I closed my position today (10.31.06) because of the recent issues surrounding the company and Costa Brava Partnership.

      Costa Brava wanted directors from their limited partnership, the company didn't and mounted a campaign against Costa Brava with the shareholders. The company cited reason after reason why having Costa Brava folks on the board was a bad thing. All of this went on for weeks.

      In the end, management cratered and let Costa Brava have it's way, and also reimbursed Costa Brava for some of it's expenses in getting board positions. Allowing this to happen was a mistake on the part of management, at least to my mind, and it tells me that management was more interested in themselves than their shareholders.

      Put bluntly, I believe current management to be spineless and since Costa Brava is really a hedge fund, why hang out and watch the hedge fund slowly pick the company clean. So I closed my position.

      I had a real world 200 share position in Bradley which I took 03.08.05. The position had a basis of $8.88. I closed my position yesterday, 10.31.06, at $16.77 a share.       Aug 18 05:36 AM
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