My Own Analyst

Updates

I will likely be adding to MASI - this is technical.  We had trimmed recently

AVP slammed on problems resolving issue with govt and weakness in China.

CAH - great results

PSMT - missed that monster

 

May look to add PLCM and/or VOLC to Top 20

Morning Update

VOLC released data last night that supports its technology, IVUS.

INGR missed and guided lower - similar dynamics.  The numbers for next year will probably decline 3-5%, and this is about what should happen with the stock (buyer near 65).

BGFV could rally sharply - their report had all sorts of positive underlying aspects.  Absent a one-time charge, they beat despite missing on sales.  Still, they managed to grow at a time where top-line has been challenged, especially as they are in California, which was soft this summer and where weather played a role.  This stock could get back to its old highs near 25 next year (my target is 24), and, for now, I like it to 19.

SWI actually had a good call.  This is one that could have a good 2014.  I am inclined to stick with this one, though it hasn't been a fun one to hold so far.

Volcano Fizzles

This is a potential dip to buy - offered at 23 in AH.  They company pre-announced a slightly weak Q3 and gave slightly weak guidance for Q4 and in-line sales guidance for 2014 (9-11% growth is actually a bit below the current consensus).  My one-year target is 28.50 maybe going to 28, but there is room for advancement.   I would be a buyer at 21 for sure, perhaps higher...

Weekend Update - Almost to 1800 Edition

Just 2.3% to go to the ceiling of 1800.  Of course, the ceiling may prove to be just a figment of my own imagination.  It is rather arbitrary - we are in a bull market with unchartered territory.  The market isn't extended or overbought or particularly expensive, and calling interim tops has been very difficult.  I don't expect a big pullback in any event, though I think that certain high-fliers will be slashed come 1/2 due to deferred gains realization.  For now, given my view of not a lot of downside, I will be patient regarding scaling out of the market in CG/B or implementing short trades in The Analytical Trader.

Looking at the watchlist ( Download Watchlist102513 ), 26 of 100 closed below the 10dma, low but much better than a week ago despite the rallying market.  With earnings season, there were severeal 10% movers, including AKAM, LAD and RMD to the downside and ILMN to the upside (awesome quarter there).  Stocks offering 35% to my one-year target are few and far between and include just ANV, PLCM and NTAP.  Oversold names have rapidly dwindled - just CAG (-1.33), ISRG (-1.23), EZPW (-1.17) and WSM (-1.12) on the watchlist.  Looking at "prospects", ABAX and BJRI are more than 2 units, while several are between -2 and -1 (CTXS, FIO, LQDT, SYMC, HMSY, RTIX, PANW, CTRX, BKE, TWI, GMCR, MFLX, EME, AEO and HURC) .  Black 1s number 14.

Looking at the stocks in the models ( Download Positionwatch102513 ), I raised the valuations (and targets) on CLH, MAT, ROSE (actually just the earnings) and URI while cutting it on RMD by $2.  I am getting rid of one of our three big losers while I contemplate the other two.  NEM is a big loser too - just not for us so much.

RMD

I had trimmed RMD from CG/B due to it being ahead of itself and a little expensive.  I am a buyer of a dip.  The company reported weak sales and EPS that missed but by a lot less than one might have expected giving the sales shortfall.  Sales were hurt by Japan and by masks in the U.S.  Japan is a short-term situation, while the U.S. is more questionable.  I think that the company is probably right - the U.S. is just a short-term issue related to both the timing of new products as well as reimbursement issues related to competitive bidding.

I recently raised my target by lifting the PE from 20 to 21.  This is an art, but I actually think that the PE could rise more over time.  Based on slightly lower earnings outlook I expect, my target drops to 66 from 68.  I like this stock near 50 and love it 46-48.

Earnings Central

IRBT down sharply today.  ATMI had a nasty miss.  

SMCI report yesterday was decent, which is probably good for that stock.  One area of concern was weakness in Japan.    This stock is too cheap in my view.

ILMN had a great report Monday afternoon.  I raised my one-year target to 88, probably too low but based on 8X  sales.

Weekend Update - Blast To New Highs Edition

The market isn't particularly overbought, nor is it yet extended.  QQQ is .70 on the PMI, just ahead of IWM at .67, but SPY is just .38.  DIA is actually slightly oversold at -.33.  Looking at the sectors, the formerly hot Financials (XLF) are just .12 - fuel for the fire.  Health is the highest read for any large sector - .72.  As I look at the SPY chart, it doesn't become a black 1 until early 2014.  Still, we are at my year-end target basically and near the 1800 ceiling I expect.

Turning to the watchlist ( Download Watchlist101813 ), only 8 stocks closed below their 10dma.  Only FLIR fell 10% (Treasure), while several rallied by more than 10% including BCEI, GOOG, URI, EGOV and XEC. Oversold names on the watchlist include CAG (-1.78) and then a bunch just below -1.0, including WSM, SWI, ANV, ISRG, NEM, MAT and EZPW.  On the "prospects", CTXS is at -2.03.  Names between -1.0 and -2.0 that interest me here include BJRI, AEO, CTRX  and CAS.  There are no stocks except ANV and PLCM that are on my watchlist (besides some in the models) that offers 35% to my one-year target (actually, only a few above 25%).  PLCM, where my target is 14.50, is in the middle of a huge tender process to buy back a slug of stock between 10 and 11.50.  They report 10/23 and I hope I am right that the stock will dip towards 10 on bad news (my prediction).  Maybe we get a trade on.  My target will drop to 13.50 or 14 following the share repurchase and this depends on earnings released this week.  Black 1s stand at a dozen.

Turning to stocks in the models ( Download Positionwatch101813 ), lots of overbought names, but several oversold ones.  This week, we have RMD and SMCI reporting.  I am trying to be careful with YTD losers, as I expect tax-loss selling pressures.  We have a few names that offer more than 50% to my one-year target.  I have confidence in IIVI and LMNX.

FLIR Flops

I think that they will get a pass on the near-term challenges and like the stock 29-30 with a 36 target a year out (20 PE)

Treasure

Weekend Update - Bounce-Back Edition

Just when it looked like the market had caught a cold, it turned out to be just allergies to the fiscal follies.  That gap-filled chart I shared a few weeks ago is now totally fixed and we are within a hair of all-time highs.  I continue to think we hit the 2013 high sometime between roughly now and Thanksgiving, most likely between the next two options expirations.  There are a lot of dynamics at work.  One is that hedge-funds haven't had a great year and need to generate some late-year performance.  This is one of the reasons Small-Caps are running so hard in my view.  Another dynamic is that there are very few big losers this year - expect many of these to be under intense pressure due to the scarcity of potential tax-loss sales in a period of bountiful gains.  This is bad news for ANV, NEM, TITN and SWI on the watchlist.  I calculate only 110 names out of 3000 in the Russell 3000 down by 25% or more.

Looking at the watchlist ( View this photo), 77 of 100 closed above the 10dma.  Two names moved to the upside more than 10%, including MW on the JOSB bid and OUTR on the activist investor announced after the close last Friday a week ago.  It's an interesting time when you can make money betting on stocks of companies that aren't performing well!  I added DAR to the list, removing CVD.  DAR is a waste recycling company focused on used cooking oil, animal by-products and bakery waste, and it just announced a huge deal that doubles the company.

Oversold names on the watchlist include CAG at -2.12 and NEM, LMNX, MAT, SWI, TITN, ANV, FL, CVX WSM, EZPW and INT between -1 and -2.  On the "prospects", CTXS was clocked and is the most oversold at -1.95.  Others below -1.0 of note would be AEO, CTRX, BJRI and CAS.  Black 1s are now 10 following a few deletions and a couple of additions, and there is a black 5 (ISRG).  BCEI joins ANV as the only stock on the watchlist and not in the models that returns 35% or more to my one-year target.

On the stocks in the model, I raised targets on CAH and RMD by increasing PE multiples by 1 to 17 and 21, respectively.  Here is the updated spreadsheet:  View this photo

P.S.  Sorry but I have an issue converting to PDF and will have to figure it out later...

JOSB Trying To Buy MW

JOSB is smaller than MW, but it is going after it along with private equity firm Golden Gate Capital.  I expect MW will fight it and not agree.  I suspect that JOSB is trying to get MW to buy it.  Could create some interesting trading...