My Own Analyst

ATMI Reports Solid Quarter

ATMI, the semiconductor consumables manufacturer, reported sales of $95mm and EPS of .25 (excluding a one-time gain), ahead of the consensus of $93mm and .24.  The company didn't provide guidance in the press release, but the tone was positive.

We added the stock to the Top 20 near the end of August at 12.59 (+25% through last night), and I am targeting 21.50 a year out, perhaps slightly higher now.  The stock has moved from very deep value to just value, but it offers growth as well.  I struggled with choosing it over TXN, which is in the CG/B model, but went with it due to a better upside and similar to perhaps better downside.  Since 8/30, TXN is up over 20% and has paid a dividend, so we are only slightly ahead. at this point. 

Why is Orion Marine Up Sharply?

I got a question from a subscriber regarding the high-volume move in ORN, which is up almost 7% and is clearing resistance from the past three months.

While I continue to view this core holding in the Top 20 Model Portfolio (with growth and value attributes) as a high-potential M&A target, the reason is the lifting of the Gulf drilling announced earlier today. 

My timing on this name proved to be very poor, but our most recent add at 12.94 on 7/7 is finally in the money.  ORN is exciting to me because they are highly likely to sustain robust growth over the next many years as the widening of the Panama Canal by 2014 leads to port expansions in the Gulf and along the East Coast.

Allegiant Very Busy in September

ALGT reported operating statistics as well as some financial guidance.  September was exceptionally strong, with total system passenger growth of 18% and a load factor of 86.3.  Here is the press release.

The company is slowing capacity growth, and it provided an outlook for Q1 that suggests seat mile growth of just 2-5%.  As they conveyed in their last call (July), they will be "improving yields", which is to say that they will be raising fares.  Their fares are so low and their direct competition (from small cities to resort/vacation destinations non-stop) so minimal, that they should succeed in driving improved profitability.  One area of concern has been non-fuel costs  - Q3 costs were initially guided to be $52-54 and came in 51.50-53.50.  Fuel costs, which are the number one cost, were $2.25 per gallon compared to $2.28 in Q2 and $1.88 a year ago.

I like the stock, which closed below 42.  My near-term objective is 47, while I think that it can get to 62 over the next year (14 PE). 

Buckle Busy in September

BKE posted same-store-sales growth of 3% and total store sales of 8.7% for September (excludes internet sales, which have been very strong), a big improvement from the large declines in the prior two months.  The store had been plagued by a number of issues, including aggressive promotion by ANF, too little inventory and perhaps some impact from an unusually hot summer (who buys jeans when its hot?).  We have stuck with BKE in both models despite the very poor performance.  Another setback was the failure to pay a large one-time dividend this year after doing it two years in row and having ample resources.  I continue to carry a one-year target of 42 (down from earlier after the weak summer).

Watch Financials

Financials opened very strongly this morning, filled the gap and are back at the highs (XLF at 14.60).  I think that further strength here could be a huge catalyst for getting the S&P 500 to my intermediate-term target of 1250 (currently at 1155).

Financials are the 2nd largest sector (after Tech) despite their relative weakness since 2007.  I find them to be very cheap and priced pessimistically.  With that said, they are very complex and much more challenging for me analytically than other sectors (I like Health, Tech, Industrial, Consumer Discretionary and Staples and even Utilities more from that standpoint).

 

Plexus Upgraded

File this in the "about time" category, but PLXS is up big on an upgrade and target hike today.  Needham raised the target to 38 and went to "Strong Buy" from just "Buy".

We first entered PLXS in the Top 20 in late June at 29.53.  It seemed like a good entry, having retraced a big run-up to 40 in April from 25 in late October.  The stock promptly dropped (with the market, in all fairness) to 26 area before recovering later in July to 31.50.  August was painful for the stock - it fell as low as 21.  We ended up buying a small piece on the way down at 29.46 but then making the position very large with two buys in late August near 23.  Going into today, it's now our largest position at 9%.  With the stock up 6% in a pretty flat market, it will be pushing 10%.  I have a policy of maxing out positions at 10%, so this will most likely be trimmed in coming days.  We have a 26.85 cost that hopefully demonstrates the adage of making lemonade out of lemons, considering I liked it so much at 29!

EZCORP's UK Investment Zooms

EZPW, a member of the Top 20 Model Portfolio, has two substantial investments in publicly-traded companies.  Albemarle & Bond reported today, with EPS growing 34% for the year.  EZPW runs the earnings through its own P&L, so this will feed into EZPW earnings for Q3.  Here is a link to the press release.

Note that they boosted the dividend as well!  

Buckle Slammed on Dividend Announcement

BKE, which has a massive short-interest, had run up dramatically in the past few weeks, but it was slammed on the open today.  The company declared its regular .20 dividend.  Investors had been anticipating a special dividend.  Last year, the company paid out a one-time extra dividend of $1.80 and a stunning $2.00 in 2008 given the economic climate at that time.  The shorts can breathe a sigh of relief that they don't have to pay out the dividend.

I had been thinking of trimming it in both models if it got to 30 (we have some profits from some additions), but I like it here at the 50dma area below 27.

BKE Monthly Numbers Improve

Comps were still negative, but they were sharply better than expected and better than the terrible numbers recently reported.  I have been very disappointed with the action here but find the stock to oversold to pare.  The company also reported that it repurchased a slug of stock near 24.  Overall sales, which don't include online, were slightly positive due to some store openings, so it's nice to see some growth.  I believe that the hot summer and competitive pressure from ANF were the main culprits of late and intend to give the stock a chance to recover.   

Orion Growth Story Highlighted by Houston's Expectations

The Port Authority of Houston needs to spend $2 billion over the next decade to "take advantage of the Panama Canal expansion".  Here is a link to the article.  ORN has been a pretty bad choice for the Top 20 since we bought it, but I continue to believe that the company offers tremendous upside.