Gentlemen, Start your Earnings Season!

My first 3 companies announced their earnings today: UST, DLX and ELX. Pretty funny that I have both DLX and ELX, looks like I was picking alphabetically.

UST - man, this has been a great stock for me, #2 on my billboard top 30. Their earnings did not disappoint (UST Reports Stronger Than Anticipated Results For The Year 2006). The stock went up over two percent on this miserable day. They gave favorable guidance for 2007 and continue to pay their nice 4% dividend. I will almost be sad when it comes time to part ways with UST this spring.

DLX - I have to laugh. I bought DLX at about $26 last spring and then it proceded to drop to under $14. Typically, I would have bailed, but I was trying to follow the rules. All I can say is Yahoo! Now over $29 with a nice 4% yield. I have made 14% on my initial investment and I fully expect them to keep edging up as they had a nice quarter(Deluxe Posts 4Q Profit Up 20 Percent). They expect growth in 2007, they have certainly turned the quarter with their new CEO. When DLX comes up after my 1st year, I'll take a hard look at retaining. Here iswhat CEO said:

"We made solid progress this quarter and are exiting the year with positive momentum," said Lee Schram, CEO of Deluxe Corporation. "We have achieved nearly 10% of our cost savings target, which is ahead of schedule, and we made steady progress with new product initiatives. Achieving nearly flat year-on-year revenue performance for the quarter along with strong earnings, operating cash flow and debt paydown reaffirms that our operational transformation is taking hold and delivering results."

ELX - they reported tonight (Emulex Reports Second Quarter Fiscal 2007 Results ). Not so hot and were down a couple percent in AH trading. I am tempted to sell ELX a bit before their year (Feb 24th) is up if they swing to a loss (I am up about 5%). They aren't stillon any MFI lists so far as I can tell. I might use the sale to renew PTEN and HW (two losers still on list) for another year with full re-balanced values. We'll see. I am on the fence.

My portfolio was down 0.8% on this crummy day. I suppose that was "okay" as the Russell 3000 was down over 1%, but I don't feel okay. Besides UST & DLX having nice days, Ezenia! was 5%. Ezenia! is another great example of patience. I bought them at $2.84. They dropped all the way to $1.40. It has bounced all the way back to $2.33.

Looks like my study of impact of selling stocks after 20% drop has gotten some interest. I do think it indicates that the reverse, buying MFI stocks after they have dropped 20% (kind of Graham's "margin of safety" concept) is a feasible strategy. So much so, that I actually implemented it today. I bought ALDA in my sidecar. ALDA is down over 50% from its 52 week high. It has been on MFI lists for a long time, though kind of marginally. I may even buy VCI as a full year MFI stock in February. That move will take some courage as it is a much-hated stock. But I just might... or as the little engine said, "I think I can, I think I can, I think I can..."

Final quick comment, I do think to some extent my study is biased as many of the stocks that dropped 20% did so in June/July when the market was in turmoil. You then missed the August-Dec bull run. So what I have done should not be annointed in any way. I will try and update every 6 months and we'll see if the pattern continues.