Juggling

Wow, lots going on. Where should I start?

• I posted a file that simulates my workbook I use to track my MFI portfolio. It can be found at the magicformulainvesting group (Files). You may have to be a member to access.
• I had a poor day with my stocks. Down about 1/2 a percent.
• Two stocks on my watch list I started yesterday got slammed today: LMS and SHOO both down over 6%. I said I would buy early if the price was right. Time to put on my thinking hat.

Here is my posting on the workbook:

As promised about a month ago, I have posted a file that tracks MFI
portfolio similar to what is on my blog. I apologize for taking a
while, my home-grown version was not exactly user-friendly. This
version will still require a working knowledge of Excel to use. It
also requires Randy's RCH add-ins. You can get by without them, but
you'll have to cut & paste stock prices from say Yahoo finance.

I did include instructions. I tried to keep it simple (stupid) and the
worksheet is set up to really be updated weekly.

Much to the chagrin (I am sure) of JG, it does have IRR functionality
built-in. It does also show overall percentage gained. The workbook is
populated with a hypothetical portfolio so you can see how it works. I
am not a programmer, so I apologize that it isn't more automated with
snappy macros and drop down boxes.

I hope people find it useful. I will attempt to answer questions, but I have to say this is a busy time of year at work with year-end financial statements.

Part of the reason I got hammered today was HW. I have to say it was a real head-scratcher as they dropped 6.5%. I say that as they pre-announced the 1st quarter and everything was above consensus (InPlay: Headwaters preannounces revs and EPS above consensus for Q1). On top of that "good news" Jubak had an article today where he said positive things about HW:

Group 2: Less-than-pure profit

These opportunities will make you a profit, at least over the next few years or so, but they really don't do anything to save the world from global warming.

Technologies likely to get big political bones: I'm talking mainly about so-called clean coal here. It really isn't part of the solution because coal produces too much carbon dioxide per pound burned for any system of capture-and-storage to work. (Burn a ton of coal to generate electricity, and you get four tons of carbon dioxide.) However, any politician who says this right now is committing suicide: There are too many jobs at stake and too many well-funded lobbyists roaming the halls. It will take years for the technology to prove itself one way or the other, and in the meantime, the effort will be enough to build and support interest in clean coal and carbon dioxide-storage stocks.

• Stocks to watch: Headwaters (HW, news, msgs) and Praxair (PX, news, msgs). The former is the largest provider of technology and chemical reagents to the coal-based synthetic-fuels industry. The latter has announced joint research into improved carbon-dioxide capture technologies with utility AES Corp. (AES, news, msgs). Just so the coal folks don't think I'm picking on them, I'd put corn-based ethanol in the same camp -- lots of rhetoric and not much long-term future. Still, that rhetoric should be enough to make Archer Daniels Midland) (ADM, news, msgs) a profitable holding. (To be completely fair, the company is pushing ahead into other biofuels that hold more long-term potential.)

Maybe I don't understand something, HW is raising 125m... perhaps that is reason for drop.

OVTI also took a hickey today. Proof that no matter how poorly a stock has done, it can always do worse. Down to a miniscule, microscopic, itsy-bitsy price of $12.39. It has got to be a buy here! Not (ahem) that I am emotionally attached or anything!

Did have some good news (besides not having bought SHOO or LMS yet). TGIS inked a deal with the Navy Seals and shot up today (Thomas Group Announces Contract with Navy SEALs). Glad they did that rather than pre-announce a good quarter like HW!

KG was interesting to watch today. Remember they had sharp spike on heavy volume at the close on Friday. Other people must've thought that was interesting too. KG went up in the 1st 30 minutes today from $17.20 to $18.06 on heavy volume. Then someone took the punch bowl away and the stock traded back down to $17.32. I am now officially up $8 on KG. Great return for 8 months! A buck a month.

I read a great post on FDG today. Don't know how I missed it when it first came out. Someone appears to think there is still some hope for this laggard! (FDG Article).

Now back to my watchlist analysis. Two stocks took major hits today. LMS announced an earnings shortfall (Lamson & Sessions lowers 2006 profit target). Reading their press release did make me wonder if their sterling numbers over the past 12 months that I commented on yesterday were padded a bit by hurricanes Katrina, Rita & Wilma. They also commented that residential construction being down is weighing on them. These points will not strike LMS from my watchlist, but it does highlight caveat emptorer!

I have not written SHOO up yet, but I did find their 7% haircut today intriguing. It was based upon a single analyst commenting that in 1st 1/2 of 2007 SHOO will be going against some tough comps for same store sales (Steven Madden Declines on Downgrade). What I find intriguing is that he lowered his 2007 estimate from $2.34 to $2.28. The company was saying $2.20 to $2.30 so all he did was place himself more in line with SHOO. Doesn't seem worth 7% to me. Hmmm, I may be a buyer tomorrow. Let us see how rest of my analysis shakes out.

SHOO - Steven Madden. As the symbol suggests, they makes Shoos (er Shoes). I remember Cramer saying this stock was great about a year ago as Madden (not John) was really in tune as a designer. Their EBIT is fabulous, going from 9m to 22.5m over past 5 quarters. Both sales and margins have been expanding. If the shoes are unique and desirable, that is a bit of a moat. Toss in the 7% haircut and I may be dialing my broker tomorrow.

THO - Thor Industries. Long been on my watchlist (I actually have some shares in my kids college accounts). They make RVs and sales have been "cruising"... until the quarter ending 10/31/06 (I suspect this may be another "Katrina" effect as more people bought RVs last year in September/October due to losing homes). They did have a bang up November (Thor Retail Motor Homes Up 23% in November). They do have a moat as not that many RV manufacturers and they are pretty sheltered from foreign competition as too expensive to ship.

TTMI - TTM Technologies. Says they make circuit boards. Sure seems like a commodity to me. EBIT has gone up nicely in past 5 quarters from 6m to 16m. They just got a unit from Tyco with new customers. MF sure likes them: (TTM: Excellence Undiscovered). Sure seems like a Cramer Triple Buy!

VCI - Valassis Communications. They provide marketing services. Sounds like junk mail and things hung on your front door handle. Pre Internet stuff. This is a much hated stock, has dropped from $30 to $14 this year. They are in the midst of buying a competitor. Often after these deals close, the purchaser goes up as short positions are unwound. EBIT has been in a steday tailspin going from 185m to 140m in past 5 years. Next.

WCC - Wesco Intl. All kinds of electrical supplies like circuit breakers, transformers, meters etc. Sounds a bit like LMS. Past 12 months EBIT is 270m and growing steadily. Was only 100m in 2004 and 150m in 2005. Hmm, another stroing candidate.

WSTL - Westell Technologies. They make telephone equipment. I know, Yawn. Nothing exciting. I think I can say, "next".

Recap ranking:
SHOO
TTMI
WCC
LMS
OFLX
THO
BRL
SCSS
NOOF
HAL
DGX
KSWS
VCI
WSTL