Lots of New Stocks

You gotta hand it to middle August, always seems to be lots of new stocks on the screens. There is certainly a seasonality to the screens, they obviously have their largest turnovers right after earnings season.

There are no fewer than 5 new stocks on the 30 greater than $50m screen: BKE, GTLS, SEPR, PRIM and PVSW. They will all be added to my mechanical portfolio, which continues to kick butt (first column is the mechanical results, 2nd column is S&P 500 and third is difference):

Totals	23.6%	-1.5%	25.1%
Closed	-18.0%	-32.8%	14.8%
Open	45.7%	15.2%	30.5%

I am tempted to buy all 5. I will definitely buy BKE. Let us look at the 5 companies. I will not over-analyze, the mechanical approach seems to be working on its own merit. I just want to make sure none of them don't belong, like RST and BPI (which have both actually done ok anyway... RST is down 5% and BPI is up 23%).

First the raw statsitics:

		bke	sepr	prim	pvsw	gtls
+	Operating Income After Depreciation	173.59	273.08	42.35	6.71	139.45
-	Minority Interest - Income Account	-	-	-	-	0.36
=	Income for Calculation	173.59	273.08	42.35	6.71	139.09
	Diluted Shares Outstanding	47	114	33	17.914	29.014
	Share Price	26.54	18.12	6.95	5.00	20.73
+	Market Cap Calc	1,234.67	2,062.56	228.20	89.57	601.46
+	Preferred Capital	-	-	-	-	-
+	Debt in Current Liabilities	-	186.09	7.63	-	-
+	Long-Term Debt	-	99.84	25.32	-	243.18
	Cash and Short-Term Investments	189.66	503.13	83.20	43.41	205.36
-	Excess Cash	189.66	429.13	69.67	41.59	205.36
=	Enterprise Value	1,045.01	1,919.37	191.49	47.98	639.28
+	Property Plant and Equipment - Net	126.98	119.36	28.18	1.47	105.79
+	Receivables	3.79	135.50	95.48	7.85	96.57
+	Inventories	82.79	66.69	20.87	-	86.82
+	Other Current Assests	18.39	166.89	9.98	2.05	19.76
+	Working Cash	-	74.00	13.53	1.82	-
-	Accounts Payable	39.21	27.87	48.47	5.37	41.46
-	Current Liabilities - Other	32.14	415.21	91.39	6.34	120.19
=	Invested Capital	160.60	119.36	28.18	1.47	147.29
	Earnings Yield	17%	14%	22%	14%	22%
	ROIC	108%	229%	150%	455%	94%

Obviously they all have strong Earning Yields and ROICs, otherwise they would not be in top 30. They all have excess cash and GTLS is the only one with any debt to mention.

Here is my quick snapshot:

BKE - This is a retailer I have been watching for a awhile. It was in the top 100 screen back in November of 2008 and surprisingly has gone virtually nowhere since then... which probably explains why it is now in the top 30. They are one of the few companies out there growing revenues and they expect the year ending January 2010 to be 14% above the prior year! They have a pristine balance sheet and even pay a snappy 3% dividend. I have generally steered clear of retail (GME is my exception), but have kicked myself numerous times for not pulling the trigger on TRLG which is up 108% since hitting the mechanical portfolio 2/28/09. Besides, they are headquartered in Nebraska of all places and my mother was raised in Central City Nebraska (which ironically was not that central nor that much of a city).

GTLS - I came this close (ok you can't see my fingers) to buying GTLS back in Maywhen it was about $12 a share. But they announced earnings and the stock "ran away" from me, though in hindsight it was still cheap. It is up 78% for the top 50/100 screen and amazingly has made the top 30 screen despite that move! Glancing at their profile, it looks like they manufacture parts for chemical and oil companies. So Businesses are their customers. Their sales have been a bit down, but their cost of goods has dropped about the same amount so profit hasn't dropped too much.

SEPR - I had never heard of this company. Interestingly, they are near their 52 week high and still making the list. They are a pharmaceutical company, with Lunesta being the one product I have heard of. I have three pharmas right now with FRX, PFE and ENDP (not counting my Chinese companies CMED and CSKI). They are certainly blowing and going. Their operating income has been shooting up sharply, past 5 quarters:

75.892

93.947

99.834

3.409

-0.886

They'll be on the list big time when the 3.4 is replaced next quarter by another 75 or whatever. They just upped guidance and expect to earn between $2.55 and $2.90 in 2009. That is a lot for an $18 stock with a strong balance sheet. I am tempted to buy them, though not sure I want 4 pharmas with all the ongoing healthcare debate. Hmm.

PRIM - hey, another company I had not heard of. This is a smaller company with limited analyst coverage, doesn't mean they can't be a good buy. They provide construction and engineering services. Their backlog is decreasing and they have a large project with Chevron on hold... due to a challenge from environmental groups. Not sure I want to buy these guys, until I get more visibility.

PVSW - another software company. I tend to like these, obviously have done very well on CKSW. They are a $5 stock. They have been in my top 50/100 mechanical portfolio since December and are up about 38%. They expect the 3rd quarter to be down about 10% from a year ago, that is a bit discouraging.

Well, I think I will likely buy SEPR and GTLS. I will almost certainly buy BKE.

Here is my chart for the week (remember the magenta line shows my results and the other two lines are the russell indices: