The Next Tranche - Part 3

This is my third blog thinking Outloud about stocks I am considering for my November 15th MFI tranche. The due date is approaching quickly. My actual final choices will likely be a game day decision, based upon these reviews, whee the prices go from here, new information and perhaps new stocks.

GTIV - this is a stock I have thought about buying 100 times. They got exceedingly cheap when they bought odessey healthcare (probably overpaid) and had quite a bit of debt. They have managed their way through that. Two years ago, they did drop below four dollars and they now trade north of $12. They are in the business of providing home healthcare. This entire industry came under fire for padding bills to Medicare or at the very least making unnecessary visits.  While you might think that healthcare to the elderly in a growth industry given the demographics of our country, the fact that they rely on Medicare and Medicaid for a majority of revenues could be problematic.  GTIV bought a traditional hospital system on September 19th to try to diversify away from being too reliant on Medicare.   The stocks popped up ten percent that day, even though they were the buyer and were taking on more debt.   After reading everything,my view is that this is a stock with quite a bit of risk. If the price were to drop 15 to 20%, I would consider it.

MNDO - this is an extremely small Israeli company that provides services to the telecom industry. They only have a 31 million market cap. The appeal is that they have 17 million of cash on hand and pay a nice annual dividend.  I read the latest earnings call and the CEO said a couple things that bothered me.  First they have a plan of active pursuit of acquisitions. That can be a great unknown as the fear is they will over pay or not have a successful integration.  The second is he says "in the short or medium term, the net income is expected to be significantly lower than in prior years. ". Not really what I am looking for. I will take a pass.

MSN - No this is not the Microsoft network. Very different, this is Emerson radio.  This is actually an interesting company, albeit you might think radios are a dying industry. They are also very very small, with a 54 million market cap. They actually have 61 million in cash. That is right, a market cap less than cash.  My first thought was, they must be losing money.  But they are eking out a profit.  I cannot see how the stock price can drop much.  One issue for me is that even though I am far from a big investor, I might have trouble buying or selling shares. It is not very liquid.  Today only 11,000 shares were traded at $2 a pop.  Just $22,000.   Reading through their last press release, one major issue is that they are very reliant on just a couple of customers. Walmart is discontinuing their microwave line up, and that is almost 30% of their annual sales.  I think I have read enough. Unless they get some new customers, this might be a company worth more in runoff than as a going concern.

NDZ - this is an interesting stock that I first saw on Eds Talking Stock.  They provide products and services to the medical industry (provider of isotopes for medical imaging). The first thing that caught my eye was their huge stockpile of cashola.  They are a $520 million company  and they have 280 million of cash.  They are profitable, but it is a bit deceptive as they recently sold a business for 162 million (guess that explains all the cash).  I guess the big overhang here is that they need isotopes for raw material for their products. Their deal with Atomic Energy of Canada ends in 2016, and if they do not find an alternate source, that could be problematic.  Evading through some materials, it appears they have been involved in several ugly, prolonged and expensive legal battles. It appears those have been concluded and the company can start focusing on the future rather than being immersed in courtrooms.  This is a stock with risk, as obviously obtaining isotopes is not easy. But risk/ reward seems reasonable. NDZ will make the next round.

NOC - this is Northrup Grumman. You might argue I am a year too late.  Over the past year NOC is up 40%. Many of the defense names sold off late last year due to fears of fiscal cliff and sequestration.  Neither were as bad as expected.  Northrup looks like a solid play to me.  They pay a 2.5% dividend and have a pretty dependable earnings stream.  They are (like many many companies) struggling to grow the top line.  I would not call them cheap, perhaps I would call their price reasonable. I will carry NOC to the next round, but it suspect that unless they miraculously get cheaper I will have better choices.