Use access key #2 to skip to page content.

MagicDiligence (< 20)

November 2009

Recs

1

Magic Formula Weekly Roundup 11/28

November 28, 2009 – Comments (2) | RELATED TICKERS: DELL.DL , JEC , PDLI

Weekly roundup of stocks moving in and out of the Magic Formula Investing screen.

Read the full article at:

http://www.magicdiligence.com/articles/weekly-roundup-2009-11-28

(this article contains lists that do not format into CAPS)

Recs

6

Black Friday Holiday Gifts for Investors

November 27, 2009 – Comments (0)

It's Black Friday, time to start the holiday shopping. For any investors on your list (including yourself), here is a list of holiday gift ideas they will love.  [more]

Recs

4

MFI Stock Review: ITT Educational Services (ESI)

November 24, 2009 – Comments (2) | RELATED TICKERS: ESI , APOL , COCO

ITT Educational Services (ESI) is a for-profit education company, with over 79,000 students enrolled at its ITT Technical Institutes and Daniel Webster College, which was just acquired this past April. The company currently operates 112 ITT campuses, 9 learning centers, and 2 Daniel Webster locations, as well as online programs. Historically, ITT was focused on short, 2-year, technology-related degree programs. But more recently, ITT has expanded into both non-technology areas and higher level degrees. Currently, over 70% of locations offer bachelor's degree programs in a studies ranging from Criminal Justice to Business Administration. While most students are still in 2-year degree programs, slightly over a quarter of enrollment is in 4-year bachelor degree studies.

For-profit education is a great business that has been broadly sold off over the past month or so. The reasons for this are cloudy, to be sure. Industry leader Apollo Group (APOL) announced an informal SEC inquiry, and widely read trade publications like Barron's and Bloomberg have run negative articles on the industry. 3 of the top publicly traded for-profits are all currently on the Magic Formula screen (ESI, APOL, and Corinthian Colleges - COCO). It seems like an irrational sell-off. All of these companies are growing sales, profits, and enrollments by 20% or more, as high unemployment has driven many thousands of people back to school to improve their education. In ITT's case, sales grew 34% and net profit 50% year-over-year in the just completed third quarter. For 2010, the company is expecting another 25% increase in sales and profits. This puts ITT's forward earnings yield at 16%, which is extremely cheap for the quality we are buying here.  [more]

Recs

2

Magic Formula Weekly Roundup 11/21

November 21, 2009 – Comments (0) | RELATED TICKERS: AHCI.DL , BKE , DRC

Weekly roundup of stocks moving in and out of the Magic Formula Investing screen.

Read the full article at:

http://www.magicdiligence.com/articles/weekly-roundup-2009-11-21

(this article contains lists that do not format into CAPS)

Recs

2

Magic Formula Stocks in Forbes Top 200 Small Companies 2009

November 19, 2009 – Comments (1) | RELATED TICKERS: AFAM , ARC , BOLT

Every year, Forbes creates a list of the top 200 best small companies in America. Which current Magic Formula stocks are part of the list, and which ones have been a part of MFI in 2009?  [more]

Recs

2

MFI Stock Review: Time Warner (TWX)

November 17, 2009 – Comments (1) | RELATED TICKERS: TWX , FOX , VIA-B.DL

Time Warner (TWX) is one of the largest media conglomerates in the world, with four distinct operating units. Cable Networks is the largest portion of the company, driving about half of operating earnings. This unit runs some of the most widely distributed and largest audience channels in cable, including TBS, TNT, CNN, and HBO. AOL, representing just under a quarter of profits, is the infamous Internet company that derives most of its income from dial-up service, but also has a sizable advertising business and operates numerous highly-trafficked sites like MapQuest and AIM (AOL Instant Messaging). Filmed Entertainment is the movie arm, consisting of the Warner Brothers and New Line Cinema studios, providing about 17% of profits, although this is a cyclical business. Finally, Publishing, representing the remaining 10% or so of profits, produces such well known and widely circulated magazines as Time, People, Sports Illustrated, and Fortune.

The Time Warner of today is significantly different than the Time Warner of just 10 months ago, as Time Warner Cable (TWC) was spun off in March. Before the spin, TWC contributed close to 25% of sales. The Time Warner of 3 months from now will be significantly different from today, as AOL will be spun off in December. That is quite a transformation in a single year, with the company jettisoning over a third of total revenues! New CEO Jeffrey Bewkes, a veteran of Time Warner's cable channel arm, has wasted no time in the long overdue breakup. The goal is to transition Time Warner into more of a pure play on content, similar to MagicDiligence Top Buy Viacom (VIA-B)  [more]

Recs

1

Magic Formula Weekly Roundup 11/14

November 14, 2009 – Comments (0) | RELATED TICKERS: GRMN , BKE , KBR

Weekly roundup of stocks moving in and out of the Magic Formula Investing screen.

Read the full article at:

http://www.magicdiligence.com/articles/weekly-roundup-2009-11-14

(this article contains lists that do not format into CAPS)

Recs

4

Magic Formula Buyouts and Bankruptcies 2009

November 12, 2009 – Comments (0) | RELATED TICKERS: RX.DL2 , TRA.DL , AMSWA

It should come as little surprise that many stocks that make it into the Magic Formula Investing (MFI) screen are attractive acquisition targets. Many, if not most, are good businesses selling at cheap prices, exactly what the screen is designed to find. When you have quality selling cheap, not only individual investors but business managers, both public and private, take notice as well. Particularly if the screened business is one that is a current or potential competitor, or a business that nicely compliments current operations, it makes sense to acquire it at a favorable price. When this happens, investors reap big rewards in short periods of time.

Of course, there is the other side of the coin too - declining businesses or heavy cyclicals can find their way onto the screen as well, usually well into the downside. With these firms we need to be very careful - too much debt can land them in bankruptcy court. Unfortunately, MFI has turned up a few of these as well. Let's take a look at some individual "buyouts and bankruptcies" on the MFI screen in 2009.  [more]

Recs

6

MFI Stock Review: Sturm, Ruger & Company

November 10, 2009 – Comments (0) | RELATED TICKERS: RGR , SWHC

Sturm, Ruger & Company (RGR) is a firearms manufacturer that makes and markets four different kinds of firearms: rifles, shotguns, pistols, and revolvers. The company also produces investment castings for third-party sale when there is excess capacity not needed for its own products. Products are sold mainly to independent wholesale distributors, who then resell to retailers primarily in hunting and sporting markets. Ruger is basically a U.S.-only company, with less than 4% of sales coming via export.

Ruger's appearance on the Magic Formula screen is a classic case of fooling the parameters due to a cyclical situation - this time the widely reported "gun boom" that started in the forth quarter of 2008 right after the election of President Obama and has continued through most of 2009. Many were worried that the new administration would re-enact the assault weapons bans of the mid-1990's. This fear combined with the prospect of another Great Depression leading to widespread crime and desperation created a perfect storm for firearms sales. Gun shows were packed, with lines wrapping out the doors and down the streets. Ammunition at many suppliers was sold out. Both Ruger and other public gun maker Smith & Wesson (SWHC) reported unit demand doubling from normal levels.  [more]

Recs

2

Magic Formula Weekly Roundup 11/7

November 07, 2009 – Comments (0) | RELATED TICKERS: APOL , CBST , CH

Weekly roundup of stocks moving in and out of the Magic Formula Investing screen.

Read the full article at:

http://www.magicdiligence.com/articles/weekly-roundup-2009-11-07

(this article contains lists that do not format into CAPS)

Recs

4

MFI Stock Review: Cephalon (CEPH)

November 05, 2009 – Comments (2) | RELATED TICKERS: CEPH , TEVA , ACT

Cephalon (CEPH) specializes in bio-pharmaceuticals that target central nervous system (CNS) disorders, pain treatments, and oncology (cancer). The star product over the past few years has been Provigil, a treatment for sleep disorders, that has accounted for about half of sales. Other significant drugs in the portfolio are Fentora and Actiq (the former a replacement for the latter), which account for nearly 25% of sales. Fentora and Actiq are designed to treat cancer-related pain. The final meaningful drug is Treanda, a treatment for leukemia and lymphoma, although Cephalon also has numerous other smaller formulations that target conditions such as seizures and spasms.

Cephalon's growth will largely be tied to its newest product: Nuvigil, a replacement for Provigil which is facing imminent generic competition and loses patent protection in the next few years. Nuvigil has several advantages over the older drug, including fewer side effects and better effectiveness. Best of all for Cephalon, the drug was just launched this summer and offers over 10 years of patent protection. Nuvigil is set to be the engine of growth, particularly through expanded indications for jet lag, bipolar depression, schizophrenia, Parkinson's disease, and others. If all goes to plan, Cephalon will be able to migrate Provigil patients into Nuvigil, protecting them from competitors, and gain new patients through the expanded label. Things are going well so far: Nuvigil has already collected 19% market share in 5 months, and the FDA has fast-tracked it for jet lag approval. Some analysts believe Nuvigil has huge blockbuster potential for a company of Cephalon's size, with a potential $2 billion dollar peak market.  [more]

Featured Broker Partners


Advertisement