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December 2009



Trout Cabbage Pasta

December 29, 2009 – Comments (2) | RELATED TICKERS: DRI

They own Red Lobster, Olive Garden, Longhorn Steakhouse, The Capital Grille, Bahama Breeze, and Seasons 52. In fiscal 2009 they had sales in excess of $7 billion, an almost 10% increase over fiscal 2008, and earned over $4 per share. They are Darden Restaurants, Inc. (NYSE: DRI).

Financial information contained in this report, is based on the company's most recent Form 10-K filing for fiscal year ending May 31, 2009, as filed with the Securities and Exchange Commission on July 24, 2009, and as amended on November 11, 2009.

Short-Term Investment
Based on a recent close of $35.93, there is an approximate 15% upside to first resistance as compared to an approximate 5% downside to first support. While we are not traders, based on the trading range that the stock has been in over the past nine months, a short-term trade with very tight stops may not be a bad play at this point.

Long-Term Investment
We believe that a reasonable value estimate for the stock is in the $64 range, and would add the stock to our portfolio at something less than $21. Why the large margin of safety?

At issue for us is the company's current ratio of 0.5, the company's quick ratio of 0.09, and the company's cash ratio of 0.06.  [more]



Where's Liz?

December 27, 2009 – Comments (2) | RELATED TICKERS: KATE

We were asked yesterday what we thought of apparel maker Liz Claiborne, Inc. (NYSE: LIZ).

Our thoughts are based on the company's most recent Form 10-K filing for fiscal year ending December 31, 2008, as filed with the Securities and Exchange Commission on March 4, 2009.

Short-Term Investment
To us, there is little short-term investment incentive for this stock. With first resistance at $5.32 and a recent close of $5.28, we simply aren't interested in risking $5+ to make $0.04.

Long-Term Investment
We believe that a reasonable value estimate for the stock is in the $6-$7 range, and would add the stock to our portfolio at something less than $2.25.

At issue for us is that company's debt, which at the end of fiscal 2008, was $743 million, more than 6 times EBITDA, and near 1.5 times Net Fixed Assets. While the company did reduce debt during fiscal 2008 by $118 million, management also authorized the payment of $21 million in cash dividends, something, in our opinion, higlights the lack of management's entreprenurial spirit. At the very least, management should have replaced a portion of the $48 million in cash spent on interest payments on the company's debt.

Lastly, we note that for company ended fiscal 2008 with an equity value of ($2.27), tangible book value of $2.65, and shareholder equity of $5.30, none of which makes us fans of the stock at this time.


For the Liz Claiborne worksheet, please click here. To see what the rest of the CAPS Community has to say, please click here.   [more]



Raw Value Worksheets - Week Ending 12.27.09

December 25, 2009 – Comments (2) | RELATED TICKERS: COCOQ.DL , WDC , IVC

We are continually asked to post some of the worksheets we update during the course of any given week, and to recommend stocks based on our worksheets.

While we are happy to make some of our worksheets available, we simply do not recommend stocks.

With that said, please find below, links to some of the worksheets we created over the past several weeks.


Corinthian Colleges, Inc. (Nasdaq: COCO)
For the Corinthian Colleges worksheet, please click here.

Western Digital Corporation (NYSE: WDC)
For the Western Digital Corporation worksheet, please click here.

Polo Ralph Lauren Corporation
For the Polo Ralph Lauren Corporation worksheet, please click here.

Invacare Corporation (NYSE: IVC)
For the Ivacare Corporation worksheet, please click here.

Perrigo Company (Nasdaq: PRGO)
For the Perrigo Company worksheet, please click here.   [more]



Micrel - Technological Innovation?

December 20, 2009 – Comments (2) | RELATED TICKERS: MCRL.DL

Micrel, Inc. (Nasdaq: MCRL), is a leading manufacturer of IC solutions for the worldwide analog, Ethernet and high bandwidth markets. The company's products include high performance analog, power, advanced mixed-signal and radio frequency semiconductors; high speed communication, clock management, Ethernet switch and physical layer transceiver integrated circuits. These products address a wide range of rapidly growing end markets including cellular handsets, portable and enterprise computing, enterprise and home networking, wide area and metropolitan area networks and industrial equipment.

Founded in 1978, Micrel has posted year-over-year revenue growth in 23 out of 26 years and been profitable in 25 of its 26 years of its existence. The company has consistently generated positive cash flows since going public in 1994.

Corporate headquarters and state-of-the-art wafer fabrication facilities are located in San Jose, California with regional sales and support offices and advanced technology design centers situated throughout the Americas, Europe and Asia. In addition, the company maintains an extensive worldwide network of sales representatives and distributors.

Micrel utilizes both its own world-class wafer fabrication facility, which contains a broad array of process technologies that allow Micrel to quickly develop and introduce state-of-the-art products. The company combines its expertise in fabrication technology with world-class design teams to develop and produce these high performance products to provide our customers with the solutions they need to compete in today?s fast paced technology industry.

Micrel first achieved ISO 9001 registration on March 31, 1997, and in December of 2004, the company's wafer fabrication facility was certified to ISO14001:1996, the International Environmental Management System Standard. The goal of the environmental management system is to ensure regulatory compliance and to reduce environmental impact through waste reduction and recycling.

Micrel is committed to its customers' success. The company's outstanding sales, customer service and technical support organizations, together with its manufacturing operations, are structured specifically to address customer needs and requirements. Micrel is known throughout the industry for its service orientation and for being, "fast on its feet".

The company competes with Linear Technology Corporation, Maxim Integrated Products, Inc., National Semiconductor Corp., Texas Instruments, Freescale Semiconductor (formerly Motorola), Intersil, Fairchild Semiconductor, Advanced Analogictech, Semtech, ON Semiconductor, Analog Devices, Vitesse Semiconductor Corp., Integrated Device Technology, Mindspeed, Broadcom Corp. and Marvell Technology Group Ltd.

For the Micrel worksheet, please click here.

wax  [more]



Worksheets From Downtown

December 16, 2009 – Comments (3) | RELATED TICKERS: BYI.DL , AOS , NVR

I received several more requests for Raw Value Worksheets over the weekend. I also had some e-mails asking how to use them.

Each Raw Value Worksheet is intended to be used as a starting point for further research, and as such, how to use them is determined by the reader.

At Wax Ink for example, we use them as a reference guide to highlight areas of the financial statement we think are weak, or require continued research.

Take Bally Technologies for instance.

The Raw Value Worksheet for Bally highlights that more than 22% of the company's Total Assets are made up of Goodwill and Intangibles. In addition the Raw Value Worksheet also highlights that company has a Debt to Net Fixed Asset ratio of 1.22.

The Raw Value Worksheet has highlighted an area that requires deeper research in order to understand the company's Asset make-up and Debt collateralization.


NVR, Inc. (NYSE: NVR) For the NVR worksheet, please click here.

A.O. Smith Corporation (NYSE: AOS) For the A.O. Smith worksheet, please click here.

TeleTech Holdings, Inc.
(Nasdaq: TTEC) For the TeleTech worksheet, please click here.

Odyssey HealthCare, Inc. (Nasdaq: ODSY) For the Odyssey HealthCare worksheet, please click here.

Bally Technologies, Inc. (NYSE: BYI) For the Bally Technologies worksheet, please click here.  [more]



Christmas Worksheets

December 13, 2009 – Comments (8) | RELATED TICKERS: PRX.DL2 , HLS , GXDX.DL

I received quite few e-mails last week requesting worksheets on stocks that were listed in an article posted at the AAII site. (subscription required)

The article titled The First Cut: Attractively Priced Share Buyback Stocks contained the results of a stock screen that was intended to highlight exchange traded companies with significant positive earnings surprises that had below average forward price to earnings ratios, and were followed by at least four analysts.

So in response to those folks that requested worksheets, here you go. Perfect weather to you all!


Innophos Holdings, Inc. (Nasdaq: IPHS) For the Innophos Holdings worksheet, please click here.

Par Pharmaceutical Companies, Inc. (NYSE: PRX) For the Par Pharmaceutical worksheet, please click here.

HealthSouth Corporation (NYSE: HLS) For the Healthsouth worksheet, please click here.

Genoptix, Inc. (Nasdaq: GXDX) For the Genoptix worksheet, please click here.

Cabela's Inc. (NYSE: CAB) For the Cabela's worksheet, please click here.




More Raw Value Worksheets

December 11, 2009 – Comments (2) | RELATED TICKERS: FSYS.DL , SCI , NDN.DL2

Over the past couple of weeks, I have been asked for Raw Value Worksheets on several companies. I finally got an opportunity this week to get those done.

I hope everyone has a great weekend and that the weather where you are is perfect! Thanx for the e-mails and the encouragement.


Fuel Systems Solutions, Inc. (Nasdaq: FSYS) For the Fuel Systems worksheet please click here.

OSI Systems, Inc.
(Nasdaq: OSIS) For the OSI Systems worksheet please click here.

Service Corporation International (NYSE: SCI) For the Service Corporation worksheet please click here.

99 Cents Only Stores (NYSE: NDN) For the 99 Cents Only Stores worksheet please click here.

NewMarket Corporation (NYSE: NUE) For the NewMarket Corporation worksheet please click here.

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