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Flies in the Ointment

Recs

9

January 10, 2010 – Comments (6) | RELATED TICKERS: FOSL , STE , TNL.DL

 

We had several e-mails over the recent holidays asking what we did with research for companies we had decided not to pursue and would we consider sharing that research with others.

Unlike most folks, we do not use stock screens. We see something on the web, or read something in a periodical, or are asked about a particular industry sector and we take a look. Regardless of how we come up with the name of a company, all of our research begins with a Raw Value worksheet.

From there, a determination is made if additional research is warranted at that time. If it is, we continue with our research, often going back 10 years of more, in an effort to determine reasonable financial averages. If it isn't the related worksheets and any associated notes are archived for future use.

With that said, please find links to some of the Raw Value worksheets we have archived over the past several weeks.

As always, we remind everyone that our worksheets are a starting point for your continued research and not a jumping off point for the purchase of a security.

Wax

Lincoln Educational Services Corporation (Nasdaq: LINC) - Our 5 year hold Reasonable Value estimate for the company based on fiscal 2008 year end data is $28-$30. We note that approximately 50% of the financial metrics we focus on, were what we would consider investment quality. In addition, we anticipate at least an 18% reduction in our Reasonable Value estimate once fiscal 2009 financial data is released. For the Lincoln Educational Services Raw Value worksheet, please click here.

Fossil, Inc. (Nasdaq: FOSL) - Our 5 year hold Reasonable Value estimate for the company based on year end fiscal 2008 data is $58-$60. We note that approximately 80% of the financial metrics we focus on, were what we would consider investment quality. In addition, we anticipate at least a 17% reduction in our Reasonable Value estimate once fiscal 2009 financial data is released. For the Fossil Raw Value worksheet, please click here.

iGATE Corporation (Nasdaq: IGTE) - Our 5 year hold Reasonable Value estimate for the company based on year end fiscal 2008 data is $10-$12. We note that approximately 70% of the financial metrics we focus on, were what we would consider investment quality. In addition, we anticipate at least a 21% reduction in our Reasonable Value estimate once fiscal 2009 financial data is released. For the iGATE Raw Value worksheet, please click here.

STERIS Corporation
(NYSE: STE) - Our 5 year hold Reasonable Value estimate for the company based on year end fiscal 2009 data is $60-$62. We note that approximately 70% of the financial metrics we focus on, were what we would consider investment quality. In addition, we anticipate at least a 25% reduction in our Reasonable Value estimate as fiscal 2010 draws to a close. For the STERIS Raw Value worksheet, please click here.

Bally Technologies, Inc. (NYSE: BYI) - Our 5 year hold Reasonable Value estimate for the company based on year end fiscal 2009 data is $70-$75. We note that approximately 60% of the financial metrics we focus on, were what we would consider investment quality. In addition, we anticipate at least a 25% reduction in our Reasonable Value estimate as we move further into fiscal 2010. For the Bally Raw Value worksheet, please click here.

Snap-on, Inc. (NYSE: SNA) - Our 5 year hold Reasonable Value estimate for the company based on year end fiscal 2008 data is $100-$102. We note that approximately 43% of the financial metrics we focus on, were what we would consider investment quality. In addition, we anticipate at least an 21% reduction in our Reasonable Value estimate once fiscal 2009 financial data is released. For the Snap-on Raw Value worksheet, please click here.

CareFusion Corporation (NYSE: CFN) - Our 5 year hold Reasonable Value estimate for the company based on year end fiscal 2009 data is $54-$56. We note that approximately 72% of the financial metrics we focus on, were what we would consider investment quality. For the CareFusion Raw Value worksheet, please click here.

Technitrol, Inc. (NYSE: TNL) - Our 5 year hold Reasonable Value estimate for the company based on year end fiscal 2008 data is $10-$12. We note that approximately 36% of the financial metrics we focus on, were what we would consider investment quality. In addition, we anticipate at least an 18% reduction in our Reasonable Value estimate once fiscal 2009 financial data is released. For the Technitrol Raw Value worksheet, please click here.

6 Comments – Post Your Own

#1) On January 10, 2010 at 10:20 PM, Tastylunch (29.52) wrote:

Wax

what's the rationale behind never using screens?

I mainly find ideas in a manner similiar to yours, but I do find a weekly/daily 2-3 minute screen is a good wya to find plays I wouldn't normally encounter through more organic means.

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#2) On January 11, 2010 at 5:26 AM, wax (97.63) wrote:

Tasty;

The reason is because screens use metrics based on, for lack of a better term, concensus data. A good example is earnings. Most websites factor depreciation into earnings. We don't.

To us, depreciation is part of the statement of cash flows, and that's where we leave it, not as an adjustment to earnings.

Impairment is another example. While it is apart of earnings for tax purposes, it isn't part of earnings for our purposes so we make adjustments for it.

Screens simply don't provide that sort of information. Besides, it's a lot more fun spending time in CAPS seeing what folks are picking.

Wax

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#3) On January 11, 2010 at 10:49 PM, FreeMortal (29.61) wrote:

Interesting.  Thanks for sharing your research!

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#4) On January 12, 2010 at 12:18 AM, xserver (< 20) wrote:

LINC looks interesting.  Check out COCO as well, if you haven't already.

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#5) On January 12, 2010 at 5:09 AM, wax (97.63) wrote:

xserver;

Corinthian Colleges, Inc. (Nasdaq: COCO) - Our Our 5 year hold Reasonable Value estimate for the company based on year end fiscal 2009 data is $28-$31. We note that approximately 65% of the financial metrics we focus on, were what we would consider investment quality. In addition, we anticipate at least a 22% reduction in our Reasonable Value estimate as fiscal 2010 gets closer to fiscal 2011. For the Corinthian Colleges Raw Value worksheet, please click here.

Wax

 

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#6) On January 12, 2010 at 5:10 AM, wax (97.63) wrote:

FreeMortal;

You are most welcome. I hope it helps.

Wax

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