Boring Portfolio Report
ANN ARBOR, Mich. (Dec. 20) -- As if these last few days before Christmas
were not hectic enough, stocks added some extra excitement this week. Total
trading volume on the NYSE for the past five days totaled 2.67 billion shares,
easily making it the busiest week in market history. Whoa!
On Friday, the Dow rose 11 points in a choppy, triple-witching session that
was itself the third busiest day on record. For the week, the Dow gained
2.8%, as did the S&P 500, which was up 0.42% today. Over on the Nasdaq,
things were no less frenetic, but the result was less upbeat. The Naz fell
7 points (-0.56%) on the day but managed a 0.28% gain for the week.
The Boring Portfolio was, well, boring. It lost a grand total of $50 (-0.09%)
on Friday, not counting any accumulated interest on $10,652 socked away in
the kitty. For the week, the Borefolio rose 0.80%.
Four Boring stocks advanced, while three declined and one (Cisco) was "unch."
Borders Group booked a $3/4 gain to extend its leading position in the Borefolio.
Apparently news has leaked out in advance of my trip to the home-base Ann
Arbor store to begin my Christmas shopping early tomorrow.
Carlisle Companies, one of the Boring holdings that quietly adds a fraction
here and a fraction there, rose two bits. Late today the company announced
that at a special meeting on Friday shareholders approved an increase from
25 million to 50 million in the number of authorized shares of common stock,
thereby enabling to company to effect a two-for-one stock split. The record
date for the split is January 2.
Green Tree grew a quarter, also. The company reported that it filed a shelf
registration with the Securities and Exchange Commission to sell up to $3
billion in manufactured housing contract pass-through certificates. When
combined with a previous registration, Green Tree will have a total offering
of up to $5.3 billion of the securities available for sale. Mo' money for
Green Tree.
Shares of Oracle Corp. managed a nice $1 1/8 gain on strong volume of 7.3
million shares. I spotted no relevant news. There was no news on Solectron
or Oxford Health, either. Both stocks fell today, on below-average volume.
Prime Medical slipped $3/8, also on below-average volume. I received a copy
of a report on the company that Bharat Pandya at Southcoast Capital prepared
a couple of days ago. Borefolio followers may recognize Dr. Pandya's name,
as I've availed myself of his deep knowledge of Prime Medical from time to
time.
Pandya continues to rate the stock a "strong buy" for both the short and
the long term. In this latest report, he establishes a new EPS estimate for
1998 of $0.91, fully-taxed. His 1997 estimate remains at $0.68, fully-taxed
(or $0.72 nominally).
With EPS for 1996 expected to come in at $0.46 on a fully-taxed basis, Pandya's
estimates translate into 41% compounded annual growth in EPS over the coming
two years. In light of the fact that the stock is currently trading at less
than 17-times projected EPS for next year, Pandya is hardly climbing out
on a limb by characterizing the stock as "undervalued."
According to Pandya's model, Prime Medical should break the $100 million
mark for revenues in 1997. That is despite the fact that Pandya does not
expect the recently announced partnership with EDAP Technomed, manufacturer
of the Prostatron for treatment of benign prostatic hyperplasia, to have
any material impact on revenues in '97. (And, no, Prostatron is *not* the
name of one of the PowerRangers.)
As Pandya points out, an outcomes database on Prostatron treatments must
be compiled before most medical insurance policies will reimburse for the
treatment. That's where Prime Medical's established relationships with 25%
of all practicing urologists in the U.S. will come in handy.
Pandya's revenue and earnings projections coincide closely with those offered
by Pru analyst Ken Bohringer. Bohringer projects EPS of $0.70 for 1997, based
on expected revenues of $105.5 million, and he offers $0.90 as his 1998 EPS
estimate. Bohringer has set a near-term target price of $19. That's right
in line with my $18 1/2 target that I've noted here in the past.
Finally, the Borefolio may become a little more, shall we say, energetic
next week, as I've decided to add 100 shares of Tidewater, Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TDW)") else Response.Write("(NYSE: TDW)") end if %>
to the mix. Based in "Nawlins" (where freighters apparently belly right up
to the bar at the dockside Hilton when the crew needs refreshments), Tidewater
is a leader in the red-hot oilfield services group.
Roughly 85% of the company's revenues come from its Tidewater Marine division.
With a fleet of approximately 650 vessels, Tidewater Marine is the world's
largest provider of offshore supply vessels and marine support services.
The division operates in most of the significant offshore oil and gas exploration
and production regions of the world, towing mobile drilling rigs and equipment,
transporting supplies and personnel, supporting pipelaying and other offshore
construction activities -- stuff like that.
The balance of Tidewater's revenues come from Tidewater Compression, which
provides natural gas and air compression equipment and services, primarily
to the energy industry. With a fleet of approximately 2,800 compressors,
Tidewater Compression operates one of the largest rental fleets of gas
compressors in the U.S. The compressors are used primarily to boost the pressure
of natural gas from the wellhead into gas gathering systems, into nearby
gas processing plants, or into high pressure pipelines.
As a supplier to hydrocarbon energy producers, Tidewater brings to mind Peter
Lynch's story of the companies that sold shovels and food to the miners during
the California Gold Rush -- and ended up making more money than the miners
did. My objective in buying Tidewater is to provide the Borefolio with some
exposure to the number one group in Value Line's list of leading industries,
ranked in terms of recent share price appreciation. I also wanted to select
a company that did not have a smudged environmental track record, and Tidewater
passes in that regard according to my research.
Beware, however: the oil patch is a volatile place. Stocks can rise or fall
rapidly, depending upon global oil and gas prices, the weather, international
conflicts -- lots of things. If such excitement doesn't fit with your tastes,
TDW may not be for you. On the other hand, the stock is one of the comparatively
less risky ones in its group, its valuation has not gushered as many others
have, and the company's financial underpinnings are better than its peers.
My full "buy" report is available elsewhere in the Boring Portfolio section
of The Motley Fool.
Do have a great week-end -- and try to maintain your poise and inner tranquility
should you venture into the malls. I'll try, believe me. Really.
Friday, December 20, 1996
Stock Change Bid
--------------------
BGP + 3/4 35.38
CSL + 1/4 58.38
CSCO --- 65.00
GNT + 1/4 39.25
ORCL +1 1/8 43.25
OXHP -1 1/8 57.50
PMSI - 3/8 11.13
SLR -1 1/4 55.50
Day Month Year History
BORING -0.09% -3.14% 15.98% 15.98%
S&P 500 +0.42% -1.08% 20.47% 20.47%
NASDAQ -0.56% -0.31% 23.79% 23.79%
Rec'd # Security In At Now Change
2/28/96 200 Borders Gr 22.51 35.38 57.14%
2/2/96 200 Green Tree 30.39 39.25 29.17%
6/26/96 100 Cisco Syst 53.90 65.00 20.59%
5/24/96 100 Oxford Hea 48.02 57.50 19.73%
8/13/96 100 Carlisle C 52.65 58.38 10.87%
3/8/96 400 Prime Medi 10.07 11.13 10.49%
10/15/96 100 Solectron 54.52 55.50 1.79%
11/21/96 100 Oracle Cor 48.65 43.25 -11.10%
Rec'd # Security In At Value Change
2/28/96 200 Borders Gr 4502.49 7075.00 $2572.51
2/2/96 200 Green Tree 6077.49 7850.00 $1772.51
6/26/96 100 Cisco Syst 5389.99 6500.00 $1110.01
5/24/96 100 Oxford Hea 4802.49 5750.00 $947.51
8/13/96 100 Carlisle C 5264.99 5837.50 $572.51
3/8/96 400 Prime Medi 4027.49 4450.00 $422.51
10/15/96 100 Solectron 5452.49 5550.00 $97.51
11/21/96 100 Oracle Cor 4864.99 4325.00 -$539.99
CASH $10651.57
TOTAL $57989.07
Transmitted: 12/20/96