Today's Lunchtime News ooked at Spine-Tech and other companies which concentrate on products & processes that alleviate back pain. Finally, we've got a FoolWire on Diamond Shamrock, an oil refining company.You'll find all our Special Sections, FoolWires and earnings reports on either the Evening News or FoolWire & Special Reports screens. Enjoy!
DIAMOND SHAMROCK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DRM)") else Response.Write("(NYSE: DRM)") end if %>
800-475-6701 (access code: 317223)
Discussing the merger with Ultramar Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ULR)") else Response.Write("(NYSE: ULR)") end if %>
MICREL INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCRL)") else Response.Write("(Nasdaq: MCRL)") end if %> watched its stock soar $2 3/4 to $22 1/4 after UBS Securities released its analog industry report today. Though the contents of the report have not been made public, the analog integrated circuit maker's CEO, Raymond Zinn, theorized that a favorable take on DRAM (Dynamic Random Access Memory) prices in the report and heavy UBS-related trading were driving the stock up.
Shares of HEALTHCARE COMPARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HCCC)") else Response.Write("(Nasdaq: HCCC)") end if %> were bid up $2 5/8 to $43 1/8 after a glowing report by analyst Kimberly Purvis at Donaldson Lufkin & Jenrette indicated that the company has been providing medical cost containment services to a market underserved by other health maintenance organizations -- self-insured preferred provider organizations. The analyst also initiated coverage of the stock as a "buy."
ARRIS PHARMACEUTICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ARRS)") else Response.Write("(Nasdaq: ARRS)") end if %> shares jumped $1 1/4 to $13 1/4 after a favorable article appeared in the "Up & Down Wall Street" section of this week's Barron's. The column indicated that though Arris, like many small bio-tech firms, "has no earnings and seems in no immediate danger of reporting any," it has forged an impressive group of co-development partnerships with blue-chip drug manufacturers. The company is in the late stages of testing APC 366-A, a very promising asthma drug co-developed with BAYER AG <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BAYZY)") else Response.Write("(Nasdaq: BAYZY)") end if %>.
QUICT TAKES: CREATIVE TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CREAF)") else Response.Write("(Nasdaq: CREAF)") end if %> soared $1 5/8 to $5 3/4 on news that Merrill Lynch had upgraded stock of the computer soundboard maker from "buy" to "accumulate."... Shares of ULTRAMAR CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ULR)") else Response.Write("(NYSE: ULR)") end if %> were bid up $1 3/8 to $29 7/8 after the company announced it would acquire DIAMOND SHAMROCK INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DRM)") else Response.Write("(Nasdaq: DRM)") end if %> in a merger of gas station and oil refinery concerns... Shares of VLSI TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VLSI)") else Response.Write("(Nasdaq: VLSI)") end if %> jumped $15/16 to $15 15/16 after the company introduced an MPEG 2 audio/video decoder chip for use in digital set-top applications. The decoder will generate an analog television signal which is in full compliance with current standards... PHYMATRIX CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PHMX)") else Response.Write("(Nasdaq: PHMX)") end if %> popped up $1 to $21 1/2 after Smith Barney reiterated a "buy" rating for the physician management services company... TELCO SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TELC)") else Response.Write("(Nasdaq: TELC)") end if %> shares ran up $2 1/8 to $18 7/8 after Merrill Lynch upgraded the telecommunications equipment concern from "neutral" to "near-term accumulate"... News of a $625 million contract with the Air Force moved shares of EXIDE ELECTRONICS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XUPS)") else Response.Write("(Nasdaq: XUPS)") end if %> $3 1/2 to $12 5/8. The company produces systems which protect computers and electronic systems against loss of electrical power.
MOSSIMO <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MGX)") else Response.Write("(NYSE: MGX)") end if %>, the maker of fashionable activewear and sportswear, tumbled $7 to $34 today on news that the third quarter would not be as good-looking as its clothes. The company fell 11% on Friday and the reason became clear this morning when the company announced that earnings would fall substantially -- ironically, on much higher sales. The company identified bad purchasing decisions and a change in suppliers as the reasons for an earnings shortfall which will continue, but abate somewhat, in the fourth quarter.
GREENWICH AIR SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GASIA)") else Response.Write("(Nasdaq: GASIA)") end if %> hit an air pocket and dropped $2 5/8 to $25 3/4 as US AIR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: U)") else Response.Write("(NYSE: U)") end if %> told the company that it will not renew a $5.2 million-per-month contract with Greenwich due to dissatisfaction with the company's newly-acquired Aviall unit. While US Air's disappointment with Aviall results from service rendered before Greenwich took over the Dallas company, Greenwich expected the termination when they made the acquisition. It said it hopes to make up the lost business in the next 12 to 18 months.
The TEMPLETON RUSSIA FUND <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRF)") else Response.Write("(NYSE: TRF)") end if %> dropped $1 1/4 to $21 1/2 on news regarding the health of Russian President Boris Yeltsin. Yeltsin will have to wait for a planned heart transplant, being too weak to undergo the operation following a stroke he suffered earlier this summer. The West used to listen for the tell-tale playing of dirges on Soviet state radio to ascertain whether a leader had fallen. Now the West's death watch may focus on the shares of this closed-end fund instead.
QUICK CUTS: US FILTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: USF)") else Response.Write("(AMEX: USF)") end if %> gave back $2 1/8 to finish at $31 7/8 as an investor journal questioned the growth prospects for the waste-water treatment firm... VITALCOM INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COM)") else Response.Write("(Nasdaq: COM)") end if %> fell $1 1/8 to $4 3/8 on very large volume. The only news on the company concerned an investment group that acquired over 8% of the company... SPORT SUPPLY GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GYM)") else Response.Write("(NYSE: GYM)") end if %> was wrapped up and dropped for a loss today, closing down $3/4, at $6 1/4 after the maker and wholesaler of sports equipment reported negative net earnings Friday evening... TRUMP HOTELS & CASINO RESORTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DJT)") else Response.Write("(NYSE: DJT)") end if %> lost $1 5/8 to $25 1/8 on no appreciable news other than a report by the Indiana Gaming Commission, which reports winnings at the four casinos in the state. The win ratio at Trump was evidently below investor expectations.
FOOL ON THE
HILL
An Investment Opinion by Randy Befumo
(MF Templar)
Grade Point Average Logic
"If the job has been correctly done when a common stock is purchased,
the time to sell it is -- almost never."
Philip A. Fisher, Common Stocks and Uncommon Profits
In the year 2012, a government decree closed all of the world's stock markets. Shares of companies owned by the public could no longer trade. The newly-formed world government, backed by the Pork-Eating, Dog-Hating Revolutionary Front, bought every share of stock for the going price, turning world industry into a captive, state-owned fixture in one fell swoop. Investors, needless to say, were quite miffed by this turn of events and began to riot. In an effort to calm the population, but to retain the spoils of its insidious move, the crafty government proposed a new form of investment more in tune with its social agenda -- educational investing.
The process was rather simple. Investors would be allowed to purchase students currently going through the rigors of academia. They would be allowed to survey past performance records, as measured by standardized testing, as well as examine every report, quiz or test the tikes had taken in their education careers. After making an assessment of how well the students could perform in the future, investors would plunk down their money on various kidlings and then wait for the quarterly grades to be issued. These report cards would drive the value of their holdings up or down. Although not quite as fun as speculating on the cream of America Industry, investors of all stripes read the handwriting on the wall and put their nose to the textbook grindstone. A number of philosophies cropped up on what sort of students represented the best buys. Many of these were remnants from various investing approaches, making their success or failure all the more interesting to avid students of history.
One rather vocal group believed in the value approach. They tended to focus on students whose grades were... well, not that great. These students, for one reason or another, had suffered massive academic set-backs and were valued at mere pennies on the GPA point. At the center of attention was a motley collection of D and F issues with some sporadic Incompletes sprinkled about. The value crowd tended to congregate around here, looking for turnarounds. "I think Johnny can start getting Cs next quarter, and that this middling performance would actually bump up his valuation quite a bit." Nicknamed "turtle investors," this crowd made a few big killings and did alright in some more cases, but by and large ended up stuck owning a bunch of stupid kids. Many educators had quite a field day with this crowd, as it was well known that below-average students tended to remain below-average students except in rare circumstances.
Another bunch of investors were the growth-at-a-reasonable price (GARP) aficionados. This crowd was looking to buy an A student for the price of a B or B+ average. By focusing on buying students who had the potential to churn out As for less than the going price of the proven A students, they thought that with a relatively simple valuation metric they could make quite a bit of money. Unfortunately, this crowd was subject to the analyst estimates of future performance as their guiding light. "Karen is forecast to earn a 98% on the next geometry test and currently is being valued as if she were going to get an 80%," the reports would begin. "On a relative basis, she is a buy." These estimates were often subject to revision once the analysts got hold of the homework, however. "Karen left three of the proofs unfinished on a recent take-home assignment and we are downgrading her to a sell." The GARP guys climbed over each other to get out of their Karen holdings, pushing her down to the C- or D- range. (They would only later repurchase her shares again once the value guys drove her up to B and had sold out.)
One group tended to outperform the others consistently, although its system mystified many ex-stock investors as it went against all of their buy-low and sell-high principles. These were the teachers, a bunch who had never invested before in their lives. They knew enough about students, however, to know that the A+ students tended to remain A+ students and they just invested in the best -- particularly loading up when a student's prowess in Science had not yet been recognized or when a poor grade on a mid-term plunged him or her down momentarily to B- valuation. By sticking with the best students, the quarterly return of this group was pretty shaky, subject to large swings due to the students' high valuations. Over the long-term, though, it was the A+ crowd that tended to graduate magna cum laude, reaping incredible dividends. Some people who thought they were smart would sell the As and A+s when they seemed to get too high, only to curse and realize that these students had an annoying tendency to continue higher. The teachers loved this -- any of them could have told you that an A+ kid will eventually grow into his valuation and much, much more if you just have the right time frame.
Eventually, the Pig-Eating, Dog-Hating Revolutionary Front was overthrown by irate hookah users and the companies were returned to the public. Most investors went back to the same old buy-low, sell-high credo that had dominated the market for years. A few had learned from the teachers and focused on A+ companies trading at reasonable valuations, buying them and holding them for a longer period than the market could efficiently discount. How did they do? Some would say as well as those who only invested in A+ students and much better than those who were constantly dumping their B+ kids for D- players that had not made their big moves yet.