CONFERENCE CALLS
07/26/96 (Friday)
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INVESTMENT OPINION
Tragedy Creates Opportunity
With airport security on the minds of investors in the wake of the tragic explosion of TWA Flight 800, shares of INVISION TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INVN)") else Response.Write("(NASDAQ: INVN)") end if %> and MAGAL SECURITY SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MAGSF)") else Response.Write("(NASDAQ: MAGSF)") end if %> continue to rise, up $3 3/4 to $24 and $1 5/16 to $8 15/16 respectively. Both companies continue to benefit from the perception that they will sell a lot of their airport scanning security equipment in the coming weeks and months as governments across the world demand stricter airport security.
Shares of THERMEDICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: TMD)") else Response.Write("(AMEX: TMD)") end if %> have also apparently benefited from the explosion, rising from a low of $20 and change on July 16th to the current $26 7/8 level today. Thermedics manufactures an explosive-screening system called EGIS used in 36 airports around the country. The company has an eclectic mix other products as well, from heart pumps, and high-speed beverage contaminant detection systems to drug-detection systems and "Scent Seal" fragrance samplers. BARRINGER TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BARR)") else Response.Write("(NASDAQ: BARR)") end if %> has also seen its stock go from $3 to more than $6 1/2 in the past few days.
As terrible as these stock rises seem, it is hardly the first time that the market has responded to a tragedy like this. The horrific bombing of the Murrow federal building in Oklahoma City, Oklahoma on April 19, 1995 translated into short-term stock market gains for security surveillance camera manufacturer COHU, INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: COHU)") else Response.Write("(NASDAQ: COHU)") end if %>. Shares of Cohu were trading at a split-adjusted $14 1/2 until the bombing, combined with strong earnings and a two-for-one split, pushed the shares up to $35 two months later.
Although it is difficult to parse out how much of this rise was due to the surveillance camera part of the business or the exploding semiconductor equipment business, the Wall Street Journal did run an article on May 1, 1995, speculating that Cohu could benefit from increased federal attention to security concerns. Thermedics also appeared to have benefited from the Oklahoma City bombing, rising sharply the day after the explosion. The World Trade Center bombing in 1993 also resulted in price increases for Magal Security, Invision and Thermedics, although the lame Historical Quotes databases on America Online or Dow Jones Retrieval will not let me look at the price changes. Anyone out there with a Bloomberg box who wants to send me the historical quotes for the 1993 year for the three stocks would greatly assist Fool HQ's ongoing analysis of this phenomenon.
SHARED MEDICAL (SMED) rose $4 5/8 to $54 7/8 after Janney Montgomery Scott upgraded the shares to "buy" from "hold" after the company posted earnings of $0.47 EPS yesterday. Shared Medical was one of the Cabot Market Letter stocks that got pounded in the last two months.
Shareholders of GATEWAY 2000 <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GATE)") else Response.Write("(NASDAQ: GATE)") end if %> were rewarded with a $1 3/4 to $39 1/8 rise this morning after the company posted earnings of $0.66 EPS versus only $0.44 EPS last year, on a 49% rise in revenues. These earnings were a nickel higher than expected.
ZYTEC CORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ZTEC)") else Response.Write("(NASDAQ: ZTEC)") end if %> rose $1/2 to $11 1/4 after the custom electronic power supply manufacturer postponed a 2.27 million secondary offering, citing "recent weakness in the technology sector, particularly among computer and networking issues."
Although it only manufacturers embedded computer systems, its earnings are growing like it discovered the cure for cancer. RADISYS CORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:RSYS)") else Response.Write("(NASDAQ:RSYS)") end if %> today pumped out another incredible quarter, rising $5 3/4 to $33 3/4 after it posted $0.27 EPS versus estimates of $0.11 EPS and $0.06 EPS a year ago.
ZORAN CORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ZRAN)") else Response.Write("(NASDAQ: ZRAN)") end if %>, which manufacturers JPEG and MPEG codexes (or is that codexi?) for digital video applications, rose $1 3/4 to $13 3/4 after it announced earnings of $0.11 EPS versus a penny last year on really higher revenues.
The battered, tattered and much maligned shares of AMERICAN POWER CONVERSION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: APCC)") else Response.Write("(NASDAQ: APCC)") end if %> recovered $2 3/16 to $11 3/8 this morning when the company reported earnings of $0.20 EPS. Management's comments projecting 1996 revenue growth of 20%-25% also supported the shares.
APPLIED MATERIALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMAT)") else Response.Write("(NASDAQ: AMAT)") end if %> got a plug in Business Week from Michael Murphy, of California Technology Stock Letter fame. Shares rose $2 1/16 to $24 7/8 after Murphy pointed out that the stock was being priced at 1994 levels despite the fact that sales and profits have doubled since then.
Beating analyst estimates remains a pretty good way of boosting a company's shares. UNIX system developer DATA GENERAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DGN)") else Response.Write("(NYSE: DGN)") end if %> rose $1 3/8 to $10 3/4 this morning after coming in at $0.17 EPS, two cents higher than expected.
TRUMP HOTELS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DJT)") else Response.Write("(NYSE: DJT)") end if %> continues to benefit from rumors that it is on sale, rising $1 3/4 to $26 1/4 today. Many believe the gaming company is just not big enough to compete in the rapidly consolidating industry.
Prospects that food distributor-cum-networker DIANA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DNA)") else Response.Write("(NYSE: DNA)") end if %> will break itself up into more than one company are behind today's $5/8 rise to $22 1/4. Diana is down from its high in the $80s as many grow skeptical of the true value of its DataNet switch.
INTERNATIONAL RECTIFIER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IRF)") else Response.Write("(NASDAQ: IRF)") end if %> reported earnings today that were two cents higher than the $0.38 EPS for which investors were looking, causing the shares to surge $7/8 to $16 3/4 today.
Shares of computer catalog direct retailer MULTIPLE ZONES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MZON)") else Response.Write("(NASDAQ: MZON)") end if %> continue to accelerate, up $1 3/4 to $17 today. Although the company competes with CDW COMPUTER WAREHOUSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CDWC)") else Response.Write("(NASDAQ: CDWC)") end if %> and MICRO WAREHOUSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MWHS)") else Response.Write("(NASDAQ: MWHS)") end if %> and has been growing much more quickly, it trades at a discount to both companies.
BIOTECHS RISING: NABI INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NABI)") else Response.Write("(NASDAQ: NABI)") end if %> popped up $7/8 to $8 3/4 today after Lehman Brothers initiated coverage of the company with a "buy" rating. MGI PHARMA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MOGN)") else Response.Write("(NASDAQ: MOGN)") end if %> was up $1 1/8 to $6 1/8 as well after a national organization voted to fund research for one if its compounds.
PEAK TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PEAK)") else Response.Write("(NASDAQ: PEAK)") end if %> rose $2 3/16 to $21 15/16 this morning after reporting earnings that were in line with expectations of $0.27 EPS. Peak is a systems integrator and value added distributor of bar code reading computers.
Battered shares of COMPRESSION LABS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CLIX)") else Response.Write("(NASDAQ: CLIX)") end if %> rose $1 7/16 to $6 3/8 after the company reported a $0.02 profit in its just-reported second quarter. Compression Labs provides videconferencing solutions to business, government, healthcare and educational organizations.
LSI LOGIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LSI)") else Response.Write("(NYSE: LSI)") end if %> up $1 1/2 to $19 1/2; ALTERA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ALTR)") else Response.Write("(NASDAQ: ALTR)") end if %> rising $2 to $37 1/8; XILINX <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: XLNX)") else Response.Write("(NASDAQ: XLNX)") end if %> recovering $1 1/2 to $30 1/2 -- all these and more were upgraded to "buy" this morning from "hold" by Prudential.
KULICKE & SOFFA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: KLIC)") else Response.Write("(NASDAQ: KLIC)") end if %> fell $5/8 to $10 3/8 today after it reported a shocking loss of $0.13 EPS on 12% lower sales today. The company sees weak demand through the remainder of 1995 and sees significant fourth quarter costs resulting from "resizing operations."
A jury verdict of $30 million in a breached contract suit against oilfield services and equipment manufacturer STEWART & STEVENSON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SSSS)") else Response.Write("(NASDAQ: SSSS)") end if %> is what is causing the shares to slip $1 7/8 to $20 1/8.
PHAMIS INC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PHAM)") else Response.Write("(NASDAQ: PHAM)") end if %> dropped $1 5/8 to $17 1/8 after it posted earnings of $0.11 EPS when compared to earnings of $0.17 last year. The company blamed higher sales & marketing and higher research and development expenses for the disappointing earnings.
VALUE HEALTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VH)") else Response.Write("(NYSE: VH)") end if %> has been anything but a value for shareholders, with the stock falling another $3 1/4 to $15 3/4 today. The company forecast earnings of $0.34 EPS to $0.35 EPS for the second quarter and expects the third and fourth quarter to suck as well.
The ever-acquisitive discount consumer software developer SOFTKEY INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SKEY)") else Response.Write("(NASDAQ: SKEY)") end if %> was pounded for $2 to $18 1/8 this morning after Cowen & Co. cut its rating when the company posted very confusing, merger results yesterday evening.
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