CONFERENCE CALLS
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INVESTMENT OPINION
Historical Quotes
Being completely shut off from historical quotes dating from before July of 1994 yesterday left me to ponder the true value of having old quotes for most of the evening. Many so-called investors are quick to shrug off the value of long-term historical quotes, glumly maintaining that all known historical information is built into the stock's current price. A slight variation of the efficient market theme, this viewpoint essentially maintains that all fundamental information that is known is reflected in the company's current valuation.
I believe there is value in historical quotes that go back more than two years. The past historical price performance of individual securities is an important measure of management excellence. Companies with excellent, entrepreneurial management will focus on the price of the stock as one measure of success -- often because a large part of their compensation depends on this. Stock price reflects a company's success in convincing investors that "things are better than they have ever been before," through earnings performance, management savvy and product or brand strength. Strong price appreciation often reflects a strong, shareholder-oriented management which is creating real value for the owners of its company.
Past price performance is often measured by an indicator called "relative strength," one form of which is reported in Investor's Business Daily. Many claim that relative strength is purely "technical" because it looks at stock price performance and not "fundamentals." However, nothing is a more fundamental indicator of corporate success over long periods of time than stock price performance; the purpose of a publicly-traded company is to create long-term value for shareholders. If this Fool could critique the Investor's Business Daily relative strength number, it would be because it puts far too much weight on the last two quarters and not enough on the last five years in the calculation.
Note: On America Online, historical quotes are a new feature available for Windows users via keyword: Quotes. The feature should be available for Mac users within a few months.
CABLE DESIGN TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CDTC)") else Response.Write("(NASDAQ: CDTC)") end if %> got the thumbs up from Pru today, rising $1 to $31 after the brokerage added the shares to its "single best idea" list.
C. P. CLARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CPCL)") else Response.Write("(NASDAQ: CPCL)") end if %> rose $1 3/4 to $15 1/4 this morning in spite of meeting estimates of $0.29 EPS. Investors apparently did not expect the communications components manufacturer to meet its numbers given the recent price declines in the components industry.
Yesterday's pullback in the wake of a negative Barron's article has not kept PHYSICIAN RELIANCE NETWORK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PHYN)") else Response.Write("(NASDAQ: PHYN)") end if %> down for long. The stock rose $1 1/4 to $14 1/4 this morning after the company met earnings estimates of $0.13 EPS.
If making it on the desktop is big news for AT&T's Worldnet, it is not hard to understand why making it on the servertop is a major deal for NETCOM ONLINE COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NETC)") else Response.Write("(NASDAQ: NETC)") end if %>. The stock rose $1 1/2 to $17 3/4 after MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MSFT)") else Response.Write("(NASDAQ: MSFT)") end if %> said it would offer connections to Netcom on its "Internet Referral Server." Now users of Windows95 or Windows NT can choose an ISP directly from their browser.
REVLON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: REV)") else Response.Write("(NYSE: REV)") end if %>, which only recently returned to being a public company after a leveraged buy-out in the '80s, rose $1 1/2 to $28 after beating Wall Street estimates. Its EBITDA (earnings before income tax, depreciation and amortization) rose a snappy 32%, encouraging growth-seeking investors.
What Prudential giveth, it taketh awayeth. CHILDREN'S BROADCASTING CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AAHS)") else Response.Write("(NASDAQ: AAHS)") end if %> dropped $1 5/8 to $6 1/4 after Prudential dropped the stock to "hold" from "buy".
HEALTHSOURCE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HS)") else Response.Write("(NYSE: HS)") end if %> was pounded for $2 3/4 to $10 1/8 this morning after the company came out with a second quarter profit warning. The health maintenance organization will only make $0.08 EPS to $0.12 EPS per share because of a higher-than-expected medical loss ratio.
With a symbol perhaps better suited to TAMBRANDS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TMB)") else Response.Write("(NYSE: TMB)") end if %>, POLICY MANAGEMENT SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PMS)") else Response.Write("(NYSE: PMS)") end if %> dropped $4 to $37 1/4 this morning after reporting earnings fourteen cents short of consensus estimates of $0.68 EPS.
COMSHARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CSRE)") else Response.Write("(NASDAQ: CSRE)") end if %> dropped $8 1/8 to $17 this morning after the company stated it would report earnings on August 7th instead of tomorrow, as originally planned. This sudden change has apparently spooked quite a few investors.
If only there had been shares available to short for more investors. ICTS HOLLAND PRODUCTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ICTSF)") else Response.Write("(NASDAQ: ICTSF)") end if %> dropped $2 3/4 to $10 this morning after the airport security hype began to evaporate. BARR TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BARR)") else Response.Write("(NASDAQ: BARR)") end if %> was down $1 1/4 to $9 1/8, THERMEDICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: TMD)") else Response.Write("(AMEX: TMD)") end if %> dropped $1 3/4 to $25 3/4, AMERICAN SCIENCE & TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: ASE)") else Response.Write("(AMEX: ASE)") end if %> fell $2 3/4 to $13 3/4 and INVISION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INVN)") else Response.Write("(NASDAQ: INVN)") end if %> slumped $4 1/4 to $21 3/4. The good news is that many still sell for as much as 15 to 20 times sales.
DIGITAL EQUIPMENT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DEC)") else Response.Write("(NYSE: DEC)") end if %> was held in trading today after reporting operating earnings of $0.33 EPS, well below the original estimates that the company dashed a few weeks ago. They anticipate doing much better in the personal computer segment next quarter and in the meantime will buy back ten million shares. By late morning, shares were down $1 1/8 to $34 3/8.
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