• IBD on Amedisys
    Posted by on December 22nd, 2005 at 4:34 am

    This morning, Investor’s Business Daily highlights Amedisys (AMED). This is a pretty cool company. It’s a very profitable operator of several home nursing centers in the Southeast.

    “Amedisys is riding a strong demographic wave right now,” said analyst P. Jay Fortner of Cochran, Caronia Securities. “You have a lot of baby boomers getting into Medicare.”
    That wave has helped Amedisys average 39% annual sales growth the past three years. Earnings have grown an average of 42% a year over the same period.
    Third-quarter sales this year rose 92% from 2004 to $112.2 million. Earnings gained 33% to 52 cents a share. Analysts polled by First Call expect full-year earnings to rise 32% to $2 a share.
    Amedysis took a hit on Dec. 19 when a House-backed budget plan called for reduced reimbursements. Aside from cutting reimbursements made to home health care providers, the bill calls for a nearly $5 billion cut in Medicaid spending.
    Amedisys’ stock fell nearly 12% on the news. First Call analysts also lowered its 2006 earnings estimate to $2.61 a share from $2.66 previously.
    Regardless of how the House plan takes shape, Amedisys will continue to expand.
    The company has opened 20 of the 25 new offices slated to be added by year-end. Last year it opened 13 new offices. It expects to open 45 startup offices in 2006.

  • The Market Today
    Posted by on December 21st, 2005 at 5:21 pm

    Stocks followed a perfect arc today. The market opened higher, slowly rallied in the morning, flattened out by lunch, and gave back much of its gains during the afternoon. Still, we ended higher and that’s a nice change of pace.
    Despite Biomet’s (BMET) sluggish earnings, the Buy List had a decent day. The S&P 500 rose 0.25% and our Buy List added 0.53%. (By the way, have you seen our Buy List for 2006? Check it out.)
    Sixteen of our stocks went up and nine went down. Our big gainers were Expeditors (EXPD), Golden West (GDW) and Quality Systems (QSII).
    Expeditors was helped by the strong earnings report from FedEx (FDX). FedEx surged to a new all-time high. The stock is up 6,700% since its IPO in 1978. Both FedEx and Expeditors are part of the Dow Transportation Average (^DJT), which also hit a new all-time high today. The new high there is crucial to Dow Theorists.
    The economically cyclical sectors were very good today. The top sector today was Basic Materials (^DJUSBM). This may signal that the economy has more strength than many people think. Although, FedEx’s earnings covered the period through November; Wall Street really wants to know how well business is going right now. Interestingly, the small-caps had another big day. The Russell 2000 (^RUT) is close to a new all-time high.
    Bed Bath & Beyond (BBBY) just reported earnings after the close of 45 cents a share. This was in line with expectations, although sales were slightly below expectations. The stock is trading sharply lower after-hours. Anytime this stock is below $40 a share, it’s an excellent buy. Here’s some perspective: Sales grew from $1.31 billion to $1.45 billion, instead of $1.47 billion. That’s basically one-day’s worth of sales. Is that really worth $600 million in market cap? I didn’t think so.
    Also, mad props to GroovyStocks for the profile on yours truly.
    And finally, pork pie-makers in England want trade protection. I really wish I were making this up.

  • Salesforce.com Shares Decline on Outage
    Posted by on December 21st, 2005 at 1:54 pm

    This stock always seems to be in the news.

    Shares of Salesforce.com, a San Francisco-based provider of customer relationship management software, got zapped in afternoon trading on Wednesday after the company reportedly suffered a severe system-wide outage on Tuesday.
    A Salesforce.com representative could not be reached to confirm the extent of the outage.
    “We are told the outage impacted a majority of customers, as well as restricting the company’s own access to the system. Customers were completely unable to log in and use the system to access customer data. We are aware of multiple customers that are quite displeased with the outage,” First Albany Capital analyst Mark Murphy wrote in a research note. “We believe this is the most severe and widespread outage Salesforce.com has experienced. It would not surprise us if Salesforce.com’s competitors get hold of this news and try to use it to their advantage.”

  • Moody’s
    Posted by on December 21st, 2005 at 1:50 pm

    I have to admit that Moody’s (MCO) is a great company. The company just raised its dividend. It’s about to make another new high. Warren Buffett owns a large stake in it, but I think the stock is getting to be too rich at these levels. A lot of the stock’s surge is due to P/E ratio expansion. That can’t go on forever.
    If the shares come back below $50, I think it would be a great buy.
    MCO.bmp

  • Bed Bath & Beyond Earnings
    Posted by on December 21st, 2005 at 12:29 pm

    Bed Bath & Beyond (BBBY) is set to report earnings after today’s close. The stock has basically traded around $40 a share for the last 2-1/2 years. The current earnings estimate is for 45 cents a share.
    To give you an idea of how reliable the company is, there are 25 analyst estimates and the highest is for 46 cents, the lowest is for 45 cents. Talk about a narrow range! Last year, BBBY earned 40 cents a share. I don’t believe the company has ever missed its earnings estimate in 13 years as a publicly traded stock.
    The shares are rallying today:
    bbby5day.bmp

  • The Morning Market
    Posted by on December 21st, 2005 at 9:25 am

    Lots of news this morning. Third-quarter GDP growth was revised slightly lower to 4.1%. That’s still the best growth is 1-1/2 years. I think the market will shrug it off as the third-quarter started six months ago.
    The good news is what’s happening overseas. We have multi-year highs in Britain, Germany and Japan. The Nikkei is coming close to 16000. There’s also the news from China. The Chinese government announced that its economy is really about 17% larger than it originally thought. The New York Times has more.
    I think we’re heading to a positive opening. FedEx (FDX) reported very strong earnings. The Google/AOL deal is now official. Calpine finally filed for bankruptcy. Here’s a timeline of Calpine’s recent history. Nike (NKE) disappointed Wall Street was a poor earnings report.
    The transit strike is in its second day. B of A said that it will impact Tiffany’s (TIF) business. Lastly, in Slate Adam L. Penenberg speculates on the end of Moore’s Law.

  • Biomet’s Earnings
    Posted by on December 21st, 2005 at 5:23 am

    From Reuters:

    Biomet Inc. (BMET) on Wednesday said its quarterly earnings rose on sales growth for its orthopedic reconstructive and dental reconstructive implants.
    The Warsaw, Indiana-based maker of orthopedic devices said its earnings rose to $101.3 million, or 41 cents per share, in its fiscal second quarter ended Nov. 30. In the year-ago period, the company earned $91.2 million, or 36 cents per share.
    The consensus estimate on Wall Street was for a profit of 43 cents per share, according to Reuters Estimates.
    Biomet said sales in the quarter rose 8 percent to $494.7 million.
    It said it expects third-quarter earnings per share will rise to a range of 43 cents to 44 cents a share, slightly below analyst estimates of 46 cents a share. It expects sales in the quarter to be between $510 million to $520 million.

  • The Buy List for 2006
    Posted by on December 21st, 2005 at 2:03 am

    Drumroll….
    Crash! Here’s the Buy List for 2006:
    AFLAC (AFL)
    Bed Bath & Beyond (BBBY)
    Biomet (BMET)
    Brown & Brown (BRO)
    Donaldson (DCI)
    Dell (DELL)
    Danaher (DHR)
    Expeditors International (EXPD)
    FactSet Research Systems (FDS)
    Fair Isaac (FIC)
    Fiserv (FISV)
    Golden West Financial (GDW)
    Harley-Davidson (HDI)
    Home Depot (HD)
    Medtronic (MDT)
    Respironics (RESP)
    SEI Investments (SEIC)
    Sysco (SYY)
    UnitedHealth Group (UNH)
    Varian Medical Systems (VAR)
    Well, no big surprises. You should notice lots of familiar faces. Fourteen stocks are holdovers from the current list. For this year, I decided to cut back the list to 20 stocks. Sadly, eleven stocks didn’t make the cut including favorites like Frontier Airlines, Progressive and Quality Systems. Yes, I know. It’s sad to see them go (…sniff). I’ve also decided to cut back on all those orthopedic stocks. That was just too heavy a sector bet. I’m keeping Biomet though.
    The six new stocks are Bed, Bath & Beyond, Harley-Davidson, Home Depot, Sysco, FactSet Research Systems and UnitedHealth Group. Please, make them feel at home. I think you’ll get to like them.
    I didn’t plan it this way, but I’m surprised at how many mega-cap stocks made the list. The new Buy List represents over $460 billion in market value, which is equal to about 4% of the entire S&P 500. The real biggies are Home Depot, UnitedHealth, Dell and Medtronic. Combined, those four represent about two-thirds of the market value of the Buy List.
    I’m also surprised at the small number of financial stocks, although I’m going to keep stocks like Golden West, AFLAC and Brown & Brown. Any way you slice it, this is a pretty conservative list.
    If you’re not familar with the Buy List, here’s the deal. I’m not going to make any changes to the Buy List for the next 12 months. This list is set in stone (I’ll make adjustments if any positions are bought out). I’m going to start tracking these 20 stocks on January 3, 2006, which is the first trading day of the new year. For track record purposes, I’m going to assume that all 20 stocks are equally weighted based on the closing price of December 30, 2005.
    As usual, you can assume that I own any of the stocks on the Buy List. Your pain or gain is also mine. I’m still going to track the 2005 Buy List through the end of next week.
    I’m looking forward to a fun and profitable 2006!

  • The Market Today
    Posted by on December 20th, 2005 at 5:55 pm

    This is truly frightening. Wall Streeters are walking today. Do these transit workers have any idea what they’ve done? Cabs are impossible to get. Some people have to carpool! I mean…ick.
    I don’t know how much longer this can go on. I’m all for labor unions, but couldn’t they strike during better weather. Planning, fellas! Anyway, stocks bounced around for most of the day and finished just a wee bit lower. This was the third straight down day, the most since October. Our Buy List had another rough day, although not quite as bad as yesterday. The S&P 500 lost 0.02% and our Buy List fell 0.40%.
    The good news is that Commerce Bancorp (CBH) raised its quarterly dividend by 9%. That’s always nice to see. Zimmer (ZMH), Dell (DELL), Biomet (BMET) and Stryker (SYK) all got hit today. Biomet comes out with earnings tomorrow. Melissa Davis at The.Street has an interesting story on Biomet and the orthopedic industry.
    Outside our Buy List, FactSet Research Systems (FDS) reported earnings that were three cents a share higher than estimates. This is a neat little stock. I was troubled to see Electronic Arts (ERTS) say that this quarter will be “well below” expectations. ERTS used to be a “can’t miss” stock. Also, General Motors (GM) fell to an 18-year low. The company is recalling 425,000 vans due to bad seat belts. The Dow is only up 2.5% this quarter. For the last four years, the Dow has gained at least 7% in the fourth quarter.
    Business Week has an article about the tech boom in Israel.

  • Google Earth
    Posted by on December 20th, 2005 at 2:23 pm

    Here’s an interesting article in today’s NYT. Apparently, Google Earth is very good. Perhaps, too good.

    When Google introduced Google Earth, free software that marries satellite and aerial images with mapping capabilities, the company emphasized its usefulness as a teaching and navigation tool, while advertising the pure entertainment value of high-resolution flyover images of the Eiffel Tower, Big Ben and the pyramids.
    But since its debut last summer, Google Earth has received attention of an unexpected sort. Officials of several nations have expressed alarm over its detailed display of government buildings, military installations and other important sites within their borders.
    India, whose laws sharply restrict satellite and aerial photography, has been particularly outspoken. “It could severely compromise a country’s security,” V. S. Ramamurthy, secretary in India’s federal Department of Science and Technology, said of Google Earth. And India’s surveyor general, Maj. Gen. M. Gopal Rao, said, “They ought to have asked us.”
    Similar sentiments have surfaced in news reports from other countries. South Korean officials have said they fear that Google Earth lays bare details of military installations. Thai security officials said they intended to ask Google to block images of vulnerable government buildings. And Lt. Gen. Leonid Sazhin, an analyst for the Federal Security Service, the Russian security agency that succeeded the K.G.B., was quoted by Itar-Tass as saying: “Terrorists don’t need to reconnoiter their target. Now an American company is working for them.”