I am moving STX off my recommend list. This was on my "supplemental smartphone index" list I made up in response to Jim Cramer's Smartphone Index he introduced on Mad Money back on August 11, 2009. As my previous posts explain, I thought his original list of 21 names left out some good ones, so I picked a list of 9 supplemental choices. Originally, I had another 3 China domiciled names included, but I soon implemented a ban on all stocks reporting out of The People's Republic - the "people" don't report there as much as the government. And I don't trust their reporting (Cramer has a similar ban, tolerating only BIDU). By the way, I made an error in my 2/18/12 post followup on the smartphone index. I had SYNA grouped with the 3 China stocks, CHU, CHA, NTE.
From the start of the index August, 2009, STX has returned +192% and still has a price/cash flow of only 4.7 and a PE of 4 ! I hate to sell something so cheap, it still looks good as this recent article over at Kiplinger attests. But it has evidence of a tiring climb, and a triple in 3 years probably already reflects a lot of good developments. If they move more forcefully into smartphone and cloud storage, there could still be a lot of climb left in this one.
I took ARMH out of the index on 3/7/12, so that leaves 7: LLTC, WRLS, SYNA, EA,OVTI, CREE, AKAM.
Monday, August 20, 2012
Wednesday, August 8, 2012
Selling JBSS
John B. Sanfilippo & Son (JBSS) is being rotated out of my recommend list here at around $19 today. It was put in at my Instablog at Seeking Alpha 11/20/09 at $13.90. This nets a +36% result. That's not too bad since the Dow is up just 27% since then ,+ 9% worth of alpha.
But there are some things going awry with the stock. The valuation numbers are no problem - price-to-sales 0.3, price-to-cash flow 9, forward PE 7. The earnings are on an upward trek with that nice 7 PE, but the cash flow from operations is flat over 5 years now and down over 3 years and has gotten erratic (counting TTM), and the 9 ratio is just market average. This is a basic food stock, which will probably be a good area for awhile, but I like to look mainly at cash flow and technicals. On both counts, this looks precarious. The nice climb the stock has been in is starting to gather a lot of volume and the action lately is starting to look like a churn top. It's fractal condition is toast. So I'm kicking it out to make room for some better stuff.
But there are some things going awry with the stock. The valuation numbers are no problem - price-to-sales 0.3, price-to-cash flow 9, forward PE 7. The earnings are on an upward trek with that nice 7 PE, but the cash flow from operations is flat over 5 years now and down over 3 years and has gotten erratic (counting TTM), and the 9 ratio is just market average. This is a basic food stock, which will probably be a good area for awhile, but I like to look mainly at cash flow and technicals. On both counts, this looks precarious. The nice climb the stock has been in is starting to gather a lot of volume and the action lately is starting to look like a churn top. It's fractal condition is toast. So I'm kicking it out to make room for some better stuff.
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