Tuesday, January 02, 2007

Smiles & Frowns -- Bye! Bye! 2006

Business in 2006 had Wi-Fi+ ailing U.S. carmakers and Music Labels+ Google!+ merging lines between cable and television+ plummeting LCD TV prices+ soaring economy in China+ podcasting+ Ken Lay’s death+ midterm elections.

Here at the 10Q Detective, we had our own share of smiles and frowns:


BioCryst Pharmaceuticals (BCRX-$11.56) – 42.4%

January 10, 2006. "Biocryst's current valuation ($20.08) is approximately $531 million. Given the Company's limited history of discovery research, no developmental infrastructure to speak of, and an unknown advantage over a litany of other companies pursuing similar therapies, we do not find the current valuation compelling. One sneeze, and this stock could surprise investors with an ugly downside surprise."

Telestone Technologies Corp. (TSTC-$8.20) – 104.5%

January 25, 2006. "Even without the inclusion of revenue generated from the upcoming 3-G deployment in China, management still expects top-line growth and share-net EPS in the order of 20%-to-30% year-over-year. We do, however, expect a big impact on revenues and profitability, assuming a 2H:06 deployment of the 3G technologies in the PRC. Our early estimates call for Telestone to show top-line of approximately $55 million, throwing of share-net of $0.50 [assuming 10 million shares, fully-diluted]. For aggressive investors willing to assume the inherent risk of owning a small-cap company, we recommend dialing up your broker and buying some shares."

Spectrum Brands, Inc. (SPC-$10.90) – 48.7%

March 29, 2006. "The Company has consistently attributed a stagnant consumer-spending environment as an additional reason for poor product sales. The 10Q Detective believes that the core weakness facing Spectrum Brands is management itself. Sorry to disappoint, but doggie-doo-doo will not bring back profitability to Spectrum Brands. AVOID/SELL."

Lifetime Brands, Inc. (LCUT-$16.43) – 43.4%

May 08, 2006. "In our opinion, the goings on at Lifetime Brands makes a mockery of the Sarbanes-Oxley Act of 2002, which was passed to provide greater oversight and accountability of financial management. Aside from the fact that Wal-Mart is Lifetime Brands single largest customer, accounting for approximately 20% of net sales in 2005, 10Q Detective readers have been forewarned."


NBTY, Inc. (NTY-$41.57) – (91.4%)

February 20, 2006. "In our opinion, NBTY’s current top-line growth is just a blip on the radar—rather than a visible, direction-course change in consumer demand."

Force Protection (FRPT-$17.41) – (171.6%)

August 28, 2006. "In our opinion, Force Protection’s management does not have the know-how to be profitable as a ‘low-volume’ producer—with only two product lines, the Company is highly dependent on ramping up production for sustainable profitability. And management has yet to demonstrate its ability to leverage its core-competence by exporting its blast-resistant technology….

A turnaround at Force Protection is well underway, but lingering concerns on future contract wins will likely put a ceiling on further multiple expansion. A step-up in new product flow coupled with new contract wins—especially Humvee replacement orders—are the necessary positive catalysts for additional short-term trading gains in the price of the Common Stock….

Sales growth acceleration beyond FY 2008 is cloudier. However, industry consolidation trends bode well for shareholders….The 10Q Detective, however, prefers to stay on the sidelines—at least for now." [This is one stock story where we should have thrown caution to the wind—and done some buying! Woulda,’ Shoulda,’ Coulda.’]


Anonymous said...

David, Kudos for admitting FRPT was a good buy then. BTW it is still a great buy now. Nasdaq listing should occur within weeks and it is in a Joint Venture with none other than General Dynamics! They are bidding together for Billions in contracts for the MRAP(Mine Resistant Ambush Protected)vehicles which have a potential for over 21,000 vehicles. All told FRPT will be the story stock of 2007 as if a 2100% for 2006 wasn't enough...Your Vermont FRPT'er..Jeff

Anonymous said...

FRPT at $17.80 today. Overvalued. Bids have not even been awarded. Any delays or losses of contracts will cut the stock price in half.