- Hyatt Hotels (H) and Hospitality Properties (HPT) to outperform from neutral at RW Baird.
- AB InBev (BUD) to buy from neutral at Goldman.
- Amerisafe (AMSF) to buy from hold at Wunderlich.
- Northrop Grumman (NOC) to sector perform from underperform at RBC Capital.
- China Lodging Group (HTHT) to buy from hold at Brean Murray and to buy from neutral at Roth Capital.
intuitive surgical postsFeed
On Wednesday March 2, this investor threw in his two cents worth (see:Serious Money: What Should Warren Buffett Do Next?) discussing possible acquisitions. Since all the "pro's", I use the term loosely, have had a say I thought I would give readers a chance to express some of their ideas too.
This company has been on my recommended list for longer than any other company in the four and a half years that I have been writing for BloggingStocks -- with only one exception, Intuitive Surgical (ISRG). The company is EZCorp (EZPW), which beat the Street again with third quarter earnings per share of $0.56, three cents better than the analyst estimate.
Revenue for the quarter was $198.2 million, which tops the estimate of $191.01 million. The company projects 2011 earnings higher too: EPS of about $2.35 vs. an estimate of $2.25. EZCorp grew earnings by 33% and increased its footprint by 127 stores through new construction and acquisitions.
Every time a CEO utters the word challenging you can hear the stampede of investors to the exit. You would think that corporate management would have learned to use some other word to describe the the times ahead.
Many a CEO has unwittingly cost his company billions in stock value while speaking at an earnings conference by stating that the business outlook was going to be challenging. If they put the word very in front of the word challenging, then still more value will be lost, at least in the short run.
I have always felt that for all the blabbing we do -- or blogging, in my case -- we should try as best we can to be accountable for our good and bad calls. This report is long overdue, but I will post it anyway since all of my past year's picks and results have been made public.
The market was very harsh in the early part of 2009, filling investors fear and trepidation, and sinking to a March 9, 2009 bottom. Perhaps some of the bleeding has stopped, but the economy has not healed as bears and bulls seem to carry the day, or every other day.
You win some you lose some. This story is about one of my less successful investments, which I acquired and sold many years ago. Over the past four years, I have written many times about Intuitive Surgical (ISRG), by far my best stock investment, up 4,500%, give or take, over a ten-year period. I bought in at the bottom and held on for the ride, until last year when the market tanked and took Intuitive Surgical with it.
The stock has been on quite a roller coaster ride over the past two years, rising as high as $360, then plummeting to around $86 a share. This spring it reached a new high of $393.92 on spectacular earnings and investor euphoria. That was ridiculous, but in the short run you cannot predict what the market will do.
Now, with economic concerns building, an investor lawsuit pending, and perhaps a dose of reality seeping into the stock price, it has taken another dramatic turn downward again. It closed Tuesday at $269.12, a 32% fall from its high.
The metrics are so strong I can't imagine why the company has not made the front page of every investment journal -- but it hasn't. EZCORP has a market-beating P/E of 10.75 (forward 8.55) and very little debt. It's earning a ROE of 19.55%, ROA of 18.75%, and a ROIC of 19.18%. Is there something evil going on here I that I've missed?
EZCORP was an easy pick for me in late December 2009 when it was trading at $14.46. It is one of my two repeat picks for 2010, trading at the time of that writing at $17.35 after a 20% gain. Friday's close of $23.31 adds another 34.35%, and I do not see anything getting in the way of further growth for the next ten years.
Here are the glowing words of Chief Executive Officer, Joe Rotunda, stated, "This was another outstanding quarter for EZCORP, our 31st consecutive quarter of year over year earnings growth, and clearly demonstrates our ability to consistently enhance earnings and shareholder value. Coupled with this strong financial performance is our expanding worldwide presence, as seen through our continued store growth in Mexico and Canada, as well as our strategic affiliations with Albemarle & Bond in the United Kingdom and Cash Converters in Australia."
Intuitive has a trailing P/E ratio of 61 and a projected P/E of 46. I commonly average the two for such volatile stocks which translates to 53.5. There are certain times when that might be alright, but with a PEG ratio (price-to-earnings-to-growth) of 2.05, this is not one of them. If you own it I am not suggesting selling it, but if you do not it might be wiser to put it on your watch list and wait for the market to calm down.
The clock is ticking away the time before the year ends and I have only begun to sort out the possibilities. In Part 1 of this series, I discussed breaking up my potential picks into three categories: contender, on the fence, and out of the running until the 10 stocks have been identified.
Six more are included in today's review: EZCorp Inc. (EZPW), General Electric Company (GE), Wells Fargo & Company (WFC), Annaly Capital Management ( NLY), Intuitive Surgical Inc (ISRG) plus Berkshire Hathaway (BRK.B). These include the remaining five from 2009 and one more familiar to most investors.
I have been one of Intuitive's biggest cheerleaders for years and like everyone else was encouraged to find the company still growing successfully on all fronts. Given my favorable opinion of the company, and the stock, I took a look at where it stood after the run-up (closing Friday at $222.53) to see whether there might be any value left, or if the frenetic buying had exhausted the possibility.
Here are some highlights from last week's earnings coverage from BloggingStocks:
- Advanced Micro Devices Inc. (NYSE: AMD) narrowed its net loss in Q2 but not as much as expected.
- Apple Inc. (NASDAQ: AAPL) posted better-than-expected Q3 results on demand for iPhones and Macs.
- Intuitive Surgical Inc. (NASDAQ: ISRG) reported earnings and revenue that topped expectations.
- JDA Software Group Inc. (NASDAQ: JDAS) shares surged after it reported record results for Q2.
- Microsoft Corp. (NASDAQ: MSFT) lower Q4 results still topped earnings estimates, but shares fell.
- VMware Inc. (NYSE: VMW) unimpressive Q2 results still managed to beat analysts' low expectations.
- Yahoo! Inc. (NASDAQ: YHOO) Q2 profit was flat year over year and revenue and cash flow declined.
Yesterday the company reported strong top and bottom line growth, with profits of $1.62 per share, about 37 cents ahead of analyst estimates, and its revenue of $260.6 million was $30.6 million greater than expected. Intuitive also raised its forecast for procedures performed using da Vinci systems, which can lead to increased sales.
The second quarter is now behind us and for the most part it was a positive one in terms of the market pushing higher almost 40%. This is the second review of my 2009 stock picks through June 30 (see: Chasing Value: 9 picks for 2009 -- APC, GE, ISRG, WFC and more). There was a lot of talk about green shoots this past quarter as Wall Street was looking for any small bit of optimistic data to support the market.
The federal printing presses continued to run at full speed pushing the dollar lower and oil prices higher. While the feds were printing money to cover their deficits, the States do not have that same luxury and many of them are having trouble balancing their budgets to the tune of billions of dollars.