Robert Freedland     bobsadviceforstocks.tripod.com/bobsadviceforstocks       

As I have written about previously, I am now being tracked by Covestor. You can visit my Covestor Page and note my own trading account performance. One of the uses of Covestor has been to help me identify the weaker stocks within my own portfolio. Quality Systems (QSII) has been one of my top performing stocks in my entire portfolio. However, it has been lagging as of late.

There have been some 'clouds' around QSII that I have noted as an amateur investor reading the news stories on Yahoo. I didn't like the story about the Executive Vice President taking indeterminate leave for medical reasons. Previously on August 6, 2007, QSII reported 1st quarter results that missed expectations. The story isn't really over for QSII, I was just looking for something with a little bit more zip for my portfolio. While I am swapping out of QSII, I am thus reducing my rating for the stock:

QUALITY SYSTEMS (QSII) IS RATED A HOLD

Checking the list of top % gainers today, with an eye on something instead of QSII, I saw that Immucor (BLUD) a stock that I recently briefly reviewed , was acting well on the back of a solid 1st quarter earnings report that beat expectations. While not having a sale signal for my QSII, I sold my 88 shares of QSII at $38.70. These shares have been a terrific investment for me. I have sold my original shares of QSII multiple times (portions of my holding as it hit targeted appreciation prices over and over) and actually have a cost basis of $7.75 on them, purchased on 7/28/03. Thus, I had a gain of $30.95 or 399.4% since purchase! (How can I complain about that?)

Since I was making a 'swap' on my own judgment, I purchased 154 shares of Immucor (BLUD) at $37.9499 shortly after my QSII sale.

These sales and purchase are not strictly within my own trading rules. But since there appeared to be fundamental issues with QSII, and indeed the stock was lagging the rest of my portfolio, I decided it was a reasonable move. My only other stock at the present time that seems to be lagging is ResMed. However, ResMed, I believe, is involved in a temporary recall that is adversely affecting sales/profits. I will try to sit tight with that one for now.

Thanks so much for stopping by and visiting my blog! If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Bob

Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice ! As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.

Earlier today I found that my latest stock purchase, Graham Corp (GHM) had hit a sale point on the downside and I sold my 210 shares at $41.34. These shares had just been purchased on 1/10/08 at a price of $46.27. Thus, my loss on these shares worked out to $(4.93)/share or (10.7)% since purchase. My trading rules dictate me to implement sales as stocks hit (8)% losses. I am fairly 'old-fashioned' with these sales and monitor my stocks manually. With the fast-moving market, I probably should consider automatically setting up these transactions.

Since this stock sale is on 'bad news', I do not have any permission to replace this investment with another holding. Thus, I am now down to 10 holdings in my trading account, down from my maximum of 20 and above my minimum of 5. My portfolio keeps 'talking to me' and I am listening.

As is my practice, I shall be waiting for one of my positions to hit a sale at a targeted appreciation point to get that 'permission slip' to add another stock. Meanwhile, I am sitting on my hands. Hoping against hope that the market does not dictate another sale of a great company with a weak stock price.

With this sale of my own shares,

GRAHAM (GHM) IS RATED A HOLD

Thanks so much for visiting! If you have any comments or questions, please feel free to leave them right on the website or email me at bobsadviceforstocks@lycos.com.

Bob

After selling my Starbucks (SBUX) stock earlier today on my own discretion, I chose to use this as an opportunity to replace that position with something with a bit more exciting prospects (?), or pizzazz as I wrote.

Looking through the list of top % gainers , I came across an old favorite of mine Copart (CPRT) which I had discussed as far back as May 26, 2004 on Stock Picks Bob's Advice, making a nice move higher. As I write, Copart is trading at $33.51, up $3.53 or 11.78% on the day.

This morning Copart reported strong fiscal 4th quarter results that beat expectations. Except for a dip in earnings in 2006, their Morningstar.com "5-Yr Restated" financials is intact, and their StockCharts.com "point and figure" chart looks strong.

Thus,

COPART (CPRT) IS RATED A BUY

A few moments ago I purchased 210 shares of Copart (CPRT) for my Trading account at a price of $33.6757. Wish me luck!

Thanks again for stopping by and visiting. If I get a chance, I shall try to write up a more complete update on Copart, but the above links should give you any needed additional information. If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Bob

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any decisions based on information on this website.

Last Thursday I reported on my purchase of shares of Copart (CPRT) and promised I would try to get a bit more of a review on the blog than the brief comments after the purchase. As I reported in that entry, I do own shares and infact purchased 210 shares on 9/27/07 at a price of $33.68.  Copart is not a new name for me.  In fact, I wrote up Copart on 5/26/04 when the stock was trading at $23.02.  Copart (CPRT) closed at $34.39 on 9/28/07, for a gain of $11.37 or 49.4% since posting this stock three years ago.

Let me go through some of the data underlying my decision to purchase shares and explain why

COPART (CPRT) IS RATED A BUY

What exactly does this company do?

According to the Yahoo "Profile" on CPRT, the company

"...provides salvage vehicle sale services primarily in the United States. It offers vehicle suppliers, primarily insurance companies, with a range of services to process and sell salvage vehicles over the Internet through its virtual bidding Internet auction-style sales technology."

How did they do in the latest quarter?

On September 26, 2007, after the close of trading, Copart announced 4th quarter 2007 results.  Revenue for the quarter ended July 31, 2007, came in at $154.0 million, up 12.2% from last year's results.  Income came in at $36.7 million or $.40/diluted share up 21.2% from last year's result of $31.6 million or $.35/share. 

Analysts according to Thomson Financial had expected profit of $.35/share on revenue of $138.1 million.  Thus the company handily beat expectations. 

How about longer-term results?

Reviewing the Morningstar.com "5-Yr Restated" financials on CPRT, we can see the steady increase in revenue from $306.5 million in 2002 to $528.6 million in 2006 and $547.8 million in the trailing twelve months (TTM).  Except for a dip in 2006 to $1.00 from $1.10/share, earnings have been growing nicely since 2003 when the company earned $.60/share.  The latest twelve months shows Copart with earnings of $1.40/share.

No dividend is paid but the shares outstanding are stable with 89 million reported in 2002 increasing only to 90 million in the TTM.

Free cash flow is positive with $70 million in 2005, $45 million in 2006 and $84 million in the TTM.  The balance sheet from Morningstar appears very strong, with $124 million in cash which by itself could easily pay off both the $80.7 million in current liabilities and the $1.5 million in long-term liabilities combined.

What about some valuation numbers?

Using the numbers from Yahoo "Key Statistics" on Copart, we find that the company is a mid cap stock with a market capitalization of $3.04 billion.  The trailing p/e is a moderate 23.57 with a forward p/e (fye 31-Jul-09) estimated at 17.91.  Estimating the earnings going forward over the next five years, the PEG works out to an acceptable 1.42.  

According to the Fidelity.com eresearch website, Copart has a Price/Sales (TTM) ratio of 5.54, much higher than the average in the industry of 2.35.  On a positive note, the company is reported to be somewhat more profitable than average, with a Return on Equity (TTM) of 15.40%, higher than the industry average of 13.09%.

Finishing up with Yahoo, we find that there are 88.33 million shares outstanding with 69.21 million that float.  As of 9/11/07, there were 1.02 million shares out short, representing 1.4% of the float or 4 trading days of volume.  This is slightly higher than my own 3 day rule for short interest.  No dividends are paid and the last stock split reported on Yahoo was a 3:2 stock split on January 22, 2002.

What does the chart look like?

Reviewing the "Point & Figure" chart on CPRT from StockCharts.com, we can see the weakness in the price chart through much of 2002 as it  dipped from $25/share in January, 2002, to a low of $7.00 in March, 2003.  Since that time, the stock has been moving steadily higher .  The chart does not appear particularly 'overexteded' to me.

Summary: What do I think?

Well I like this stock!  In almost a 'recession play', the stock fills a niche for automobiles and is involved in car auctions.  I am confident that in any weakness in the economy, more and more car purchasers are looking at used cars...of courst that is only my speculation.

Earnings were great as the company handily beat expectations.  Valuation isn't bad with a moderate p/e and a PEG under 1.5.  The Price/Sales is a bit rich but the Return on Equity was a bit better than average.  Finally, the stock chart looks nice.

Thanks so much for stopping by and visiting.  If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.  If you can, be sure and visit my Stock Picks Podcast site, my Covestor Page where my trading portfolio is analyzed, and my SocialPicks page where all of my stock picks from early 2007 are stored.

Have a great week trading!

Bob 

Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice ! As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.

As part of my continued effort at transparency on this website, I have been reviewing my actual holdings in my Trading Account approximately every three weekends. Currently with 13 positions, this will take me about 39 weeks to complete the cycle. Three weeks ago I reviewed Harris Corporation . Going alphabetically (by symbol) brings me up to IHS Corp (IHS). Let's take a closer look at this stock and see whether it still deserves a spot on my blog and in my own investment portfolio.

Currently I own 140 shares of IHS which closed at $64.20 on December 21, 2007. These shares were acquired 10/1/07 with a cost basis of $58.53, giving me an unrealized gain of $5.67 or 9.7% since purchase. This is actually the second time that I have owned IHS. I purchased shares 3/22/07, only to see them decline to a sale point 4/9/07 at which time those shares were sold resulting in a $(465.98) loss in a couple of weeks time.

I am occasionally asked about whether I will 'revisit' a stock after having solid it at a loss. I think that IHS demonstrates that I do keep these stocks on my investing 'horizon' even if they are sold on what I would call a 'technical' basis. I first discussed IHS on this blog on March 24, 2007 , when the stock was trading at $42.10.

What exactly does this company do?

According to the Yahoo "Profile" on IHS , the company

"...provides technical information, decision-support tools, and related services to customers in the energy, defense, aerospace, construction, electronics, and automotive industries worldwide. It operates in two segments: Energy and Engineering. The Energy segment develops and delivers oil and gas industry data on exploration, development, production, and transportation activities to energy producers and oil companies. It also provides decision-support tools and operational, research, and strategic advisory services to these customers, as well as to utilities and transportation, petrochemical, coal, and power companies. The Engineering segment provides solutions, such as technical specifications and standards, regulations, parts data, design guides, and other information to customers in its targeted industries. This segment serves defense, aerospace, construction, energy, electronics, and automotive industries. The company' customers range includes governments, multinational corporations, smaller companies, and technical professionals."

How did they do in the latest quarter?

On September 20, 2007, IHS reported 3rd quarter 2007 results . Revenue for the quarter ended August 31, 2007, came in at $183.4 million, up 31% over the 3rd quarter 2006 results of $139.9 million. Net income increased similarly to $21.7 million from $16.1 million and earnings grew 25% to $.35/share from $.28/diluted share last year.

How about longer-term results?

Examining the Morningstar.com "5-Yr Restated" financials on IHS, we can see the steady revenue growth from $339 million in 2002 to $551 million in 2006 and $639 million in the TTM. Earnings have been a bit more erratic with results climbing to $1.11/share in 2004 before dipping to $.75/share in 2005, but resuming the climb to $.99/share in 2006 and $1.22/share in the TTM. No dividends are paid. Outstanding shares are stable with 69 million in 2003 increasing only slightly to 71 million in the TTM.

Free cash flow is positive and growing with $63 million in 2004 and $105 million in 2006 and $101 million in the TTM.

The balance sheet is just adequate with $132 million in cash and $221 million in other current assets compared to the current liabilities of $350.9 million. This works out to a current ratio of 1.01. I would prefer to see companies with more current assets and ratios of at least 1.25. There are $86.2 million in long-term liabilities as well.

What about some valuation numbers?

Looking at Yahoo "Key Statistics" on IHS , we can see that this company is a mid cap stock with a market capitalization of $4.02 billion. The trailing p/e is rich at 52.28 with a forward p/e of 33.61 (fye 30-Nov-08). According to Yahoo, the p/e is not justified in terms of anticipated growth as the PEG ratio (5 yr expected) comes in a bit rich at 1.90.

This richness in valuation is reflected as well, using Fidelity information, by the Price/Sales ratio which is 5.99 is well above the industry average of 2.40. In terms of profitability, as measured by the Return on Equity (TTM) statistic, we find that IHS does a little better with a statistic of 11.38 vs. the industry average of 8.73%.

Yahoo reports 62.65 million shares outstanding with 58.13 million shares that float. There are 2.02 million shares out short as of 11/9/07. This is moderately significant as it totals 7 trading days of volume (the short ratio) to cover. No stock dividends are reported on Yahoo and no cash dividends have been paid.

What does the chart look like?

Examining the "point & figure" chart from StockCharts.com on IHS, we can see that this stock has steadily appreciated from November, 2005, when the stock was trading at $17 to a peak of $72/share in December, 2006. The stock has pulled back somewhat but overall the sharp and steady ascent appears intact.

When would I sell these shares?

With a cost basis of $58.53, and not having sold any shares of this lot yet, I would sell all my shares should the stock decline to an 8% loss which works out to .92 x $58.53 = $53.85. On the upside, my plan is to sell 1/7th of my shares or 20 shares at the 30% appreciation target. This works out to 1.3 x $58.53 = $76.09.

Summary: What do I think about IHS?

I like IHS and continue to own the stock. That being said, I have concerned about the p/e in the 50's, a PEG over 1.5, and a price/sales ratio double the stock in its industry. I do not see any analysts on this stock and don't know whether the latest quarter was above or below 'street' expectations. The graph shows upward price momentum but appears to be a bit over-extended. In addition, the balance sheet shows relatively heavy current debt loads with a current ratio barely over 1.0.

Thus,

IHS (IHS) IS RATED A HOLD

Thanks again for stopping by and visiting. If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com. If you get a chance, be sure and visit my Covestor Page , my SocialPicks Page , and my Podcast Website .

Have a great shortened week and wishing all of my friends a very Merry Christmas and a wonderful New Year!

Bob