Mike Lyons CA, CFA

Market - Recent mid-east problems might be a decent catalyst for a correction in the market. Market has gone straight up since August and has been looking for a catalyst and this is a pretty big one. Market rally was significant enough and the catalyst is big enough that it could be a fairly good correction. 10% would not surprise him. Could be a few weeks or a couple of months.

Fairly cheap but worries about how much value they can extract, as they don’t sell the end product. Financial multiples are attractive. Not sure this is the best time after their run up. In the wrong place of the value chain as they don’t get to keep any of the economic value themselves. Seem to be doing a better job of late.

In the event of a market correction, they might benefit because of all the hedging they have done. To him, a permanent marker against them is their error in writing unhedged insurance premiums.

Not enthused about this one. Sells for 3 to 4 times revenue, 15 times earnings. If it was a market leader or had some special attributes, he might be willing to pay more for it but it isn’t in this category. Runs a risk of being usurped by other internet vehicles.

Beer is a gradual declining industry. Too expensive given the lackluster industry backdrop. A little over 3X sales.

Refining is an ugly business. Not an industry of secular growth but one of cyclical margin swings. Hard to make money at it and plants are hard to run. Sector has just had a bounce off a significant rally. Has a fair amount of debt. If dynamics for the sector continue positive for a little while, they will be more of a beneficiary than the un-levered players. (He just sold a refiner, Frontier Oil (FTO-N).)

Instead of paying dividends they continue to buy back stock, which destroys shareholder value. Not sure management runs the business for the benefit of shareholders.

If we get an economic rebound it will probably do fairly well. Doesn’t like the black box nature of GE Financials. Will probably do very well if there is an economic rebound.

Offers reasonable value. Trades for a reasonable price/sales and earnings. US retail sector is demonstrating they can make money even in this sort of environment. !.93% yield.

This is an example of the kind of stock that he is willing to ride a lot longer and to much higher multiples if he believes management is outstanding. Executing extremely well on many fronts. Fully funding all their expansion and the institution of a dividend. If you feel there will be a market correction, you might want wait.

Likes the footwear industry. Very low multiple at about 25% of revenue and 11X earnings. Targeting to do about $2 a share in the next couple of years. If you put a twelvish multiple on this and get to 50% of revenues, it’s not very hard to get to $25 or $30.

A leading performer of high performance plastic resins. Decent dividend of almost 3%. Low price sales and reasonable price/earnings. 2/3 of the business is profitable European operations and 1/3 is unprofitable North American. If the new CEO can get North America up to decent profitability, there is a lot of room for earnings and margin expansion.

(A Top Pick Nov 3/10. Up 5.96%.)

(A Top Pick Nov 3/10. Down 9.85%.) Still Buying

(A Top Pick Nov 3/10. Down 5.1%.) Still Buying.