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Stock Opinions by Ian Ainsworth

N/A

Markets. Growth is being able to grow faster than the industry and faster than the economy. Focus on revenue growth as they are bringing something new to the economy and then for the ability to do that profitably, with better margins than competitors. In emerging markets we may find lots of revenue growth but it is a different benchmark than the US companies. Canada has the potential to grow faster than the US. It has to be driven by golds and commodities and it is interesting to see if we get that super cycle.

Unknown
DON'T BUY

Has been an amazing performer but it didn’t pass his screens. Their debt equity ratio is beyond what is normal. Likes the management. Cautious about this one. They are in a good position to pay down the debt and he would be interested in .5:1.

consulting
BUY

They spent a lot on R&D, way more than competitors as a percentage of sales, but more recently they seem to have traction and have R&D under control. One of their major customers changed suppliers but they have recovered. They are getting big traction in South America. He doesn’t buy small caps but he would have seriously looked at this one.

computer software / processing
TOP PICK

Been under pressure - undue concern about health care in the states. If that happens he thinks this one will do better and recommends taking advantage of this move. Just won the sigma contract. Down around 16 times earnings and thinks they will be taken out at some point. Lower highs and lower lows but he goes on fundamentals.

Business Services
TOP PICK

Private clouds will take off. If they do then this is in an incredibly good position because they own it.

computer software / processing
TOP PICK

Quite an amazing little company. Biggest market in face and skin creams. Prestige beauty market is growing and these guys are growing faster. Owner is 75 years old and there is potential for a takeout but that is not why he buys it. Diversity of brands and countries.

Consumer Products
DON'T BUY

Likes their technology and products. When he models out the prospects for their new HEP C drug the numbers don’t work. Thinks the new product is already built in.

biotechnology / pharmaceutical
DON'T BUY

Great company, strong position in databases. Companies find it hard to move away from them. The problem is that the DB business is fairly mature. Oracle is slow to adapt to the cloud, however they are also unsure how to deal with ‘Big Data’. Others are finding that the world is changing very rapidly. A solid company but the transition is going to start to eat into their growth. This does not qualify according to his growth criteria.

computer software / processing
HOLD

Had a bad IPO. Comfortable buying it back in the $20s. He modeled it out very conservatively and now targets in the high $40s. He is holding it and their future roll out of video could really boost revenues.

0
PAST TOP PICK

(Top Pick Aug 29/12, Up 47.63%) Biggest holding in all his funds. One of the cheapest plays on this new technology. They should split it but doesn’t know if they will. Larger server manufacturer in the world, just using them internally.

Business Services
PAST TOP PICK

(Top Pick Aug 29/12, Down 33.31%) A disappointment for him. Grew service business, but we are seeing a shift away from infrastructure stocks. IT is a service rather than licensed hardware and software. Would not have expected this to affect them this quickly. Don’t be quick to sell it.

0
PAST TOP PICK

(Top Pick Aug 29/12, Up 23.25%) Foreign market is quite strong but US is seeing a shift into hospitals. The opportunity for them to move into new markets remains and so he would stay with them.

Consumer Products
COMMENT

Dominant player in gene sequencing business. Becoming more commercially available to clinics instead of just research labs. They are buying up some of their customers and going into competition with them. He is nervous of the valuation. It is at and beyond his expectations.

Consumer Products
BUY

Dominant technology for cell phones. Competitors coming and market is maturing. The key is that their technology will be better for at least a couple of years so he is not worried at this point.

Telecommunications
DON'T BUY

Fairly mature business. Their recent deal is highly accretive, but their mix of revenues is even more mature. He thinks that this company does not pass his growth criteria.

misc industrial products
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