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Market. The Russell 2000 (US small equities) has broken out above its March 1 highs, which bodes well for the market. This is important, because when smaller companies are moving up, it typically implies more optimism in the broad market. It would suggest that this could be for the next 12 months. The Fed is still convinced they are going to raise interest rates twice between now and the end of the year. US 10-year bond yields are around 2.33%, and if they move as high as 2.4%, from a techno analysis perspective, it gives a new intermediate weekly buy.
Makes electronic black boxes for airplanes. In addition to knowing where the plane is, they also have captured a bunch of data for making things more efficient from an operations viewpoint, fuel consumption, proper hours of operation, etc. They just announced a new contract with a Chinese airline. China really is the key for the company, because they are building out a massive increase in their fleets and airports.
Ranks 222 out of 723 stocks in his model. If putting new money to work, you would typically look for something higher up in the rank. Currently trading at $9.12, and the overall earnings estimates for 2017 is $.28, giving a reasonable PE multiple. ROE of 25% looks attractive. Next year’s earnings growth is expected to be 21%, against a 28 PE, giving a PE to growth next year of 1.3X. It looks a bit expensive.
Manufactures crystals that are used in medical imaging devices, as well as for the large hadron collider in Switzerland. Currently selling their product to a Chinese medical manufacturer. They are also working on 3-D displays with some European automakers. They have a great product and the industry is moving towards their solutions. Currently, they don’t have a significant visible backlog beyond the Chinese opportunity.
Ranks in the top 5% of his database. Free cash flow yield is about 2.8%. The overall payment of 4th quarter trailing cash flow is around 72%. Historically, if it is more than 100% of cash flow, it is not sustainable. The outlook for earnings is slightly down for 2017, and a glacial rebound for 2018 at 7%. The dividend looks to be sustainable. Dividend yield of 7.3%.
In the past, they made extremely small titanium balls which were used to adhere to stainless steel hips, knees and joints. Instead of ordering the devices, they have decided to make the devices themselves. They have 2 markets. Titanium and Inconel and a bunch of other alloys create extremely high temperatures nickel-based products. If this unfolds as he expects, the stock could be $1 by the end of the year.
(A Top Pick July 21/16. Up 8.81%.) They make the lives of hospitals more efficient with some of their supply chain management work. A high recurring revenue. Earnings are expected to double by April 2018, going from $.24-$.51, giving you a 22X PE. They are free cash flow positive. ROE is very good at 24%. Feels this still has further upside.
Their key revolves around lentil and pulse crops for protein with non-animal source products. It ranks 279 in his database. Latest results have been modest. Sales increase is 9% and a 14% earnings increase. Earnings growth is forecast at 15%, against a PE of 12.9%. They are not free cash flow positive, which is why the stock has gone sideways.
The program was interupted by a news flash from Washington, and wasn't inished. Top Picks are not talked about today.