Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Friday, September 01, 2006


By The Average Joe Investor

So I haven't exactly been lighting up the site with new posts recently, but I wanted to take a moment to take a look back to a few of the stocks I've covered here since the beginning of year. We've seen a significant amount of volatility since I started up the blog and there are a lot of stocks that aren't looking quite as rosy as they did earlier this year.

So first a few nice whiffs on my part. Marvell Technology Group (Nasdaq:MRVL) was one that I not only liked but held myself. Now? Well now to say that things are a mess may be an understatement. Aside from the fact that semis as a group sold off in the dip, Marvell also got itself mixed up in the options scandal and announced an acquisition of an Intel Corp. (Nasdaq:INTC) unit that investors didn't react kindly too. Also, though their recent earnings announcement was not a full one due to the options issue, revenue did look a bit light. Though I said I thought the price was too high when I wrote about the stock in mid-March, I did not see the 40% haircut that it has as of today. As much as it's trading down, though, I'm not a buyer here mainly because this is still just slightly too expensive to offer a good safety margin for a value player and has had it's momentum broken so it's not a momentum runner any more either.

Another stock that I wrote about that has just gotten pounded is KongZhong (Nasdaq:KONG). Kong is one of the group of Chinese WVAS (wireless value-added services) players and was trading at the time of my article at $12.34. Now it's at $7.43. And that's significantly back up from some of the lows that it hit in the mid $5's. So what happened? Well, Kong, and just about all of the WVAS guys, depend primarily on China Mobile (NYSE:CHL) to make their living. So, when China Mobile decided to change some of the rules around how WVAS providers could conduct their business (rules like sending repeated confirmation messages to people that had signed up for services and giving longer free trial periods) all of the WVAS players took a nice tumble. Long term, these new rules may very well help the established players like Kong, TOM Online (Nasdaq:TOMO), and Sina Corp (Nasdaq:SINA) as they push out fly-by-night operations that really are ripping off customers and giving WVAS a bad name. Or it could just be another step on the road to China Mobile bringing WVAS inhouse. Either way, my take is that at this level Kong shares could be attractive, though still with a significant amount of risk - in fact it's worth mentioning here that any business gets more risky as you cut down the number of customers they have. The fewer customers, the more power each one has and the more likely a company could a) lose a boatload of business really fast or b) have to do something nasty like bring down prices.

Suntech Power Holdings (Nasdaq:STP), a stock that I've written about a few times has bounced around a lot over the past few months. Since coming public at $15/share (though not trading retail under $20) the stock has been as high as $44, bounced back down to under $35, gone back up to $40, gone as low as $25, and is now sitting back at $29. I still really like this stock and the company behind it, I think that if solar power does become a significant source of alternative energy Suntech is doing all the right things to position themselves as an industry leader. They have used a significant chunk of their IPO capital securing raw materials and generally growing the business, they inked a long-term partnership with MEMC Electronic Materials (Nasdaq:WFR), and they recently closed an acquisition of MSK Corp which gives them a foothold in the tough-to-enter Japan market. Looking back to my original article on Suntech, it's funny to see that SG Cowen was pegging this as a $58 stock, while American Technology said it was worth $84. At the time the stock was trading at $45 and I thought that it deserved to be in the $25-30 range - today I feel about the same, the stock is probably worth the top end of that range $29-30, though it's very likely that a little momentum behind it could push it up to the $35 range.

On the up side of the coin, there are a bunch of stocks that I've written about that have seen some good times. Syneron Medical (Nasdaq:ELOS) - a crowd favorite for sure - has jumped over 20% since I wrote about it, due in part to a nice quarterly report, but helped for sure by improving market conditions. I could rehash the reasons I like Syneron, but why do that when I could just point back to my original post?

Another one that's done nicely is a ol' guy known as Western Refining (NYSE:WNR), an oil refiner that IPO'd earlier this year. After going public at $17/share, it traded up near $27 before easing off the past few days as oil has dropped. The climbing price is obviously due in most part by the high oil prices, but I would imagine that some of it was also due to the fact that Western is worth more than the $17 IPO price. The stock will probably continue to see some pressure as oil stays under pressure, but I still agree with my original take that this is worth around $24/share.

And how about Hansen Natural (Nasdaq:HANS)? Back in January I wrote that they may have a little more "fizz" when they were trading at $22 (adjusted for their 4:1 stock split) and fizz they did. Before their split they hit a high of around $200/share ($50 adjusted) before shaving a lot off the top and coming all the way back $27.70 where they're trading today. This is another stock that's probably still a little expensive to be considered a value and has lost its pep as a momentum stock. I'm also not sure how crazy I am about the dependence on the growth of the energy drink market (Hansen's owns the Monster brand of energy drinks) and I have not seen a whole lot of Hansen's soda outside of Whole Foods Market (Nasdaq:WFMI).

And there you have it - a first edition of "Joe Looks Back."

Powered by Blogger