Stocks and Sectors

Hickey and Walters (Bespoke) submit:

While the last year has been a period where practically all stocks, regardless of style or size, have risen, some stocks have risen more than others. Small caps (Russell 2000) have risen 95%, while large caps (S&P 500) are up a relatively modest 68.5%. This trend, however, is anything but a recent one. Small caps have essentially been outperforming large caps for the last decade. The chart below shows the ratio of the S&P 500 divided by the price of the Russell 2000. When the line is rising, large caps are outperforming small caps, and when the line is declining, small caps are outperforming.

Based on the relationship between the S&P 500 and the Russell 2000, relative performance between large and small cap stocks follows long-term cyclical trends. As shown in the chart below, periods of outperformance and underperformance by either category are measured in years rather than months. Even with the typical cycle lasting several years, though, the current cycle has been the longest of them all. After peaking out in 1999, large caps have been consistently underperforming small caps for ten years and counting. When it ends is anyone’s guess, but it’s hard not to argue that large caps are at least due for their day in the sun. (Click to enlarge)

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In line with our theme to identify bargains based on a set of criteria, we have come across Soko Fitness (SOKF.OB), a leading operator of fitness clubs and spas in Northeast China.

Data Ended 3/8/2010

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The Inflection Point submits:

Powerful inflection points are characterized by companies that have recently experienced a dramatic improvement in their fundamentals. Important inflection points often coincide with a breakthrough earnings report that is soon followed by a surge in both the stock and the volume accompanying the breakout. UFP Technologies (UFPT) experienced such an inflection point last week.

UFP Technologies is a company which designs and manufactures engineered packaging solutions for the automotive, computer, medical, aerospace, military and consumer markets. After three accretive acquisitions last year and an underlying improvement in overall demand, UFPT posted a breakthrough earnings report on Wednesday morning. Earnings grew 150% year-over-year to $.45 a share as revenues grew 11.4% higher to $26.1 million. Along with these record profits, the company also achieved record gross margins of 31%.

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Jeffrey Saut submits:

Excerpt from Raymond James strategist Jeffrey Saut’s latest essay (published Monday, March 8th):

…[T]he insightful Puru Saxena’s writes:

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Jeff Miller submits:

…[H]ere are the ratings from last Thursday at the close. Those who subscribe to our weekly reports received timely updates, but I apologize for missing yesterday online.

Summary

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Yoseph West submits:

Here’s Part 1.

In this article, I’ll be analyzing T.A.T. Technologies Ltd.’s (TATT) balance sheet, highlighting an aspect that particularly stands out to me and explaining any adjustments I’ve made.

Before taking a look at the adjustments, I want to highlight how cash-rich TATT is. Without dipping into any other asset, they can easily pay off all of their liabilities (with cash to spare!). I really like this, especially when it combines with the fact that Current Assets minus Total Liabilities equals 86.5% of TATT’s Market Cap. This helps provide a comfortable margin of safety, as it’s not including long-term assets or the value of the business itself!

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China OTC Player submits:

By Platinum Tiger

U.S.-listed Chinese small caps overcame generally listless market conditions on Monday and rallied to their second day in a row of two percent-plus gains, finishing the day at their highest level since January 15th. Gainers outpaced losers in the session by a ratio of more than 2:1, with pharmaceutical stocks leading the charge with a nearly 3 percent average gain. Chinese small caps have now advanced nearly 15 percent for the year thus far, and the sector looks poised to continue its gains in the coming weeks.
Click to enlarge
New all-time highs were reached on Monday by 7 of the 35 stocks in our China OTC Player index, including AMCF, CAHS.OB, CELM], [[CT]C, JNGW.OB, LLEN and SOKF.OB. Other noteworthy results for the day included a 37 percent gain for CHGI.OB and a 33 percent gain for CSGJ.OB, both on heavy volume.

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Phil Davis submits:

Guest post by Pharmboy

The health care equipment sub-industry for the next 12 months is neutral, according to S&P reports. The core product categories are historically recession-resistant and will continue to grow regardless of still-restrictive credit market conditions that may ultimately affect spending decisions at the hospital customer base. However, there is concern about hospital capital equipment spending amid tight credit market conditions and stressed municipal and state budgets, and there is mounting evidence of slowing demand for elective medical procedures as well as reduced procedure rates in areas that are not normally viewed as elective, such as interventional cardiology and orthopedics.

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Harry Long submits:

Business: Crown Crafts, Inc. (CRWS) engages in the design, marketing, and distribution of infant and toddler products in the United States and internationally. Its infant products include crib bedding, blankets, nursery accessories, room decor, bibs, burp cloths, bathing accessories, and other infant soft goods.

Free Cash Flow Generation (Data as of 2/25/2010)

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China OTC Player submits:

By Platinum Tiger

Jiangbo Pharmaceuticals (JGBO.OB), a stock I recommended here about two months ago, committed an investor relations gaffe in late February that has driven its stock price down to its lowest and most attractive levels in about a year. What was a blow to the momentum investors who recently bailed out is a positive boon to those seeking bargains in the bullish Chinese small cap market.

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