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Sunday, April 26, 2009

Last 4 Trades Examined -

DIT - Bought at $32 on April 23rd See Blog Post. It hit $39.20 on Friday, April 24th for 23% gain in a day. I would love a pullback to add more as it now has been rated IBD EPS 99 and that could mean a big momentum run Read Latest Blog Post to see what I think can happen

VIFL - Bought at $1.35 on March 27th Read Blog Post. It hit $3.00 on April 13th for a 122% gain. It has since pulled back under $2. Earnings are due by May 15th and they are up against what I consider easy comps ($0.02). Food safety is all over the news and any mention of irradiation would be a huge catalyst. In the meantime, I do believe management needs to do something about the MDS stock overhang. They are a vendor and largest owner and seem to sell on any pop. Why not just find a strong holder to take out what they want to sell?

NIV - Bought at $3.80 on March 17th .Read Blog Entry. It hit $5.50 then next day for a 45% gain. However, I was looking for something higher and more sustained, not just a quick pop. So I was not happy with the outcome of this one. Time is working against this stock as I believe insiders lock up will expire in May or June. Was stopped out at $4 for no gain.

LZR - Bought at $5.40 on December 23rd Read Blog Post. It hit $10.15 on January 16th for a 88% gain. It then pulled all the way back to close at $4.65 on March 3rd. I pounded the table because I was certain that earnings were going to be impressive year over year. It then hit $9.79 on March 27th for a 105% gain off the pullback. Two chances to get 90-100% gain. Earnings are due by May 15th and once again they are up against easy comps.

Most of these stocks all had very nice gains. Trading them is something I always examine and try to perfect. Picking them is hard and trading them perfectly is even harder. I did not trade NIV well. Having a core / trading share strategy seems to work best. (LZR, VIFL etc.)

At I try to find stocks that have good, factual reasons to move.

DIT - Now IBD EPS 99 !!!

* DIT's IBD #'s have been updated and it now has the coveted, stellar IBD EPS 99 rating. RS is 97, and Accum/Dist A+. All are Best in Group which includes GMCR. DIT is now above GMCR in its IBD group and GMCR has been on absolute momentum run all year from the $30's to the $50's. With an uptick in volume, I believe DIT is a candidate for a similar momentum run and in turn, the top of the IBD 100 List.

* DIT generated 18m cash flow from ops in 1h 09 and paid off 15m debt (another 5m debt comes off this quarter for sale of disc ops) and 2m preferred stock redeemed which REDUCED diluted shares o/s by 146k to 704k.

* If you take DIT's 2008 net income by new diluted share count it is $8 EPS.

* If you take 1H 2009 net income (traditionally weakest quarters) by new diluted share count it is $4.98

* DIT I get an $10-$12 EPS run rate for 2009

* Competitor CORE has 15 p/e on recent analyst target ($30 target - $2 EPS Estimate)

* DIT has a 330k float lowest I can find on on any major exchange 550k o/s

* Conservative management

Thin stock and volatile. Can be dangerous and not for large positions in my opinion. However, if hedge funds and value investors discover it, with this share structure we could be in for a GMCR type ride or more. It could double and I could argue it is still undervalued compared to CORE based on the numbers.

Wednesday, April 22, 2009

Why DIT could be and should be a $100+ stock

(It is extremely thin and not for large positions or chasing in my opinion!!!)
DIT is the best kept undervalued stock secret just needing to be discovered. The fundamentals of this company are amazing. I don't think anyone knows about it. By my calculations if you apply the P/E of DIT's competitors, this should be a $100+ stock. In at $32.

1) DIT Basic Shares O/S Approximately 507k Float Approximately 307k See Bloomberg

2) According to this site, DIT is the lowest float stock on all the major exchanges See Low Float Stocks (It is extremely thin and not for large positions or chasing in my opinion!!!)

3) DIT's IBD ratings have vastly improved after this last quarter where they would qualify for the IBD 100 list. Composite is 98, EPS is 98, RS is 96. DIT's EPS is rated higher than GMCR , which is in the same IBD category and was on the IBD 100 after a nice run.

4) DIT generated Cash from Operating activities of $18m and paid off debt of over $15m for the first six months of this year Read Cash Flow Statement in Press Release

5) DIT pays a dividend Read Press Release

6) DIT just reported $2.60 EPS in what is traditionally its weakest quarter See Results

7) ***DIT redeemed the Series C Preferred stock which will reduce fully diluted shares by 146,842 in this present quarter.
“This transaction will reduce our fully diluted share base by 146,842 shares. The full impact of this will occur in our fiscal third quarter,” noted Andrew Plummer, AMCON’s Chief Financial Officer. Read Press release

8) ***For this recent second quarter (traditionally the weakest) DIT had Net Income of $2,096,358 on fully diluted shares of 805,236 for EPS of $2.60. Next quarter with the redemption of the Series C Preferred stock, fully diluted shares will be reduced by 146,842 to approximately 675,000 - 700,000. If DIT did just the same EPS in the third and fourth quarter as they just did in the second the calculation would be $2,096,358 divided by 700,000 = $3.00 per share EPS. This would put them on track for $10 EPS this year or a $12 EPS run rate. Assuming they have zero growth in their traditionally two strongest quarters over their traditionally weakest quarter.

9) ***DIT competitors CORE, NAFC, and SYY all have a P/E of at least 10 See Competitor Stats

10)***$10.00 - $12.00 EPS X 10 P/E = $100-$120

AMCON is a leading wholesale distributor of consumer products, including beverages, candy, tobacco, groceries, food service, frozen and chilled foods, and health and beauty care products with distribution centers in Illinois, Missouri, Nebraska, North Dakota and South Dakota. Chamberlin’s Natural Foods, Inc. and Health Food Associates, Inc., both wholly-owned subsidiaries of The Healthy Edge, Inc., operate health and natural product retail stores in central Florida (6), Kansas, Missouri, Nebraska and Oklahoma (4). The retail stores operate under the names Chamberlin’s Market & Cafe and Akins Natural Foods Market. Company Website

Thursday, April 2, 2009

VIFL - Up 119% in 6 days - Will Add on Pullbacks

I bought VIFL 6 days ago at $1.35 Read Blog Entry Today it hit a high of $2.95 for a 119% gain in 6 days.

VIFL reported earnings for the Fiscal Year 2008 today. Read Press Release

Growth Highlights:

Sales - 20% Year over Year growth & 29% Quarter over Quarter growth
Net Income - 115% Year over Year Growth & 422% Quarter over Quarter growth

Potential Catalysts For VIFL to be a small cap momentum runner in 2009 (Like prior super-trades runners EFUT PDO NTI etc.):

1) Continued Growth : From the 10-K Filed 3/30/09 10-K

Management attributes increased revenue to continuing growth of base customers requiring irradiation of products on a regular basis. The majority of revenue growth is occurring in medical sterilization but the Company remains well-positioned for any increased interest in food irradiation.

Although there is no assurance, management anticipates continued profitability during 2009. Management does not anticipate any significant increases in actual processing costs or general and administrative expenses during 2009.

During the past few years, the Company has aggressively pursued sterilization of medical devices to increase its customer base. Medical device manufacturing is expanding rapidly due to improvements in medical technology and an aging population structure in the U.S. The Company is certified to International Organization for Standardization (ISO) standards for radiation sterilization of medical devices, which is especially important for potential customers exporting medical products to the EU and Canada. Medical device sterilization represented approximately 70% of revenues in 2008. The State of Florida is now the second leading state in the U.S. for FDA registered medical device companies.

2) Strong Growth / Acceptance in Food Irradiation or Food Safety Headlines:

Just this week there was salmonella recalls in pistachios, pepper, and mayonnaise. The new administration is setting up a food safety board.

I just found this today and if true this could be huge for VIFL:

"Irradiation zealot " may get top food safety spot - - There's a possibility that former Monsanto executive Michael Taylor and irradiation proponent Dr. Michael Osterholm will be named to top food safety spots in the new Administration.

On Monday, Secretary Vilsack is set to announce the appointment of Dr. Michael Osterholm [5], a food safety expert, to lead the Food Safety agency at the USDA. According to Food & Water Watch [6], Osterholm has been “a zealot in promoting th[e] controversial technology (of irradiation) [7] as the panacea to contaminated food.
Read Article

Food irradiation is a proven technology that can prevent food-borne illness or prevent the spread of insect pests. The process is supported by the U.S. Department of Agriculture, the U.S. Food and Drug Administration, the World Health Organization, the American Medical Association, the American Dietetic Association and other governmental and scientific organizations. Food irradiation is a developing segment of the irradiation industry and the Company is well-positioned to take advantage of future growth in this area. Food irradiation was responsible for approximately 18% of revenues in 2008.

Debate over U.S. food safety system heats up Read Article

As the federal government scrambles to contain this widening salmonella outbreak, health experts believe this could be a turning point in renewing the debate over irradiating foods to eliminate deadly pathogens.

Maki and others advocate wider use of irradiation to protect fresh food against disease-causing microbes.

3) IBD / Valuation - The Company is Rated 97 EPS and 99 Composite (Same as PDO and LZR before their big runs) by IBD. It is currently #3 on IBD Stocks Under $10. It is ranked #1 ahead of MON in its IBD Category group. If the current top line growth rate continues and we see some additional growth due to greater acceptance of food irradiation, combined with the low float, VIFL is a stock to watch for an ever bigger momentum run in 2009. I will add if it pullback and keep in portfolio looking for a major momentum run in 2009 on food safety issues.

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Welcome to, blog home of Superman. Purpose of this blog is for me to discuss my trades and stock ideas (As well as opinions and rants on stock market related issues). I will mention the date and price I enter. As far as exits, I always try to take half off when I have some profit and if I believe in the stock, let the rest run further. I always also use mental stop limits, at which time I would exit and minimize any losses. I do not like to give price targets unless I can support them by P/E in some way or by comparison to another stock. I just post stock trades and ideas that I believe will go higher (or lower for shorts) and the reason I believe that. Individuals should have their own strategies for managing profits and losses. My stock picks tend to NOT be daytrades at all and many take time to move. I am not an investment advisor and this blog should not be considered or followed as investment advice.