Monthly Archives: February 2007

Cramer’s Second 1/3 of Bottoming Stocks

On tonight’s MAD MONEY on CNBC, Jim Cramer said the market escaped a bad day but the damage has been done.  Cramer thinks you can go bottom fishing after a very big drop, so he focuses on the most discounted stocks and you have to have plan knowing not everything bottoms at the same time. 

Cramer’s Second 1/3 of the bottoming out stocks is one that takes a couple weeks is the financials: 

The part that you have to worry about are the sub-prime and he thinks the ones paying huge dividends are the worrying area.  That is too small for the market though.  The fed can cut rates when those who need to borrow can’t and the fed is the one to intervene with cutting rates.  Ahead of that is when you want to start owning the banks and brokers.  He still loves Goldman Sachs (GS), Capital One (COF), Bank of America (BAC), and he even likes Citigroup (C) now that it is so low.  He likes T.Rowe Price (TROW) as well and reminded about his call to buy the brokers on the downgrade today.

The last 1/3 to bottom is the mining and other cyclicals that you cannot buy until the others have peaked, according to Cramer.

By the way, do you know what bottom fishing is when you buy the bottom and it keeps going lower?  Bottom Sniffing.

Jon C. Ogg
February 28, 2007

Posted on: February 28, 2007 – 6:28 pm in Cramer

Cramer’s First 1/3 of Bottoming Stocks

On tonight’s MAD MONEY on CNBC, Jim Cramer said the market escaped a bad day but the damage has been done.  Cramer thinks you can go bottom fishing after a very big drop, so he focuses on the most discounted stocks and you have to have plan knowing not everything bottoms at the same time. 

The first 1/3 that bottomed is what you find in the supermarkets and inside the medicine cabinets and those rallied and can still be bought: 

P&G (PG) can go up another point; others you can buy are Colgate (CL), Clorox (CLX), General Mills (GIS), Heinz (HNZ).  But Altria (MO) excites him the most with a recession proof business and a 4% yield plus the coming break-up.  Cramer thinks the rules of the past have changed and you can’t buy Pfizer (PFE) or Eli Lilly (LLY) because they have risk; he thinks you can buy some biotech like Celgene (CELG) and Gilead (GILD) regardless of a slowdown.

Jon C. Ogg
February 28, 2007

Posted on: February 28, 2007 – 6:18 pm in Cramer

The 52-Week Low Club

Every day 24/7 will look at widely traded stocks that hit 52-week lows

Transmeta (TMTA) Down from a one-year high of $2.37 to $.72. Company licenses intellectual property for chips. Quarterly sales went from $13.3 million last year to $2.4 million in the latest quarter. Net loss moved from $2 million to almost $15 million. Surprising the stock isn’t lower.

AVANIR Pharma (AVNR) Company is having revenue recognition issues. Not much cash on the balance sheet. The company’s major drug continues to be delayed. The stock has a 52-week high of $18.14 and closed at $1.86.

PRA Intl. (PRAI) Down from a 52-week high of $32.22 to close at $20.06. Clinical development company had a fall of in earnings from $7.5 million last year to $5.7 million in the most recent quarter.

Corus Bancshares (CORS). Condo and redevelopment loan operation has been taking higher than usual write-offs. Had an annual high of $33.74. Now sits at $18.56.

Fremont General (FMT). Was $24.13 within the last 12 months. Now $8.18. Sub-prime mortgage lender is delaying filing of latest quarter and annual results.

Office Depot (ODP) Down from a year high of $46.52 to $36.62. Slow revenue sales and a fourth quarter miss on EPS.

Micron Technology (MU) High for the last year of $18.65, now at $11.86. Memory chip company is seeing huge drop in prices for it NAND flash products. Market obviously doesn’t see recovery soon.

McClatchy Newspapers (MNI). Down from $56.12 high for last 12 months to $37.37. Wall St. thinks newspapers are dying business and MNI made the mistake of buying more when it purchased most of Knight-Ridder.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: February 28, 2007 – 5:28 pm in Research

Novellus Guidance Unchanged; Discusses Weak Vista Demand on DRAM Prices

In the Novellus (NVLS-NASDAQ) mid-quarter update, the company says results are looking within expectations previously given and guidance is unchanged from January.  This was offered then as $0.40 to $0.44 EPS, $395 to $405 million revenues, 49% gross margins, orders down 5% to 10% & Shipments up 3% to 8% sequentially. 

What is interesting is that the company is claiming that demand for Windows Vista has been slow and has been impacting the price of DRAM.  These companies should all have known that this wasn’t going to be like a Windows 95 launch and it is sort of suspect that they might be using this as a hedge ahead of time in case things slow down any more.  The real flood for Vista won’t come in close to the launch date, and they’ll have to wait until later in the year.  You would think the suppliers would have known this based on their own channel checks and partner orders of Windows Vista, but maybe they aren’t drinking the industry cool-aid with others.

NVLS is down 0.65% at $31.99 in after-hours on light volume after closing up 1.4% at $32.20 in regular trading.  MSFT is actually trading flat after-hours and that is after closing up 1.1% at $28.18 on the day.

Jon C. Ogg
February 27, 2007

Jon Ogg is a partner in 24/7 Wall St., LLC and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: February 28, 2007 – 4:57 pm in Earnings, Semiconductor, Software, Technology Companies

Nothing Good in Applebees’ Sales

No wonder Applebee’s (APPB) wants to Sell or find more alternatives.  We questioned why someone would want to buy this company back on February 13 when the shares were over $27.00.  Shares closed up 1% at $25.56 today.

Here was the February comparable sales: System-wide domestic comparable sales Decreased 4.0 percent for February, and comparable sales for domestic franchise restaurants Decreased 3.9 percent. Comparable sales for company restaurants Decreased 4.3 percent; guest traffic Decreased between 5.5 and 6.0 percent after a higher average check. The severe winter weather this year on February system-wide comparable sales is estimated to be approximately 1.5 to 2.0 percent, with company restaurants affected by approximately 0.5 to 1.0 percent and franchise restaurants affected by approximately 2.0 to 2.5 percent.

The company’s P/E is north of 20 and its market cap is $2 Billion.  The growth days may be behind it, and if they want a private equity buyer the chances are that the buyer won’t have been a customer.  Its balance sheet is in OK shape, but there is just nothing screaming out that this one is cheap or is hiding any resounding unknown values.  Shares are also up 50% from the yearly lows and the business appears more matured than it looks problematic. 

So, who would acquire this one and why?  The shorts aren’t concerned about a buyout, or if they are I would like to ask them why January’s short interest grew from 6.02 million shares to 6.96 million in February.

Jon C. Ogg
February 27, 2007

Jon Ogg is a partner in 24/7 Wall St., LLC and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: February 28, 2007 – 4:22 pm in Food

Earnings Preview: Dell (DELL)

Tomorrow afternoon (Thursday) we’ll get to see the ‘earnings’ out of Dell Inc. (DELL-NASDAQ).  The street is looking for $0.29 EPS & roughly $14.88 Billion revenues.  The earnings and revenues may not be the issue here, even though they managed to surprise the street with their last earnings report not looking as bad as expected.  Keep in mind that we might not get the full picture because of filing issues and it should not be a shock to investors if they have been looking at the news.  This will also mark the end of the year as the fiscal end is JAN-2007.

As of options prices today it appears that options traders are factoring in a move of no more than $0.75 if you back out the 2-weeks of time value.   The short interest has shrunk from January’s 34 million shares down to 29.8 million in February.  About all you will get out of any major technical analysis from the stock chart here is that it is at least it is within a few percentage points of levels that have acted as support in the past. 

Based on how the stock has traded, no one in their right mind can be expecting any huge upside blowout tomorrow.  Michael Dell announced he was re-seizing control back on January 31 and the stock is actually down about 5% since that date.  Before you go bashing Michael Dell for not staging an instant turnaround, you better look at Hewlet-Packard (HPQ) which is down about 8% since that January 31 mark and is also down since its earnings.  Because HPQ is already known to have recaptured the #1 PC seller and since it has doubled in about 2 years, we all know the great story that has happened there.  HPQ now mas a market cap of $107.5 Billion; DELL has a $51 Billion market cap and it has essentially been chopped in half over the last two-years.

The Inquirer has speculated on market chatter of a retail deal coming down the pipe for DELL, but not with specifics.  The specifics of a ‘retail deal’ would revolve around what is in the deal for each side (the company and a retailer).  Ideally, Best Buy (BBY) would be the best partner; but Dell would have the least amount of leverage there compared to leverage at a Circuit City (CC), Radio Shack (RSH), and elsewhere.  While this would potentially be monumental in its impact against other PC makers like H-P (HPQ) and Gateway (GTW), this would actually not be the absolute first dabbling of off the street sales.

The company still has a long way to go to fix itself.  My partner speculated that the company may be hard to fix and may have to live with much lower growth rates.  That may be true and it may not.  I personally do not believe that Michael Dell reassumed control just so that he could be a whipping boy on Wall Street.  A retail deal would certainly ad some kick, but it is very possible that the retail deal may be more targeted and more generic than people expect.  What if it was just for service repairs, printer cartridges, and maybe laptops?  If I had a real great guess I would offer it.

There is another possibility.  Dell may announce even more restructuring into more customer-service oriented company than it is thought of today.  It ‘could’ even consider a transformational change, although please do NOT interpret that as a prediction that they will go start buying up service and niche companies galore.  Dell has been sprucing up management where it could and it is going to be a long turnaround.  I have no idea what Michael Dell will launch yet as his exact attack plan, but chances are that it will be much more than a mere round of layoffs and bonus cessation program.  Most likely Mr. Dell himself will unveil a loose timeline or he will set a date for analysts and media where he will unveil his HP-killer plan. The last stockholder annual meeting was last July, and he probably wont want to wait 5 more months to unveil anything.  It may not happen and I don’t want to create any drama here.  You just have to know how aggressive and demanding he can be and know he didn’t yank Rollins out of the slumbering CEO seat to come back just to run a status quo ship.

Jon C. Ogg
February 27, 2007

Jon Ogg is a partner in 24/7 Wall St., LLC and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: February 28, 2007 – 3:54 pm in Consumer Electronics, Earnings, PC Companies, Technology Companies

Cramer Likes This Miner

On today’s STOP TRADING segment on CNBC, Jim Cramer said he hates miners (earth diggers, not kids) because of the leverage to BRIC areas that are perceived; but he does have one that he actually likes.  The one he likes is CVRD-Companhia Vale do Rio Doce  (RIO-NYSE/ADR) because of it having the nickel monopoly in the world that gets to hoard and make up its own pricing.

High dividend and defensive stocks KO, PG, & XOM are tickers he noted favorably again.  On Sprint NexTel (S), Cramer said the stock is up because it was an amazingly good quarter for a bad company and he doesn’t think it should be independent.  He still likes Level 3 (LVLT).

Jon C. Ogg
February 27, 2007

Jon Ogg is a partner in 24/7 Wall St., LLC and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: February 28, 2007 – 2:46 pm in Uncategorized

15 Second Line Defensive Stocks

Stock Tickers: BRK/A, LTR, FLO, THS, DLM, NVO, ALO, PYX, AACC, CSH, YUM, HME, DTE, WTR, SNH

Yesterday we gave a first line of defense group of stocks.  That list could have likely been far larger, but in reality there is an entire realm of second tier defense names that are deemed large cap stocks as well.  Some of these could have easily been on the list of 20 top Defensive Stocks yesterday.  Some of these are probably a bit more controversial and may have higher valuations than the traditional lay-up defensive stocks given yesterday.  We weren’t going to run a second list of these, but we wanted to share it since the markets have not recovered much of yesterday’s losses.  Included is a brief explanation for each name:

1) Berkshire Hathaway (BRK/A)
major diversified, one of the few names that actually traded up on days when we had big market crashes; plus you already he know Buffett and successors see value in these companies forever

2) Loews Corp (LTR)
operated in O&G and insurance but has substantial tobacco operations

3) Flowers Foods (FLO)
do people stop eating baked goods?

4) Treehouse Foods
sort of same as Flowers, but with cheaper valuations and smaller market cap

5) Del Monte Foods (DLM)
once again, canned and packaged foods

6) Novo Nordisk (NVO)
insulin for diabetics

7) Alpharma (ALO)
generic and branded drugs, and antibiotic compounds (weak because of earnings)

8) Playtex (PYX)
only not a candidate if women and men eliminate personal products, was going to be on yesterday’s list except Clorox got the post

9) Asset Acceptance (AACC)
buyer of defaulted debt and collection of late or non-payments; aka debt collectors with proprietary systems

10) Cash America Int’l (CSH)
pawn shop operators, the first place people go for cash because they can get their belongings back

11) Yum! Brands (YUM)
rats or no rats this should have been on yesterday’s list, feed your whole family for $15.00 if you want

12) Home Properties (HME)
affordable apartment communities, better valuations and yield compared to most apartment REITs

13) DTE Energy (DTE)
power utilities with better valuations than others, but that is because of Michigan

14) Aqua America (WTR)
expensive valuations for water compared to S&P/Utilities; but a go-to safety net play unless we all stop drinking water, taking showers, and flushing toilets

15) Senior Housing (SNH)
REIT structure of old folks homes around the US with a high yield

As a reminder, before you go out buying everything defensive you have to make sure youare even concerned about a drop of yesterday’s magnitude.  Did the globalmarkets really change that much?  They may have and they may not have.

Jon C. Ogg
February 28, 2007

Jon Ogg is a partner in 24/7 Wall St., LLC and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: February 28, 2007 – 2:39 pm in Uncategorized

Sprint From The Stock Masters

Take a deep breath America, today is a new day. Be sure to read Article titles for the China Market Crash it will brighten up your day. Let U2 help out, it is a beautiful day. U2 BEAUTIFUL DAYOkay maybe that’s a bit much, still, it’s a dope song.

Stock Tips Check out Sprint (S) today, they posted a higher profit and added subscriber growth – shares are trading up 5.5% today. Yes, Sir, not to self-advertise but our subscribers are enjoying that little ride today, so you are welcome.
The No. 3 U.S. wireless service provider has been losing customers in recent quarters, so investors were praising all that was holy when Sprint reiterated its forecast for a net gain in postpaid customers.
SurTerre Research analyst Todd Rethemeier said that while he would like to see more concrete signs that Sprint could turn the corner, some investors were glad the company had repeated the expectations it expressed in early January.
Tack on that 3 Cent dividend, Sprint’s developing WiMax network (which will be the largest wireless network in history when complete sometime in 2008) and a great guidance. What more do you need?

http://www.thestockmasters.com/index.asp

Posted on: February 28, 2007 – 1:31 pm in Wireless

More Cramer Defensive Strategies

More safety picks from Jim Cramer for "the end of the chaos" this morning that was then followed by his Wall Street Confidential also on TheStreet.com.  His printed picks are not necessarily the ones you would instantly thinks of: Altria (MO), PP&G (PG), AT&T (T), Coca-Cola (KO), and Exxon (XOM).  He also noted that he likes Goldman Sachs (GS) again on pullbacks.  He thinks only 1/3 actually bottom like the ones you can eat, drink, and smoke; and he thinks those bottomed and thinks the financials will next bottom.  Neither AT&T (T) nor Exxon (XOM) were on my "20 Defensive Stocks for a Crummy Market"  list from yesterday.  Currently the DJIA is up 41 points after having been up more than 100 points.  Out of the 20 stocks on our defensive list, only 4 are currently down for the day and 2 of those are down 0.1% or less.

Last night the WSJ Online Edition carried our list of 20 Defensive Stocks, as did Stockhouse in Canada, and our own partner BloggingStocks.

This morning it is listed on the Financial Times Alphaville section and MarketWatch carried it as well.

Jon C. Ogg
February 28, 2007

Jon Ogg is a partner in 24/7 Wall St., LLC and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: February 28, 2007 – 12:29 pm in Cramer

Gross. Domestic Product.

By William Trent, CFA of Stock Market Beat

BEA: News Release: Gross Domestic Product

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.2 percent in the fourth quarter of 2006, according to preliminary estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.0 percent. The GDP estimates released today are based on more complete source data than were available for the advance estimates issued last month. In the advance estimates, the increase in real GDP was 3.5 percent (see “Revisions” on page 3).

Last month, when the advance report came out, we trotted out our handy-dandy year/year unadjusted comparisons to provide some perspective. We noted that the supposed sharp acceleration (that has since been revised away) didn’t look so sharp based on the raw data. Here is the chart as it looked then:

And here is how it looks now, after the revisions.

Read More »

Posted on: February 28, 2007 – 12:27 pm in Economy

Divx Wipe Out

If an investor bought Divx (DIVX) three months ago at the peak of the buying frenzy in the company’s stock, he would only be down about 32% now.

What happened?

Wall St. is concerned that the company is not growing very fast anymore. Revenue in the fourth quarter of 2006 was $16.7 million. The first quarter is being forecast at $17.3 to $19.3 million. At the lower end that is only 3.5%.

For the nine months ending September 30, 2006, revenue rose 93%. But, for the three month period ending September 30, revenue was up only 77%. In 2004 and 2005 revenue roughly doubled over the previous year.

It’s easy to see Wall St.’s concern. The company still trades for 11.6x sales.

Douglas A. McIntyre

Posted on: February 28, 2007 – 11:52 am in Software

Chicago NAPM shows contraction levels for second month

The NAPM’s regional Chicago report is the first glance investors get of macro-level data for the month of February.  The index showed a level of 47.9 versus 48.8 in January, both figures in what is considered contraction territory.  The Chicago report, like the other 15 or so regional purchasing surveys, only cover limited geographic areas and don’t measure any hard data, but the signs of weakness in the beginnings of the supply chain are starting to appear.  Especially concerning is the February survey reading for inventory at 54.5, up from 41.9 last month.

Some of the low figure for January could be related to year-end inventory drawdowns from ’06, but it is a scenario worth watching for further clarity.  The markets don’t seem to be reacting too strongly to the report, but there’s a lot of other activity dominating traders’ mindsets today. 

The full PMI will be out tomorrow, and as long as the markets are orderly today the PMI release should be well-covered and could move markets downward if they confirm the Chicago’s readings of inventory buildup and weak outlook.  Later in the month we’ll get the Industrial Production & Retail Sales figures which will really start to fill in the supply/demand picture down to the consumer level.

Ryan Barnes

Posted on: February 28, 2007 – 11:17 am in Economy

Saturn Bludgeons GM’s Asia Rivals

Who would have believed that the unit which was GM’s (GM) weakest for years is now leading the charge against its Japanese rivals? Not anyone sane.

But AutoObserver, a unit of Edmunds, says that Saturn sales will be up 50% in February. According to its surveys, most of these sales are converts from Honda (HMC), Nissan, and Toyota (TM). In markets like southern Florida and southern California, import strongholds, Saturn is also doing well. The car unit’s new sedan and crossover are both experiencing brisk volume.

Although there is a temptation to take the success out of context, the improvement at Saturn could be early proof that products designed under GM mad scientist Bob Lutz are actually catching on. If so, the sales uptick could spread to other GM brands.

With GM’s stock up 60% over the last year, Wall St. is wondering what the catalyst might be to send it higher. Maybe they’ve found one.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about. 

Posted on: February 28, 2007 – 11:14 am in Autos

Great Atlantic & Pacific Shunned Over Pathmark Bid

The Great Atlantic & Pacific Tea Co. Inc. (GAP) is seeing its shares down 4% to $31.85 after it reported yesterday that it is trying to acquire Pathmark Stores (PTMK) for some $653 million. PTMK is also trading down 1% at $11.83.  In fact yesterday may have been the worst possible day to coincidentally announce the merger.  The stock had actually been up on the hopes of a merger, but after reviewing the balance sheets and after looking at the comparable debt levels it is not really a surprise as to why the shares are lower.

This deal is not being viewed positively at all by the street, and perhaps it is because of the ancient history where this company grew so large in the first half of the 1900’s that it could not keep up with itself and nearly imploded.  It is only a fraction of the size of its glory days and perhaps Wall Street thinks it shouldn’t try to go back to change history.  Standard & Poors has even placed its "B-" debt rating on Negative Credit Watch based on the excess leverage and burdens, and that is already at Junk Bond Status.

GA&P has at least gotten its earnings back to positive but depending on how much cash this chewed up, it could greatly bite into all of its liquidity ratios to the point that it would be cutting it very close.  GA&P has roughly 410 stores and Pathmark has roughly 141 food stores. GA&P has a market cap of $1.33 Billion and Pathmark has a market cap of $617 million.  The deal is reported as being cash and stock at an approximate $12.50 level and since the stock of PTMK is at $11.80 it doesn’t look like the street believes  this is a shoe-in merger.  The last consideration is that the merger still only values Pathmark at about half of its level 5 years ago.

Jon C. Ogg
February 27, 2007

Jon Ogg is a partner in 24/7 Wall St., LLC and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: February 28, 2007 – 10:32 am in Food, Mergers and Buy Outs

15 Companies That Management Can’t Fix: Xerox

There are certain companies that probably cannot be turned around no matter who runs them. They tend to be in industries where macro-economic trends are against them, like the buggy whip business 150 years ago.

Investors are not likely to get much out of these firms, unless and until the trend that is hurting them is reversed

There is no denying that the Xerox brand is one of the most recognized in corporate America and has a lot of equity overseas as well. But, the stock is up about 10% over the last two years, well below the S&P. The problem is significant. The company is not growing. Xerox has a good footprint in digital copiers, high end printers and document management, but firms like Canon want the same customers. And, they are getting them.

Xerox owns a piece of Fuji Xerox, and weaknesses at that operation forced the company to cut its forecasts for the current quarter.

The fourth quarter of last year spoke volumes about Xerox’s challenges. Revenue rose 3% to almost $4.4 billion and net income fell from $282 million in the prior year period to $214 million. The company’s operating profit was up slightly. And guidance for the early part of this year was lackluster.

Xerox recently made The Wall Street Journal’s list of the 25 worst performing stocks over the last 10 years.  Current annual revenue is as low as it has been over the last decade, so it is hard to see how the company can make the case that its new office products are gaining any ground.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: February 28, 2007 – 10:23 am in Uncategorized

PZZA: Papa John’s Drops the Pizza

By William Trent, CFA of Stock Market Beat

Small Cap Watch List and Mid Cap Watch List member Papa John’s International (PZZA) reported earnings last night. Highlights:

Read More »

Posted on: February 28, 2007 – 9:49 am in Food

SAFM: Chicken Purveyor Sanderson Farms Jumps from Fryer to Fire

By William Trent, CFA of Stock Market Beat

Small Cap Watch List and Mid Cap Watch List member Sanderson Farms SAFM) Released disappointing earnings (compared with analyst estimates of a ($0.07) loss on $277 million in sales):

Net sales for the first quarter of fiscal 2007 were $292.7 million compared with $236.2 million for the same period a year ago. For the quarter, the net loss was $2.8 million, or $0.14 per diluted share, compared with the net loss of $8.6 million, or $0.43 per diluted share, for the first quarter of fiscal 2006. Operating income for the first quarter of fiscal 2006 was reduced by incurred but unrecognized lost profits and expenses of approximately $3.0 million related to losses sustained as a result of Hurricane Katrina.

While fading bird flu fears helped stabilize poultry prices, demand for corn-based ethanol has caused feed prices to soar.

“While all of these factors, along with the favorable trends in chicken prices, are positive indicators for our business going forward in fiscal 2007, we expect our feed costs will continue to rise,” [CEO Joe] Sanderson continued. “The demand for corn from ethanol producers is affecting market prices for corn and soybeans. However, we remain confident that the chicken and grain markets will strike a favorable balance over time.”

Read More »

Posted on: February 28, 2007 – 9:47 am in Food

Biotech IPO Filing: Endoceutics of Canada

A Canadian biotech company named Endoceutics, Inc. has filed with the SEC to raise up to $75 million via an IPO.  The underwriting group is listed as First Albany, Oppenheimer, and Stifel Nicolaus.  Endoceutics will have the ticker ENCX on NASDAQ.

This clinical-stage biotech is developing hormone therapies for the treatment and prevention of breast cancer and endocrine-related disorders in postmenopausal women and aging men. It has late-stage product candidates for the treatment and prevention of breast cancer and a variety of conditions affecting postmenopausal women. It plans to commence three Phase III clinical trials in the next twelve months and is supporting a Phase III clinical trial being conducted in collaboration with an academic research institution evaluating one of our compounds. The IPo proceeds will be sufficient to fund two product development programs through the completion of currently planned Phase III clinical trials and the filing of NDAs in the United States. Assuming favorable clinical trial results, it anticipates filing an NDA for one of these product candidates in 2008 and for the other in 2009 and its lead product candidate, for the treatment and prevention of breast cancer.  The company has manufacturing and collaboration and distribution agreements in place with Schering-Plough (SGP).

There is one key risk worth noting here, which it brings up itself in the prospectus: We currently only have two full-time employees and will have two additional employees under contract…. and intend to rely on third-party contractors to perform a variety of our operations, including research and development activities, manufacturing, marketing and sale of our products.  This is not unheard of but investors do tend to be more skeptical on operating companies of this size.

Jon C. Ogg
February 27, 2007

Jon Ogg is a partner in 24/7 Wall St., LLC and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: February 28, 2007 – 9:45 am in Biotech, IPOs

Dow’s 400 Point Drop Aside, RadioShack’s Turnaround is Solidly in Place

By Chad Brand of Peridot Capitalist

Despite Tuesday’s dramatic 416 point drop in the Dow Jones Industrial Average, you may have noticed one stock that managed to gain 12% for the day. That stock was RadioShack (RSH), the electronics retailer that I highlighted earlier this month as a major turnaround candidate in retailing, similar to Sears Holdings (SHLD).

Why all the fuss over RSH shares when the rest of the market was getting pummeled? Well, the company reported fourth quarter earnings of $0.62 per share, soaring past the $0.43 forecasted by analysts. RadioShack also gave 2007 earnings guidance of $1.00 to $1.20 per share. That second part is most important because the average estimate for RSH’s earnings is $1.12 in 2008!

Read More »

Posted on: February 28, 2007 – 9:44 am in Consumer Electronics