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Tuesday June 09, 2009
Quant's trio of 'best buys'
In Upside, a service focused on applying in-depth quantitative analysis to small to mid-cap growth companies, he looks at a trio of stocks earning his "Best Buy" rating -- Priceline (NASDAQ: PCLN), Sybase (NYSE: SY), and Synaptics (NASDAQ: SYNA). "All things equal, the better a stock’s earnings momentum and profit outlook, the more likely it is to outperform in the year ahead. "Priceline has delivered seven consecutive quarters of better-than-expected profits. The online travel retailer said March-quarter earnings per share were $0.53, or $1.09 excluding one-time items — up 43% and handily above the consensus estimate of $0.91. 
"Revenue jumped 15% to $462 million, also topping the consensus. Overall gross bookings, the value of all travel services bought, rose a healthy 11% to $1.9 billion, while U.S. gross bookings increased 18%. "Priceline appears to be gaining market share, partly because its name-your-own-price method of booking allows consumers to bid for tickets at sharp discounts. For full-year 2009 per-share earnings, the consensus estimate stands at $6.56, up from $5.89 on Dec. 31. "Sybase, a maker of enterprise software for managing data and information, posted impressive March-quarter results. Excluding one-time items, per-share earnings were $0.49, up 26% and $0.07 above the consensus. "Total revenue rose 3%, with license revenue up 14%. Profit margins have improved in recent quarters, and stricter cost controls should sustain this trend. "A strong competitive position, expanding product line, and large recurring revenue base bode well for growth. For 2009, Sybase expects per-share earnings of $2.20 to $2.24, compared to $2.24 earned in 2008. "The consensus is $2.24, up from $2.16 at the start of the year. For 2010, per-share earnings are expected to increase 13% to $2.51. "Per-share profits should benefit from share repurchases, as buybacks have averaged roughly $100 million annually since 1998. "Synaptics, a leading maker of touch-screen solutions for electronic devices, has a habit of beating expectations. "Per-share earnings have exceeded expectations for 11 straight quarters, including a 15% surprise for the March quarter. Per-share earnings were $0.38 excluding non-cash charges, up 65%. Revenue jumped 28% to $101 million and also exceeded expectations. "Looking ahead, Synaptics should benefit from strong demand for its technology used in small, netbook computers. "Management now forecasts June-quarter earnings per share of $0.37 to $0.47, versus the $0.31 earned a year earlier. Consensus profit estimates call for 65% profit growth for fiscal 2009 ending June and flat profits for fiscal 2010." |
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"We screened our database for standouts based on meaningful profit surprises," says 'quantitative analyst