Re: [CANSLIM] PIR

From: "Mike Hofmann" <sfmcanslim@hotmail.com>
Subject: Re: [CANSLIM] PIR
Date: Thu, 3 Jan 2002 18:34:13 -0800
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Thanks for taking the time to reply, Jans.

I thought I remembered reading somewhere along the line that a gap at the
open was a good thing from a CANSLIM standpoint. Also, I don't understand
why it would indicate retail buying. Something happened between yesterday's
close at 17.00 and this morning's open at 17.80. I've thought that this
meant that the big boys were buying. How does a retail investor buy after
the close of extended trading one day and the opening bell the next day?

As for institutional support, I spent a good deal of time researching this
area. Here's why I think this criterion is a positive for PIR. Net
institutional shares purchased in the quarter ended 9/30 was +674,000 (per
MarketGuide.com). Also, of the top 15 institutional holders, only 3
decreased their holdings during the quarter. The primary institutional
sellers were Fidelity which sold 4.6 million shares (40% of their position)
and First Union which sold 2.1 million shares (89% of their position). I
thought that since the majority of the heavy holders increased their
positions, it was a plus for PIR.

It seems to me that earnings are good enough in the face of the other
positives and the extenuating circumstances of the terrible retail
environment during the first half of this year. WON says that previous 5
years earnings growth and that in the past 2 quarters are the most important
fundamentals. PIR's 5-yr growth is 54% and while QoQ earnings dropped in the
2nd quarter, they increased last quarter (albeit only 8%). If they hit the
bottom end of today's revised earnings guidance, QoQ growth will be a more
respectable 15%. Forward YoY earnings are currently projected to increase
12%.

I agree that this could very well be a climax run for PIR. That concerns me
greatly and will likely prevent me from jumping in. I am also wondering
about the price and RS pattern. WON warns that "the time to begin selling is
when the stock advances rapidly, is extended materially from its base, and
is showing extremely high relative strength". If that doesn't describe PIR
right not, I don't know what does. But I've read other technicians that say
it's a positive sign if a stock hits new price highs without hitting new RS
highs. PIR's RS has bounced off 100 several times over the past few months.
Might it do it again this time?

Well, I think that was a little more than 2 cents worth, but you can keep
the change ;^)

Mike

- ----- Original Message -----
From: <Spencer48@aol.com>
To: <canslim@lists.xmission.com>
Sent: Thursday, January 03, 2002 4:51 PM
Subject: Re: [CANSLIM] PIR


Mike:

     Just my 2¢, but I wouldn't even consider PIR-and here's why:  The '02
$Annual Earnings don't look impressive, and neither does the sales increase,
nor do the last 4 quarters of earnings (two in fact were negative).
     As for the gap on the open-why is that such a good thing?  The open is
where emotional buying takes place (by retail investors, not the funds-ie.
smart money).  So why one should consider "gapping on the open" a selling
point, I have no idea.
     It did establish a new high (closing 8% higher), and it closed at the
top of its range on VERY high volume, which is a good thing.  But its RS
line
(as seen in DG) did not make a new high.  This is one of WON's warning
signals to sell (and I imagine it would apply just as much to warn those
away
from buying).  To me the lagging RS on very high volume indicates that PIR
has just made it climax run.
     As far as the heavy institutional buying: I like the way Andreas
analyzed DFXI (I believe that's the stock he looked at) by looking at how
many institutions were INCREASING their buying of the stock.  Just because
institutions are heavily into it doesn't mean too much to me.  It's like
looking at EPS and Sales-you want the numbers to be increasing.  According
to
the beta version of the DG weekly graph (just to the bottom right of where
the graph begins) the # of funds holding the stock is decreasing (in
quarterly order from the most recent in 12/01, the numbers are: 160, 166,
161, 162)
     Of course, I could be wrong on all this, but I really don't feel the
probability of PIR going much higher-after looking at the chart, and PIR's
fundamentals-is in your favor.

jans


In a message dated 1/3/2002 6:06:41 PM Eastern Standard Time,
sfmcanslim@hotmail.com writes:

<< Great action on PIR recently, especially today. Granted, specialty retail
may not be a particularly CANSLIMish industry, but here's what I've got on
it. Sure would appreciate commentary.

 Today:
   a.. Gapped up at open
   b.. Established new high on extremely heavy volume (more than 5x ADV)
   c.. Ended day at upper end of day's trading range
   d.. Announced better than expected Dec sales and increased earnings
guidance for the quarter
   e.. Analysts are raving
 Fundies:

 Very strong overall

 Pros:
   a.. Heavy institutional buying in quarter ended 9/30/2001
   b.. EPS has held up in difficult economy (EPS up 9% in 3Q2001)
   c.. Cash flow + (big time)
   d.. Low debt and big improvement in this area the last two quarters
   e.. ROE just shy of WON's 17% criterion (16.6%), but is well above
industry avg (12.7%)
   f.. RSI has been holding in the 90s since early Oct
 Cons:
   a.. Annual earnings growth decreasing (5 yr = 54%, 3 yr = 10%, TTM = -2%)
... but TTM should improve if 4th Q comes in as expected
   b.. PEG may be a bit high (~1.4), but is in line with industry average
(1.5)
   c.. Insider ownership is poor at only 1.5% of outstanding shares and
insiders have been selling
   d.. Has been on a very good run; are we seeing a climax top? Today marked
by far the largest single day increase since the beginning of this run.
 Chart:
   a.. Broke out of cup w/o handle base formed by 12.65 high 9/4, 52-wk low
of 7.97 on 9/21 and gap up on strong volume 11/8. Also gapped up 11/26 &
12/18. That makes today's action the 4th b/o since early Nov. Could be
tired,
but I like the divergence between price and RSI. Price is hitting new highs
while RSI has a little room to grow. Does it have enough steam to break
through the all-time high of around 20?

 Support: Around 50-day EMA (14.72)

 Resistance: Around all-time high established 2Q1998 (~20)
  >>

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