Go to Jeff Salisbury LWGate Home Page.From: Ian <ianstm@shaw.ca>
Subject: Re: Re:ELTE (was [CANSLIM] Katherine-Opinion please?]
Date: Fri, 18 Jan 2002 17:01:18 -0800
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Thanks a lot for the chart analysis. The low volume during the new high to $13.50, and the high volume/no progress days on 1/10, 1/11, and 1/15 were the things that concerned me. I convinced myself that the low-volume high was just a case of 'too much, too fast' off the $5 October low. The recent high volume/no movement days are what concern me.
There shouldn't be much concern with P/E. The company claimed that Q4 2001, and Q1 2002 were already filled with existing backlog, and I figure that a minimum of $0.16 per Q is easy - so 4 months from now, the ttm EPS will be at least $0.70 if not more, and the P/E at current levels would be under 20. Given their industry group and recent growth rate, a much higher price could easily be supported. But I would like to see more signs of volume accumulation here.
After the next earnings report the IBD EPS ranking should go over 85, and the RS is over 90 already, so it should start appearing on IBD radar screens for the first time - including the weekend review. Perhaps it will be a month or so before the next clear direction becomes visible.
Thanks again,
Ian
- ----- Original Message -----
From: Katherine Malm
To: canslim@lists.xmission.com
Sent: Friday, January 18, 2002 3:36 PM
Subject: Re:ELTE (was [CANSLIM] Katherine-Opinion please?]
Hi Ian,
Your question has me wondering whether the sell rules that I follow translate perfectly to thinly traded stocks. But I'll tell you what I see and the way I would read it if I were to own it:
-After the B/O at 7.13, stock moves up and consolidates for about 5 weeks. This is a "valid" consolidation so that makes the previous base low 8.01 which was printed on 11/23/01.
-Just as a quick check for "overextension" that means that the stock is 70% above the 200dMA (7.02), 15% above the 50dMA (10.43) and 49.6% above the base low (8.01). It gets a yellow flag for being 70% above the 200dMA according to WON's sell rule #34, but does not get a red flag for the Rubberband Sell Rule.
-After the consolidation and breakout 12/18 the stock has started to show signs of stress. This could easily be market related, but no way to tell.
-1/2/02: New high on low volume. Red flag.
-1/10/02 & 1/11/02- two days with little or no price progress on high volume. Red flag.
-With 1 yellow and 2 red flags I thought it worth doing a PE Extension check. I've reconstructed the PE at the time of the B/O in October using trailing EPS numbers for the prior quarters. That puts it at $7.13/$.29 = 24.59. The extension warning would then be a forward PE of 24.59*2.21= 54.3. Let's see. DGO doesn't have any estimates, which means it isn't followed by enough analysts. I checked the internet to see if I could find anything and ran across this EPS/Rev snapshot:
http://yahoo.marketguide.com/MGI/mg.asp?target=/stocks/companyinformation/highlights&Ticker=ELTE
I am alarmed by the essentially flat revenues over the last 4 years, so I am going to go with the EPS estimates in my VectorVest software which reads a measly $.02. That puts the current forward looking PE at $11.98/$0.02 = 599! I'll have to mark that Red Flag.
One note is that its industry is fairly healthy, consolidating after rising, not overly extended and currently ranked in the 2nd quartile.
I'll let you take it from there!
Katherine
----- Original Message -----
From: Ian
To: canslim@lists.xmission.com
Sent: Friday, January 18, 2002 4:40 PM
Subject: [CANSLIM] Katherine - Opinion please?
Would tuesdays distribution day for ELTE make you exit the stock at this point? Do you have any other insights into the chart?
I would appreciate your analysis - it is the one big recent winner I am wondering what to do with. Based on all of my past experiences, and knowing the companies outlook, my gut tells me that it needs to consolidate here, but will run into the $20's by mid-year. But I'd rather listen to the chart. I fear I've held it long enough that I may be complacent.
Thank you.
Ian
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<DIV><FONT size=2>Thanks a lot for the chart analysis. The low volume during the
new high to $13.50, and the high volume/no progress days on 1/10, 1/11, and 1/15
were the things that concerned me. I convinced myself that the low-volume high
was just a case of 'too much, too fast' off the $5 October low. The recent high
volume/no movement days are what concern me.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>There shouldn't be much concern with P/E. The company claimed
that Q4 2001, and Q1 2002 were already filled with existing backlog, and I
figure that a minimum of $0.16 per Q is easy - so 4 months from now, the ttm EPS
will be at least $0.70 if not more, and the P/E at current levels would be under
20. Given their industry group and recent growth rate, a much higher price could
easily be supported. But I would like to see more signs of volume accumulation
here. </FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>After the next earnings report the IBD EPS ranking should go
over 85, and the RS is over 90 already, so it should start appearing on IBD
radar screens for the first time - including the weekend review. Perhaps it will
be a month or so before the next clear direction becomes visible.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Thanks again,</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Ian</FONT></DIV>
<DIV> </DIV>
<DIV> </DIV>
<DIV> </DIV>
<DIV>----- Original Message ----- </DIV>
<BLOCKQUOTE dir=ltr
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A href="mailto:kmalm@earthlink.net" title=kmalm@earthlink.net>Katherine
Malm</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
href="mailto:canslim@lists.xmission.com"
title=canslim@lists.xmission.com>canslim@lists.xmission.com</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Friday, January 18, 2002 3:36
PM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re:ELTE (was [CANSLIM]
Katherine-Opinion please?]</DIV>
<DIV><BR></DIV>
<DIV>Hi Ian,</DIV>
<DIV> </DIV>
<DIV>Your question has me wondering whether the sell rules that I follow
translate perfectly to thinly traded stocks. But I'll tell you what I see and
the way I would read it if I were to own it:</DIV>
<DIV> </DIV>
<DIV>-After the B/O at 7.13, stock moves up and consolidates for about 5
weeks. This is a "valid" consolidation so that makes the previous base low
8.01 which was printed on 11/23/01.</DIV>
<DIV>-Just as a quick check for "overextension" that means that the stock is
70% above the 200dMA (7.02), 15% above the 50dMA (10.43) and 49.6% above the
base low (8.01). It gets a yellow flag for being 70% above the 200dMA
according to WON's sell rule #34, but does not get a red flag for the
Rubberband Sell Rule.</DIV>
<DIV>-After the consolidation and breakout 12/18 the stock has started to show
signs of stress. This could easily be market related, but no way to
tell.</DIV>
<DIV>-1/2/02: New high on low volume. Red flag.</DIV>
<DIV>-1/10/02 & 1/11/02- two days with little or no price progress on high
volume. Red flag.</DIV>
<DIV>-With 1 yellow and 2 red flags I thought it worth doing a PE Extension
check. I've reconstructed the PE at the time of the B/O in October using
trailing EPS numbers for the prior quarters. That puts it at $7.13/$.29 =
24.59. The extension warning would then be a forward PE of 24.59*2.21= 54.3.
Let's see. DGO doesn't have any estimates, which means it isn't followed by
enough analysts. I checked the internet to see if I could find anything and
ran across this EPS/Rev snapshot:</DIV>
<DIV> </DIV>
<DIV><A
href="http://yahoo.marketguide.com/MGI/mg.asp?target=/stocks/companyinformation/highlights&Ticker=ELTE">http://yahoo.marketguide.com/MGI/mg.asp?target=/stocks/companyinformation/highlights&Ticker=ELTE</A></DIV>
<DIV> </DIV>
<DIV>I am alarmed by the essentially flat revenues over the last 4 years, so I
am going to go with the EPS estimates in my VectorVest software which reads a
measly $.02. That puts the current forward looking PE at $11.98/$0.02 = 599!
I'll have to mark that Red Flag.</DIV>
<DIV> </DIV>
<DIV>One note is that its industry is fairly healthy, consolidating after
rising, not overly extended and currently ranked in the 2nd
quartile.</DIV>
<DIV> </DIV>
<DIV>I'll let you take it from there!</DIV>
<DIV> </DIV>
<DIV>Katherine</DIV>
<BLOCKQUOTE dir=ltr
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A href="mailto:ianstm@shaw.ca" title=ianstm@shaw.ca>Ian</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
href="mailto:canslim@lists.xmission.com"
title=canslim@lists.xmission.com>canslim@lists.xmission.com</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Friday, January 18, 2002 4:40
PM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> [CANSLIM] Katherine - Opinion
please?</DIV>
<DIV><BR></DIV>
<DIV><FONT size=2>Would tuesdays distribution day for ELTE make you exit the
stock at this point? Do you have any other insights into the
chart?</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>I would appreciate your analysis - it is the one big
recent winner I am wondering what to do with. Based on all of my past
experiences, and knowing the companies outlook, my gut tells me that it
needs to consolidate here, but will run into the $20's by mid-year. But
I'd rather listen to the chart. I fear I've held it long enough that I may
be complacent.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Thank you.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Ian</FONT></DIV></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
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