Go to Jeff Salisbury LWGate Home Page.From: Ian <ianstm@shaw.ca>
Subject: Re: Re:ELTE (was [CANSLIM] Katherine-Opinion please?]
Date: Sat, 19 Jan 2002 21:16:34 -0800
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Katherine:
I have listened to the last 2 conference calls, and management paints a very different picture. The acquisition from last year has been negligible to overall revenues, and has not contributed to earnings yet. Rather, the fact that they are in a new product cycle, expanding internationally, and are moving into new verticals, has been given as their reason for the recent growth. Moreover, they claimed last Q that existing backlog should make Q4 2001 and Q1 2002 comparable with the last 2 quarters. They also seemed confident that their customer base and recurring revenue stream had finally reached a "critical mass" that would ensure continuing growth. They weren't sure what exact growth rate they would have, but they were confident growth would continue.
Finally, they were confident that the Law Manager acquisition from last year was finally about to contribute meaningfully to earnings.
In the face of this, it strikes me as odd that there would still be an active covering analyst with such low estimates. Maybe that means that the next earnings report (rumored to be on Feb. 11) will be the one that either breaks them, or sends them to a new level as they finally have a share price over $10 and a market cap over $100,000,000. We'll see.
Ian
----- Original Message -----
From: Katherine Malm
To: canslim@lists.xmission.com
Sent: Saturday, January 19, 2002 6:48 AM
Subject: Re: Re:ELTE (was [CANSLIM] Katherine-Opinion please?]
Hi Tom
This is what I don't get, and I'm not trying to be objectionable, just trying to find out how you'd get $.16/quarter given the company's history. When I look at this, I see OK growth in revenues, but the company continuously has good and bad quarters. I noticed in the 10Q that they capitalize software development and then write it off in chunks every so often (not uncommon) and it's possible that these negative quarters every so often are related to that. I'm guessing if I were to dig further into the financials I would get to know them better. I know that they did an acquisition in 2000, and I'd assume that the growth in EPS would be related. I look at Sept/Oct 99 and see really nice quarters just like the last two we've seen recently, but they are then followed by negative or so-so quarters. That raises red flags and would lead me to question whether the growth pattern shown recently can be projected into the future.
Katherine
GROWTH RATES
1 Year 3 Years 5 Years
Sales % -11.70 15.54 -14.53
EPS % NM NM NM
Dividend % NM NM NM
REVENUE
Quarters 1998 1999 2000 2001
MAR 8,343 12,988 13,334 14,295
JUN 10,850 15,401 13,741 17,392
SEP 12,385 15,381 12,858 18,516
DEC 13,484 15,496 12,399
Totals 45,062 59,266 52,332 50,203
Note: Units in Thousands of U.S. Dollars
EARNINGS PER SHARE
Quarters 1998 1999 2000 2001
MAR -0.070 0.010 0.050 -0.040
JUN -0.060 0.080 0.010 0.160
SEP 0.020 0.140 -0.020 0.230
DEC -0.030 0.210 -0.060
Totals -0.140 0.440 -0.020 0.350
Note: Units in U.S. Dollars
----- Original Message -----
From: Tom Worley
To: canslim@lists.xmission.com
Sent: Saturday, January 19, 2002 8:27 AM
Subject: Re: Re:ELTE (was [CANSLIM] Katherine-Opinion please?]
Hi Katherine,
I see 16 cents as easy based on the last 4 sequential quarters (last two were 16 and 23 cents). Sales appear to be accelerating thru Q3, so even a moderate slowdown in acceleration should still leave them well over 16 cents/qtr.
Tom Worley
stkguru@netside.net
AIM: TexWorley
----- Original Message -----
From: Katherine Malm
To: canslim@lists.xmission.com
Sent: Saturday, January 19, 2002 9:09 AM
Subject: Re: Re:ELTE (was [CANSLIM] Katherine-Opinion please?]
Tom, Ian
Just curious...where do you get $.16/Q EPS estimates? I took a *very* quick glance at the last 10Q, are you basing this on the acquisition in 2000?
Katherine
----- Original Message -----
From: Tom Worley
To: canslim@lists.xmission.com
Sent: Saturday, January 19, 2002 12:25 AM
Subject: Re: Re:ELTE (was [CANSLIM] Katherine-Opinion please?]
I agree, Ian. My second trip on this stock has nearly made up the loss from the first voyage. Looks more promising now than the first time I tried it. Sequential growth particularly impressive.
Tom Worley
stkguru@netside.net
AIM: TexWorley
----- Original Message -----
From: Ian
To: canslim@lists.xmission.com
Sent: Friday, January 18, 2002 8:01 PM
Subject: Re: Re:ELTE (was [CANSLIM] Katherine-Opinion please?]
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>Katherine:</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>I have listened to the last 2 conference calls, and management
paints a very different picture. The acquisition from last year has been
negligible to overall revenues, and has not contributed to earnings yet. Rather,
the fact that they are in a new product cycle, expanding internationally, and
are moving into new verticals, has been given as their reason for the recent
growth. Moreover, they claimed last Q that existing backlog should make Q4 2001
and Q1 2002 comparable with the last 2 quarters. They also seemed confident that
their customer base and recurring revenue stream had finally reached a "critical
mass" that would ensure continuing growth. They weren't sure what exact growth
rate they would have, but they were confident growth would
continue.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Finally, they were confident that the Law Manager acquisition
from last year was finally about to contribute meaningfully to
earnings.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>In the face of this, it strikes me as odd that there would
still be an active covering analyst with such low estimates. Maybe that means
that the next earnings report (rumored to be on Feb. 11) will be the one that
either breaks them, or sends them to a new level as they finally have a share
price over $10 and a market cap over $100,000,000. We'll see.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Ian</FONT></DIV>
<DIV> </DIV>
<DIV> </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: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> Saturday, January 19, 2002 6:48
AM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: Re:ELTE (was [CANSLIM]
Katherine-Opinion please?]</DIV>
<DIV><BR></DIV>
<DIV>
<TABLE bgColor=#ffffff border=0 cellPadding=2 cellSpacing=1 width="100%">
<TBODY>
<TR>
<TH bgColor=#ffffff colSpan=4>
<DIV align=left>Hi Tom</DIV>
<DIV align=left> </DIV>
<DIV align=left>This is what I don't get, and I'm not trying to be
objectionable, just trying to find out how you'd get $.16/quarter given
the company's history. When I look at this, I see OK growth in revenues,
but the company continuously has good and bad quarters. I noticed in the
10Q that they capitalize software development and then write it off in
chunks every so often (not uncommon) and it's possible that these
negative quarters every so often are related to that. I'm guessing if I
were to dig further into the financials I would get to know them better.
I know that they did an acquisition in 2000, and I'd assume that the
growth in EPS would be related. I look at Sept/Oct 99 and see really
nice quarters just like the last two we've seen recently, but they are
then followed by negative or so-so quarters. That raises red flags and
would lead me to question whether the growth pattern shown recently can
be projected into the future.</DIV>
<DIV align=left> </DIV>
<DIV align=left>Katherine</DIV>
<DIV><FONT size=-1></FONT> </DIV>
<DIV><FONT size=-1>GROWTH RATES</FONT></DIV></TH></TR>
<TR>
<TH bgColor=#dddddd></TH>
<TH bgColor=#dddddd><FONT size=-1>1 Year</FONT></TH>
<TH bgColor=#dddddd><FONT size=-1>3 Years</FONT></TH>
<TH bgColor=#dddddd><FONT size=-1>5 Years</FONT></TH></TR>
<TR>
<TD bgColor=#ffffff><FONT size=-1>Sales %</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>-11.70</FONT></TD>
<TD align=right><FONT size=-1>15.54</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>-14.53</FONT></TD></TR>
<TR>
<TD bgColor=#ffffff><FONT size=-1>EPS %</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>NM</FONT></TD>
<TD align=right><FONT size=-1>NM</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>NM</FONT></TD></TR>
<TR>
<TD bgColor=#ffffff><FONT size=-1>Dividend %</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>NM</FONT></TD>
<TD align=right><FONT size=-1>NM</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT
size=-1>NM</FONT></TD></TR></TBODY></TABLE><BR>
<TABLE bgColor=#dddddd border=0 cellPadding=4 cellSpacing=0 width=475>
<TBODY>
<TR>
<TD>
<TABLE bgColor=#ffffff border=0 cellPadding=2 cellSpacing=1 cols=5
width="100%">
<COLGROUP>
<COL width="20%">
<COL width="20%">
<COL width="20%">
<COL width="20%">
<COL width="20%">
<TBODY>
<TR>
<TH bgColor=#ffffff colSpan=5><FONT size=-1>REVENUE</FONT></TH></TR>
<TR>
<TH align=left bgColor=#dddddd><FONT size=-1>Quarters</FONT></TH>
<TH align=middle bgColor=#dddddd><FONT size=-1>1998</FONT></TH>
<TH align=middle bgColor=#dddddd><FONT size=-1>1999</FONT></TH>
<TH align=middle bgColor=#dddddd><FONT size=-1>2000</FONT></TH>
<TH align=middle bgColor=#dddddd><FONT size=-1>2001</FONT></TH></TR>
<TR>
<TD><FONT size=-1>MAR</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>8,343</FONT></TD>
<TD align=right><FONT size=-1>12,988</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>13,334</FONT></TD>
<TD align=right><FONT size=-1>14,295</FONT></TD></TR>
<TR>
<TD><FONT size=-1>JUN</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>10,850</FONT></TD>
<TD align=right><FONT size=-1>15,401</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>13,741</FONT></TD>
<TD align=right><FONT size=-1>17,392</FONT></TD></TR>
<TR>
<TD><FONT size=-1>SEP</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>12,385</FONT></TD>
<TD align=right><FONT size=-1>15,381</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>12,858</FONT></TD>
<TD align=right><FONT size=-1>18,516</FONT></TD></TR>
<TR>
<TD><FONT size=-1>DEC</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>13,484</FONT></TD>
<TD align=right><FONT size=-1>15,496</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>12,399</FONT></TD>
<TD align=right><FONT size=-1></FONT></TD></TR>
<TR>
<TD bgColor=#dddddd colSpan=5></TD></TR>
<TR>
<TH align=left bgColor=#ffffff><FONT size=-1>Totals</FONT></TH>
<TH align=right bgColor=#eeeeee><FONT size=-1>45,062</FONT></TH>
<TH align=right><FONT size=-1>59,266</FONT></TH>
<TH align=right bgColor=#eeeeee><FONT size=-1>52,332</FONT></TH>
<TH align=right><FONT size=-1>50,203</FONT></TH></TR>
<TR>
<TD align=right bgColor=#dddddd colSpan=5><FONT
size=-1><B>Note: </B>Units in Thousands of U.S.
Dollars</FONT></TD></TR></TBODY></TABLE></TD></TR>
<TR>
<TD bgColor=#ffffff> </TD></TR>
<TR>
<TD>
<TABLE bgColor=#ffffff border=0 cellPadding=2 cellSpacing=1 cols=5
width="100%">
<COLGROUP>
<COL width="20%">
<COL width="20%">
<COL width="20%">
<COL width="20%">
<COL width="20%">
<TBODY>
<TR>
<TH bgColor=#ffffff colSpan=5><FONT size=-1>EARNINGS PER
SHARE</FONT></TH></TR>
<TR>
<TH align=left bgColor=#dddddd><FONT size=-1>Quarters</FONT></TH>
<TH align=middle bgColor=#dddddd><FONT size=-1>1998</FONT></TH>
<TH align=middle bgColor=#dddddd><FONT size=-1>1999</FONT></TH>
<TH align=middle bgColor=#dddddd><FONT size=-1>2000</FONT></TH>
<TH align=middle bgColor=#dddddd><FONT size=-1>2001</FONT></TH></TR>
<TR>
<TD><FONT size=-1>MAR</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>-0.070</FONT></TD>
<TD align=right><FONT size=-1>0.010</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>0.050</FONT></TD>
<TD align=right><FONT size=-1>-0.040</FONT></TD></TR>
<TR>
<TD><FONT size=-1>JUN</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>-0.060</FONT></TD>
<TD align=right><FONT size=-1>0.080</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>0.010</FONT></TD>
<TD align=right><FONT size=-1>0.160</FONT></TD></TR>
<TR>
<TD><FONT size=-1>SEP</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>0.020</FONT></TD>
<TD align=right><FONT size=-1>0.140</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>-0.020</FONT></TD>
<TD align=right><FONT size=-1>0.230</FONT></TD></TR>
<TR>
<TD><FONT size=-1>DEC</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>-0.030</FONT></TD>
<TD align=right><FONT size=-1>0.210</FONT></TD>
<TD align=right bgColor=#eeeeee><FONT size=-1>-0.060</FONT></TD>
<TD align=right><FONT size=-1></FONT></TD></TR>
<TR>
<TD bgColor=#dddddd colSpan=5></TD></TR>
<TR>
<TH align=left bgColor=#ffffff><FONT size=-1>Totals</FONT></TH>
<TH align=right bgColor=#eeeeee><FONT size=-1>-0.140</FONT></TH>
<TH align=right><FONT size=-1>0.440</FONT></TH>
<TH align=right bgColor=#eeeeee><FONT size=-1>-0.020</FONT></TH>
<TH align=right><FONT size=-1>0.350</FONT></TH></TR>
<TR>
<TD align=right bgColor=#dddddd colSpan=5><FONT
size=-1><B>Note: </B>Units in U.S.
Dollars</FONT></TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE></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:stkguru@netside.net" title=stkguru@netside.net>Tom
Worley</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> Saturday, January 19, 2002 8:27
AM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: Re:ELTE (was [CANSLIM]
Katherine-Opinion please?]</DIV>
<DIV><BR></DIV>
<DIV><FONT face=Arial>Hi Katherine,</FONT></DIV>
<DIV><FONT face=Arial></FONT> </DIV>
<DIV><FONT face=Arial>I see 16 cents as easy based on the last 4 sequential
quarters (last two were 16 and 23 cents). Sales appear to be accelerating
thru Q3, so even a moderate slowdown in acceleration should still leave them
well over 16 cents/qtr.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=Arial></FONT> </DIV>
<DIV>Tom Worley<BR><A
href="mailto:stkguru@netside.net">stkguru@netside.net</A><BR>AIM:
TexWorley</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: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> Saturday, January 19, 2002 9:09
AM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: Re:ELTE (was [CANSLIM]
Katherine-Opinion please?]</DIV>
<DIV><BR></DIV>
<DIV>Tom, Ian</DIV>
<DIV> </DIV>
<DIV>Just curious...where do you get $.16/Q EPS estimates? I took a *very*
quick glance at the last 10Q, are you basing this on the acquisition in
2000?</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:stkguru@netside.net" title=stkguru@netside.net>Tom
Worley</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> Saturday, January 19, 2002
12:25 AM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: Re:ELTE (was [CANSLIM]
Katherine-Opinion please?]</DIV>
<DIV><BR></DIV>
<DIV><FONT face=Arial>I agree, Ian. My second trip on this stock has
nearly made up the loss from the first voyage. Looks more promising now
than the first time I tried it. Sequential growth particularly
impressive.</FONT></DIV>
<DIV> </DIV>
<DIV>Tom Worley<BR><A
href="mailto:stkguru@netside.net">stkguru@netside.net</A><BR>AIM:
TexWorley</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
8:01 PM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: Re:ELTE (was
[CANSLIM] Katherine-Opinion please?]</DIV>
<DIV><BR></DIV>
<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></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
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