Oberweis' Four-Pack

07/16/2004 12:00 am EST


James Oberweis

President, Oberweis Asset Management, Inc.

"We see few obvious macro opportunities to exploit," says Jim Oberweis . "In the absence of unforeseen macro-events (which, by definition, are tough to predict), we think the way to profit in the rest of 2004 will be from individual stocks." Here are his latest picks.

"On a valuation basis, earnings have caught up to valuations and risk is lower than it was at the beginning of the year. P/Es are cheaper than at the beginning of 2004, but are certainly not the super-bargains we saw at the beginning of 2003. Here are four stocks that we think should be of interest to investors:

"Hansen Natural (HANS NASDAQ) develops, markets, and distributes beverage category drinks. These include natural sodas, energy drinks, fruit juices, sparkling lemonades and orangeades, non-carbonated ready-to-drink iced teas, lemonades, juice cocktails and energy sports drinks, children's multi-vitamin juice drinks, and nutrition bars and cereals. Customers include Costco, Trader Joe’s, Sam’s Club, Wal-Mart, Safeway, and Albertson’s. Revenue in the latest first quarter increased 42% to $31.3 million versus $22.1 million in the year-ago first quarter. Earnings per share grew substantially to $0.19 versus $0.06 in the same year-ago period.

"Connetics (CNCT NASDASQ) is a specialty pharmaceutical company focused on the development and commercialization of innovative therapeutics for the dermatology market. Its primary products include OLUX, one of the most widely prescribed super high-potency topical steroids for scalp and non-scalp psoriasis, and Luxiq Foam, a mid-potency topical steroid for the treatment of scalp dermatoses. In February of 2004, the company announced that it acquired exclusive US rights from Roche to its Soriatane-brand acitretin, an approved oral therapy for the treatment of sever psoriasis in adults. Revenue in the latest first quarter increased 63% to $25 million from $15.3 million in the first quarter of 2003. Earnings per share grew to $0.05 versus a loss in the same year-ago period.

"LifeCell (LIFC NASDAQ) develops and distributes human-tissue products. Its proprietary tissue matrix technology allows for its products to remove antigenic cells while preserving the structure and biochemistry that is essential for normal tissue regeneration. Its primary product, Alloderm is used in reconstructive procedures primarily in the head and neck arena and for ventral hernia repair. Lifecell’s other products include Repliform, used in urogynecology applications (distributed by Boston Scientific), GraftJacket, used in orthopedic procedures (distributed by Wright Medical), and AlloCraft DBM (distributed by Stryker), used in spinal fusion and critical bone defects procedures. In LifeCell’s latest first quarter, revenues rose 53% to $13.8 million from its year ago level. Earnings per share in the quarter grew to $0.03 from prior-year first quarter adjusted earnings of $0.01.

"Applied Signal Technology (APSG NASDAQ) provides advanced digital signal processing systems used in reconnaissance of foreign telecommunications signals for intelligence gathering, a process referred to as signal intelligence. It develops equipment for both the collection and processing of signals. Its signal collection equipment consists of sophisticated receivers that scan through potentially thousands of cellphone, microwave, ship-to-shore, and military transmissions in the radio frequency spectrum with the goal of collecting specific signals. Its primary customers are the US government and its foreign allies. Revenue in the most recent second quarter rose 67% to $36.8 million from the year-ago second quarter. Earnings per share grew to $0.34 versus $0.21 in the same year-ago period."

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