Tap into UnTapped Opportunities
08/26/2005 12:00 am EST
"I don’t pretend to know how to forecast the market," says Nancy Zambell, editor of the exceptionalUnTapped Opportunities. "For me, it’s just hard work and elbow grease." Here, she describes her value strategy and highlights some of her current ideas.
"I am a fundamental investor. I am value-based with a little bit of technical analysis thrown in. Basically, I believe that if a company is fundamentally strong, has been in business for a while, has significant market share, has good cash flow, and the price is undervalued, then it may have the opportunity to go up in price. Those are the kinds of companies I look for.
"I’ve spent many years investigating stocks. There are tons of analysts out there. Who knows what the market is going to do? Everyday, something changes. So I focus on uncovered good values that are not recognized. In order to find companies that are undiscovered, I look for stocks that are not followed by a herd of Wall Street analysts, that do not have high institutional holdings, and do not have high price-to-earnings ratios. I also usually go out and visit with the companies that I recommend, as well as look at patterns of insider buying.
"Terex Corp. (TEX NYSE) is trading around $51 and near its 52-week high. There have been 18 recent insider buys. This has also been on my list for about six months. GTech Holdings (GTK NYSE), a technology and gaming company, is trading around $29. The stock is close to its 52-week low. It has seen 16 insider buys. Suffolk Bancorp (SUBK NASDAQ) has been on my list for a long time, as insiders just keep on buying. It makes me think that they will be selling their company. I particularly like investing in regional banks, not the big ones but the small regional outfits. If they are well run, oftentimes the founder of the company makes enough money that they reach the point when they want to sell. This can present good opportunities for investors, as they can receive a dividend along the way and then make some money on a buyout. The stock is now trading around $31 a share. It’s a New York regional bank that has recently seen 19 insider buys.
"Aside from insider plays, here are some other companies that I think look really good right now. PACCAR (PCAR NASDAQ) makes trucks, and the trucking industry is starting to do really well. It is paying a dividend of almost 4% and revenues were up 28% in the last quarter. It’s trading around $71. CDW Corp. (CDWC NASDAQ) sells computers through direct mail. It’s trading around $62 a share. AudioCodes (AUDC NASDAQ) makes software systems for networks. Second quarter revenues were up 49%, and net income was up 250%. It’s trading around $9.58 a share, which is close to its 52-week low. LaserScope (LSCP NASDAQ) makes medical lasers. It’s trading around $31."