Parker Eyes Ocular Science

11/21/2003 12:00 am EST


Sherri Parker

Co-Editor, UnDiscovered Stocks

Readers of the Digest are familiar with Sherri Parker, and her always-excellent UnDiscovered Stocks.And for those familiar with options, we’d also like to call your attention to her UnDiscovered Stock Options. Here’s a sample, featuring her latest stock and options play.

"Ocular Sciences (OCLR NASDAQ) is a clear winner with great sales and profit growth. For starters, this maker of disposable contact lenses has a huge built-in market. There are 36 million contact-lens wearers out there. From people who are scared of LASIK eye surgery to those who lose their glasses on a regular basis, these folks are fiercely loyal to their lenses. And because Ocular Sciences sells its lenses exclusively through licensed eye-care professionals, it gets a potential sale every time someone goes for an appointment.

"Ocular Sciences doesn't just make any old lenses, either. It develops innovative products that help boost its market share. For example, Ocular Sciences produces a special, easy-to-spot blue coating that lines millions of daily and extended wear lenses worldwide. These help contact wearers find dropped lenses on the floor, in the sink, or wherever. Earlier this year, Ocular Sciences also inked an important deal with Procter & Gamble to market Ocular's line of color-coated contact lenses under the COVER GIRL brand name. These colorful contacts enable wearers to change their eye color instantly.

"The firm i s forecasting between $1.03 and $1.05 in net earnings per share this year. That would be less than the company earned in 2002. But the profit decline is largely due to restructuring charges associated with a plan to lower manufacturing costs by upgrading some facilities, consolidating others, and trimming payrolls. Excluding charges, earnings-per-share should be close to flat year-over-year for all of 2003. What's more, the company said it should generate double-digit EPS growth next year.The balance sheet looks great to boot. Cash on the books is rising sequentially due to strong cash flow from operations (up 83% year-over-year in the second quarter). All told, Ocular Sciences looks to me like a solid company whose share price is poised to rise. Readers should purchase Ocular Sciences April call options. Hold on tight to those April calls."

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