1/04/2015

Ugly 2014 Performance Contributing to 2015 Mean Reverting Candidates

Stocks covered in this post; CTCM,CTG,EPAX,COH,NTP

Before today's post, a quick comment on last week’s mention of Karnalyte Resources. (KRN.TO/ KRLTFStock Trades at 19% of BV and 46% Net Cash


Friday (01/03/15) Karnalyte Resources announced DISCUSSIONS obtaining 700 Million USD financing for the development of Wynyard Carnallite-Sylvite Project. The news should positively impact price; KRN.TO was up 17.50% on Friday. KRLTF changed 12.31%, 10% below the converted exchange rate for Canadian Dollars to USD.


Uncertainty is the major concern. Management’s lack of transparency and dissident shareholder requisition hold back the stock price. Details clarifying the loan’s impact on capital structure; after the price should move higher. A major concern, financing has a lead Indian Bank and would flow through a syndication of other banks. India’s Gujarat State Fertilizers has a 19% stake in the company.


Now today's post. The search started by reviewing all US exchanges;NYSE,AMEX,NAS,OTCBB, OTCPK, about 12,000 listed companies. The universe reduced by selecting the bottom 25% based on stock price returns. The worst or bottom 25% 2014 returns filtered based on financial soundness. Metrics used Z score, Sloan and Beneish to remove companies with possibility of near term bankruptcy or earnings manipulation.Stocks included, Z scores greater than 2.99, adequate interest coverage, and general financial soundness.Further, include only stocks reducing share count from 2011 to MRQ, TTM and debt reducers over the same periods coupled with historical and industry low valuations.


Ideas meeting the criteria and analyzed further are worth a closer look.

CTC Media, Inc (CTCM)

“CTC Media, Inc., is a media company, which operates three Russian television networks CTC, its flagship network, Domashny and DTV”. Morningstar

Mean reverting attributes, 
52 Week Change = -64.19%, 
LTD reduction 39.19M for 2011 to MRQ 14.19M.
Share count reduction 157.23M 2011 to MRQ 155.76M,
EV/Rev = 0.75 trailing dividend yield = 14.20%
% Held by Insiders:63.92%, 
Price near 5 years low coupled with 5 yearlow for P/S and P/B, positive FCF, Z score 4.92
Month end stock price Dec 2011 = 8.77, Dec 2012 = 7.88, Dec 2013 = 13.90, Jun 2014 = 11.05, Price = 4.87 on 01/02/14.


Market Cap: 758.56M , Enterprise Value:    593.95M





















Computer Task Group Inc(CTG)

"Computer Task Group, Inc., is an IT solutions and staffing services company with operations in North America and Europe. The Company's geographical area of operation includes North America and Europe." Morningstar

CTG mentioned in a prior post, November 2014, “Mean Reverting Candidates, Financially Strong”. CTG was $8.80 on post date. Today it sits at $9.53 (01/02/15) still a strong mean reverting candidate for 2015.




Market Cap: 176.65M , Enterprise Value: 128.75M
Trailing P/E: 12.22 , Price/Sales: 0.44
Price/Book:1.52 , Enterprise Value/Revenue:  0.32
Enterprise Value/EBITDA (ttm): 5.50
Profit Margin (ttm):   3.23% , Operating Margin (ttm): 5.43%
Return on Assets (ttm): 8.15% , Return on Equity (ttm): 11.36%
Revenue (ttm):  397.74M , Revenue Per Share (ttm):    26.32
Qtrly Revenue Growth (yoy):  -3.90%
Gross Profit (ttm):   88.71M , EBITDA (ttm):  23.43M
Total Cash (mrq): 28.26M , Total Cash Per Share (mrq):  1.52
Total Debt (mrq):  0.00 , Current Ratio (mrq):    2.80
Book Value Per Share (mrq):  6.24
Operating Cash Flow (ttm): 9.21M per share = .50,
Free Cash Flow (ttm): 10.71M per share = .57
52-Week Change: -47.81%
52-Week High:19.02 , 52-Week Low:8.15
Shares Outstanding: 18.54M , Float:  12.97M
% Held by Insiders:32.95% , % Held by Institutions: 58.10%
Short % of Float (as of Nov 28, 2014): 4.00%

Trailing Annual Dividend Yield:      2.50%


Ambassadors Group Inc. (EPAX)

"Ambassadors Group Inc is a socially conscious educational company mainly engaged in organizing and promoting differentiated travel programs for students and professionals." Morningstar


















Market Cap: 43.46M , Enterprise Value:   -9.81M
Price/Sales (ttm):    0.99 , Price/Book (mrq):    0.90
Qtrly Revenue Growth (yoy):     -21.80%
Gross Profit (ttm): 43.64M ,  EBITDA (ttm):  1.17M
Total Cash (mrq):47.14M , Total Cash Per Share (mrq):   2.77
Total Debt (mrq):0.00 , Current Ratio (mrq):    3.54
Book Value Per Share (mrq): 2.79
Operating Cash Flow (ttm):3.79M , Free Cash Flow (ttm):   -3.46M
52-Week Change:-46.65%
52-Week High:  5.27 , 52-Week Low:2.14
Shares Outstanding: 17.04M , Float:  11.17M
% Held by Insiders:22.04% , % Held by Institutions:   47.30%
5 Year Average Dividend Yield: 4.00%




Nam Tai Property Inc. (NTP)

"Nam Tai Property Inc, along with its subsidiaries is an electronics manufacturing and design services provider to OEMs of telecommunication and consumer electronic products. The Company manufactures electronic components and subassemblies." Morningstar



















Coach, Inc. (COH)

"Coach has developed a narrow economic moat through a brand that enables pricing, sourcing and distribution advantages, and capital efficiency. Despite the company's recent struggles," Morningstar


























Market Cap: 10.28B , Enterprise Value:   8.76B
Price/Sales (ttm): 2.21 , Price/Book (mrq): 4.24
Enterprise Value/Revenue (ttm):  1.87
Enterprise Value/EBITDA (ttm): 6.73
Profit Margin (ttm): 14.54% , Operating Margin (ttm): 23.73%
Return on Assets (ttm): 19.45% , Return on Equity (ttm): 28.33%
Revenue (ttm):  4.69B , Revenue Per Share (ttm):    17.00
Qtrly Revenue Growth (yoy): -9.70% ,
Gross Profit (ttm):  3.30B , EBITDA (ttm):  1.30B
Total Cash (mrq):  907.50M , Total Cash Per Share (mrq): 3.29
Total Debt (mrq):170.00M , Total Debt/Equity (mrq): 6.97
Current Ratio (mrq):2.37, Book Value Per Share (mrq):8.85
Operating Cash Flow (ttm):960.21M ,Free Cash Flow (ttm): 705.62M
52-Week Change:-33.21%
52-Week High: 56.64 , 52-Week Low: 32.72
% Held by Insiders:0.91% , % Held by Institutions: 89.30%
Short % of Float :9.70%

Trailing Annual Dividend Yield:3.60% ,5 Year Average Dividend Yield: 2.30%

No comments: