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INVESTools Advisory
A Free Digest of Trusted Investment Advice To unsubscribe from this free newsletter, please see below. In This Issue: 1. Toral: "Prepare for a Good 2002" (DYII) 2. A Leader in Telecom's Eventual Rebound (ADCT) 3. Rip-Roaring Returns from the Post-September 2001 Rebound (EMC) 4. Rex Stores Still a Bargain (RSC) 5. Enron Debt Woes Bad News for Bank (JPM) *************** A Word from our Sponsor ******************* FREE REPORT: 10 Stocks To Help You Make It All Back! Still listening to Wall Street's bears? They want you out of the way while they grab today's once-in-a-decade bargains. Don Rowe says investors now have a chance to double their wealth. Get 10 leaders of this new bull market! FREE report: http://www.investools.com/c/go/WALL/MTXTH-wallTW4?s=S600 *********************************************************** INVESTools Advisory Compiled by John Brobst, INVESTools.com 1. Toral: "Prepare for a Good 2002" (DYII) Al Toral says investors now anticipate a recovery, and he reminds skeptics of how easily the market overcame disappointing news about Q3 GDP. Corporate inventories now need replenishing, lower energy costs and interest rates are encouraging near-term growth, and labor costs have dropped. "Each one of us breathes a sigh of relief now that the year 2001 is behind us, and all of us will find that the market in 2002 will be far more productive and rewarding," he says. To capitalize, Toral recommends buying stock in a list of handpicked companies, and one of his favorites is Dynacq International (DYII). The firm provides home care infusion services and supplies. It also trains patients to administer medicines and nutrients themselves through IVs and feeding tubes. Dynacq has been growing rapidly. Revenues rose from $11 million in 1998 to over $31 million for the first three quarters of 2001. Profit margins averaged 18% and earnings grew 100+% over the last three years. Three stock splits rewarded investors since 1998. "We see Dynacq as an excellent growth stock that is not too volatile for the conservative investor," Toral says. For more on Al Toral's advice see "Cyberlution," January 2002, The Pure Fundamentalist. Alvin Toral uses key fundamental data to select aggressive growth stocks. For a free 30-day trial go to: http://www.investools.com/c/go/PFUN/MTXTH-pfun011002?s=S601 ---------------------------------------------------------- 2. A Leader in Telecom's Eventual Rebound (ADCT) ADC Telecommunications (ADCT) enjoyed a nice long run. Through the 1990s, revenues grew more than tenfold and peaked at over $3 billion in 2000. Its stock reflected this as it peaked at $49. But when the telecom bubble burst, sales for ADC dropped 27% from the prior year to $2.4 billion. The firm posted an annual loss of $1.64 a share, its first since 1985. But turnaround expert George Putnam sees better times ahead for the supplier of products for fiber optics, networking, equipment and software. "Telecom will be one of the leading industries for the foreseeable future," he says. "We believe ADC will not only survive, but perhaps be one of the first telecom suppliers to rebound." He points to its cash-rich and debt-free balance sheet, layoffs of 40+%, and other measures that cut capital expenditures by 60%. Putnam sees signs that ADC's business is already rebounding. For instance, the firm just won several new contracts and is gaining market share. A rebounding economy means more demand for communication services, and Putnam says that means growing demand for ADC's equipment. "We recommend buying ADC up to $7," he says. For more on George Putnam's advice see "Recommendation," January 2002, The Turnaround Letter. George Putnam concentrates on out-of-favor companies ripe for a turnaround while trading at a discount to their true value. For a free 30-day trial go to: http://www.investools.com/c/go/TURN/MTXTH-turn011002 ----------------------------------------------------------- 3. Rip-Roaring Returns from the Post-September 2001 Rebound (EMC) Steve Harmon made some great calls around the September 2001 market bottom. For instance, he said "buy" to eight stocks in the travel security sector. All but one of these is handsomely in the black, with standouts like Invision Technologies (INVN) gaining +262% and Identix (IDNX) up +103%. He also said "buy" to Checkpoint Software (CHKP), and it has since gained a healthy 68%. Going forward, one of Harmon's favorite sectors is network technology. Current favorites include data storage kingpin EMC (EMC). "Today's commerce relies heavily on intellectual assets -- DATA -- without which corporations would be hampered to do business," Harmon says. Little wonder that EMC's client list is chock full of Fortune 500 companies. But Harmon's current favorite is Network Appliance (NTAP), whose shares have rocketed 80% to $26 since November 2001. The firm recently launched NearStore, a new data storage solution that enterprise clients can use to restore data cheaply and quickly. "With EMC, NTAP, Hitachi (HIT) and IBM (IBM), you could own a basket of the leaders in storage as a sector play in the near-term," Harmon recommends. For more on Steve Harmon's advice see "Network Technology," December 2001, Broadband Investor. Steve Harmon puts investors at the forefront of the convergence of technology, entertainment, communication, commerce and fiber-optics. For a free 30-day trial go to: http://www.investools.com/c/go/BRBN/MTXTH-brbn011002?s=S601 ---------------------------------------------------------- 4. Rex Stores Still a Bargain (RSC) Stock in Rex Stores (RSC) has climbed over 55% from $18 in July 2001 to over $28. The retailer buys current models of consumer electronics and appliances that become available at a discount because of manufacturer overruns and cancelled orders. Buyback expert David Fried first recommended Rex last July and he sees more growth in store even after its price runup. "Management has put its money where its mouth is," Fried says. Over the past year, Rex bought back over 25% of its outstanding shares, and today's buyback program allows it to repurchase another 10%. Recent results show why. Q3 EPS rose 72% to $0.50 thanks to a rise in gross margins to 28.5% that boosted net income 55% to $4.4 million. Fried notes that Rex's market cap is about $180 million; this is just $40 million more than a conservative estimate of the after-tax value of tax credits and depreciated value of real estate on the books. "Buying $1 for $0.66 is an easy decision," he says. "We are confident that this holding will add to our outstanding record of picks in our portfolio." For more on David Fried's advice see "Featured Article," January 2002, The Buyback Letter. David Fried provides wealth-building opportunities in companies repurchasing their stock. For a free 30-day trial go to: http://www.investools.com/c/go/BACK/MTXTH-back011002 ---------------------------------------------------------- 5. Enron Debt Woes Bad News for Bank (JPM) JP Morgan Chase (JPM) continues to be plagued by its exposure to debt from failed energy trader Enron. The venerable bank recently said this exposure is $1 billion more than the $900 million previously announced. Adding insult to injury, a group of insurers continue to delay payment of $965 million until the bank says more about its forward sales contracts to Enron. Bernie Schaeffer sees more tough times ahead for JP Morgan Chase & advises an option play to capitalize. He notes that shares continue to trade below their 10-day and 20-day moving averages after bouncing off of the $40 level in November and December. Longer term, the stock trades far below its 10-month, 20-month and 40-month moving averages, all of which are heading south. Meanwhile, always-wrong option punters lowered short interest by 12% last month. Schaeffer sees the moves of option traders as a contrary indicator. He recently advised buying the June 40 put (JPMRH). For more on Bernie Schaeffer's advice see "Aggressive Portfolio," January 2002, The Option Advisor. Bernie Schaeffer provides practical option investing recommendations that are simple to understand and execute. For a free 30-day trial go to: http://www.investools.com/c/go/OPTI/MTXTH-opti011002?s=S600 *************** A Word from our Sponsor ******************* ALERT: New Buy Sign from Dan Sullivan on 16 High-Return Stocks Buy signs from Dan Sullivan's The Chartist are few and far between. And on-the-money for 30+ years - if you buy what he buys. His 12/5/01 buy sign is a rare chance to join one of the country's premier stock pickers. FREE trial: http://www.investools.com/c/go/CHRT/MTXTH-chrtTN3?s=S602 *********************************************************** Disclaimer The INVESTools Advisory is published solely for informational purposes and does not solicit nor offer to buy or sell any stock, mutual fund or other security. It does not attempt or claim to be a complete description of the securities, markets, or developments referred to in the material. All expressions of opinion are subject to change without notice. The information is obtained from internal and external sources which INVESTools considers reliable, but INVESTools has not independently verified such information and INVESTools does not guarantee that it is accurate or complete. INVESTools does not undertake to advise anyone. INVESTools, its employees, and/or officers and directors, may from time to time have a position in the securities mentioned and may sell or buy such securities. 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