With a new season quickly approaching, it seems like a good time to do some spring-cleaning. Over the past week, I've dusted off the stocks in the Bottom of the Barrel portfolio and put most of them back, although some are now in different places.
As I conclude a week of rest and relaxation, here's a look at the newly polished Bottom of the Barrel portfolio.
The best performer in the portfolio has been
, the Georgia-based purveyor of customer service tracking systems. Its technology monitors the performance and efficiency of call centers that handle reservations, sales and inquiries for companies around the globe. This stock is up more than 60% since
in October, but I still like its prospects.
Witness turned a profit in the fourth quarter and continues to expand its offerings both internationally and in midsize companies. I also like its conservative accounting practices, which are sometimes rare finds in aggressive small-caps.
|Barrel Spring Cleaning
A little tinkering is a good thing
||Date of Mention
||Mar 12 Close
||Price Last Week
||% Change From Mention
||% Change Weekly
||Cost Plus World Markets (CPWM:Nasdaq)
||March 6, 2002
||Rare Hospitality (RARE:Nasdaq)
||Feb. 20, 2002
||Jan. 23, 2002
||Dec. 19, 2001
||Nov. 21, 2001
||FPIC Insurance (FPIC:Nasdaq)
||Nov. 14, 2001
||Witness Systems (WITS:Nasdaq)
||Oct. 31, 2001
||Feb. 6, 2002
||Coastal Bancorp (CBSA:Nasdaq)
||Dec. 12, 2001
||Nov. 7, 2001
||Hibbett Sports (HIBB:Nasdaq)**
||Oct. 24, 2001
||Oct. 3, 2001
||Feb. 27, 2002
||Quanta Systems (PWR:NYSE)
||Jan. 9, 2002
||Jan. 30, 2002
||Goody's Family Clothing (GDYS:Nasdaq)
||Nov. 28, 2001
||Bridgford Foods (BRID:Nasdaq)
||Oct. 10, 2001
||Empire District Electric (EDE:NYSE)
||Jan. 16, 2002
||Oct. 17, 2001
||Integra Bancorp (IBNK:Nasdaq)
||Jan. 2, 2002
||Alexandria Real Estate (ARE:NYSE)
|*Average price on date of mention.
**Prices Adjusted for 3:2 split on Feb 20, 2002.
Source: TSC Research
The other name to watch closely is
(SRDX - Get Report)
, a Minnesota-based maker of medical device coatings. SurModics' partnership with
Johnson & Johnson
to develop Rapamycin-coated stents for use in angioplasty continues to move forward. The new stent has a medicinal coating that helps prevent artery blockage. The product should be launched for general use in Europe in the second half of the year and in the U.S. potentially as early as next year.
I also still like
and the potential from its pending merger with
. However, its 17%-plus gain since its
mention in February
is pretty steep. Although NetBank's prospects remain bright, I'm moving this stock into the Market Outlook group of the portfolio.
has experienced some profit-taking in the past two days, after nice gains since I
it on Feb. 20. I still believe that this Atlanta-based owner of steakhouses will do well as the economy recovers, most likely as spring turns to summer. It remains a good name in the midpriced, casual dining space.
Names to Avoid
The names on the avoid list don't change. But given the continued turmoil at
, I'm changing this stock from its previous two-barrel rating to a warning rating, represented by the introduction of our flashing traffic barricade. The company's recent sudden change in strategy as well as concerns over its executive team make Actrade a very unappealing selection.
(For an explanation of our barrel rating system,
see our recent description.
Goody's Family Clothing
has seen a nice recovery in the past two months. However, it continues to feel the pressure of
in large markets like Atlanta and of general merchandise discounters like
in smaller markets. There are better retailers to own than Goody's.
The second-best performer in the Barrel portfolio, behind Witness Systems, is
, the purveyor of that green coin-counting machine you see at the front of your local grocery store. While the convenience (and fun) of dumping your spare change into those bins and getting money in return are cool, the stock, which is trading at a price-to-earnings multiple of nearly 55 times, appears fully valued.
, the Chicago-based maker of highway safety equipment, continues to feel the pinch from reductions in state highway construction budgets. That trend likely won't change soon, but an uptick in the economy should help this stock. I look for Quixote to tread water in the first half of the year, but investor interest should return in the second half.
All of the companies in the income portfolio --
Alexandria Real Estate
Empire District Electric
-- continue to pay solid dividends and remain favorites for those looking for small-cap income. I especially like Empire District, a stable Midwestern utility with a good customer base, little regulatory risk, a 6%-plus yield and the continued potential of a takeover at a premium price.
So, there you have it, a quick review of many of the Bottom of the Barrel portfolio stocks. Next week, I'll add another name to the portfolio and keep tabs on my picks.
Do you have candidates for Bottom of the Barrel? If so,
shoot me an email
with the company's name, why you think it qualifies and your full name and hometown. If I profile your suggestion, I'll send you a TSC
gift to commemorate your pick.