Bottom of the Barrel: The Portfolio Gets a Spring Cleaning
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 Witness Systems (WITS), 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 first mentioned 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
|Original Rating||Current Outlook||Company/Ticker||Date of Mention||Mar 12 Close||Mention Price*||Price Last Week||% Change From Mention||% Change Weekly|
|2.5||Positive||Cost Plus World Markets (CPWM:Nasdaq)||March 6, 2002||$27.23||$25.83||$25.21||5.42%||8.01%|
|2.5||Positive||Rare Hospitality (RARE:Nasdaq)||Feb. 20, 2002||24.21||25.72||26.81||-5.87||-9.70|
|2||Positive||Endocare (ENDO:Nasdaq)||Jan. 23, 2002||15.39||18.21||15.60||-15.49||-1.35|
|2.5||Positive||SurModics (SRDX:Nasdaq)||Dec. 19, 2001||38.18||34.60||37.90||10.35||0.74|
|2.5||Positive||VitalWorks (VWKS:Nasdaq)||Nov. 21, 2001||4.97||4.30||4.93||15.58||0.81|
|2||Positive||FPIC Insurance (FPIC:Nasdaq)||Nov. 14, 2001||12.32||12.83||12.65||-3.98||-2.61|
|3||Positive||Witness Systems (WITS:Nasdaq)||Oct. 31, 2001||13.27||8.06||13.68||64.64||-3.00|
|3||Market||NetBank (NTBK:Nasdaq)||Feb. 6, 2002||15.84||13.45||14.83||17.77||6.81|
|2.5||Market||Coastal Bancorp (CBSA:Nasdaq)||Dec. 12, 2001||32.68||27.84||31.56||17.39||3.55|
|2.5||Market||Coinstar (CSTR:Nasdaq)||Nov. 7, 2001||32.28||19.96||27.26||61.72||18.42|
|2.5||Market||Hibbett Sports (HIBB:Nasdaq)**||Oct. 24, 2001||25.26||20.04||22.95||26.05||10.07|
|2.5||Market||Quixote (QUIX:Nasdaq)||Oct. 3, 2001||18.00||21.44||18.04||-16.04||-0.22|
|1||Special Sit.||Luby's (LUB:NYSE)||Feb. 27, 2002||6.74||6.22||6.37||8.36||5.81|
|3||Special Sit.||Quanta Systems (PWR:NYSE)||Jan. 9, 2002||16.41||16.05||15.66||2.24||4.79|
|Barricade||Avoid||Actrade (ACRT:NYSE)||Jan. 30, 2002||17.00||20.65||15.36||-17.68||10.68|
|0.5||Avoid||Goody's Family Clothing (GDYS:Nasdaq)||Nov. 28, 2001||5.40||4.50||4.22||20.00||27.96|
|1||Avoid||Bridgford Foods (BRID:Nasdaq)||Oct. 10, 2001||10.75||13.18||10.95||-18.44||-1.83|
|2.5||6.04||Empire District Electric (EDE:NYSE)||Jan. 16, 2002||21.01||21.23||20.68||-1.04||1.60|
|2.5||2.43||Met-Pro (MPR:NYSE)||Oct. 17, 2001||14.11||11.16||13.32||26.43||5.93|
|2.5||4.62||Integra Bancorp (IBNK:Nasdaq)||Jan. 2, 2002||19.81||20.75||20.23||-4.53||-2.08|
|3||4.49||Alexandria Real Estate (ARE:NYSE)||Feb.13, 2002||42.18||40.25||42.15||4.80||0.07|
|*Average price on date of mention.
**Prices Adjusted for 3:2 split on Feb 20, 2002.
Source: TSC Research
Names to AvoidThe names on the avoid list don't change. But given the continued turmoil at Actrade (ACRT), 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 (GDYS) has seen a nice recovery in the past two months. However, it continues to feel the pressure of Kohl's (KSS) in large markets like Atlanta and of general merchandise discounters like Wal-Mart (WMT) in smaller markets. There are better retailers to own than Goody's.
Barrel PotpourriThe second-best performer in the Barrel portfolio, behind Witness Systems, is Coinstar (CSTR), 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 original Barrel stock, Quixote (QUIX), 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 (ARE), Empire District Electric (EDE), Integra Bancorp (IBNK) and Met-Pro (MPR) -- 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.
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