JBL: Fear Factor

On May 17, American Science announced the first sale of Gemini to the U.S. government. Gemini is a nonintrusive parcel-inspection system designed for use in sensitive government areas. It is the first product on the market to use dual energy transmission and proprietary Z Backscatter X-rays.

American Science and Engineering is 40% off its 52-week high. With over $11 a share in cash, more than $93 million total, and less than $10 million in debt, the company has a terrific balance sheet.

Expectations got ahead of this stock as reflected by the knee-jerk reaction to its fiscal fourth-quarter results. Wall Street had predicted 76 cents per share in the last quarter, and ASEI apparently disappointed by reporting EPS of 51 cents. But on the May 23 conference call, CFO Kenneth Galaznik explained the 76 cent per share consensus expectation "excluded the accounting treatment effect of a charge for certain outstanding warrants," which equaled 42 cents per share, according to the firm's 8K filing.

So in reality, American Science and Engineering posted earnings of 93 cents per share, well in excess of expectations. Nevertheless, the stock has been punished significantly for its perceived sins and is now a buying opportunity.

Bronco Busting (Out)

I added to my shares of Bronco Drilling (BRNC Quote) last week by selling my Cisco (CSCO Quote). I still like Cisco, but it has had a good run, and being 100% invested, I had to sell something.

Bronco Drilling has seen a decline in stock price since I first recommended it on Feb. 25; however, it recently blew away earnings and is still seeing a high rig-utilization rate. I see this as an opportunity to buy a good company.

I am also adding to my shares of Xethanol (XTHN Quote) by exercising my warrants. Xethanol recently announced the acquisition of a plant in Georgia that will produce 35 million gallons of ethanol a year. Xethanol also unveiled its plans to expand throughout the east coast through its subsidiary CoastalXethanol.

Finally, the mark of a good CEO is his or her ability to leave a company and see that company remain efficient. Henry Paulson was a good CEO at Goldman Sachs (GS Quote) and is a good choice for Treasury secretary. Goldman has seen a pullback and its CEO go into public service; this is a buying opportunity.

I reiterate my belief that this is a $200 stock. Goldman is best-in-breed of investment banking firms. I do not own shares of Goldman, due to the conflict of a family member (my wife) covering this stock.

Remember being poor is bad, staying that way is stupid.