Time to Be Cautious With Your IRA Trading

Sales and Purchases

Last week was a busy one for me in trading for my IRA, and it also included the day to rebalance my monthly five-stock screen. This screen has performed quite well over the last several months and is basically the same as my regular screening system, except it substitutes a requirement that volume must be increasing instead of the high-relative-strength requirement. I do require, though, that the stock price be close to its 52-week high.

So last week I sold Crane Company (CR Quote), Gardner Denver (GDI Quote), Nova Chemicals (NCX Quote), Pepsiamericas (PAS Quote) and Teleflex (TFX Quote).

I bought Century Aluminum (CENX Quote), DRS Technologies (DRS Quote), Keystone Automotive (KEYS Quote), Lions Gate Entertainment (LGF Quote) and URS Corp. (URS Quote). These five stocks will be held for one month, and then this portion of the portfolio will be rebalanced again.

In regular trading last week, I eliminated my position in Becton Dickenson (BDX Quote). I had held this stock for seven months, and it no longer appeared on my screening system as a buy.

I took a new position in PAREXEL International (PRXL Quote). While technically a research services company, PAREXEL is tied into the health services sector. The company provides services like contract research, consulting and medical communications to the pharmaceutical, biotechnology and medical device industries.

While the company's growth in sales has not been spectacular at only 10% on average for the last five years, more recent growth trends are much better. In fiscal 2006 (ending June), the company's revenue increased 13%, and so far in fiscal 2007, revenue is up 21%. The company has issued a projection for 2008, calling for a revenue increase of 17%. Earnings have grown faster than sales, with EPS increasing 72% this fiscal year to date and projected by the company to increase 23% in fiscal 2008.

These growth projections seem well-supported by an increasing backlog that, as of quarter-end March 31, 2007, was up 10.4% from the December quarter and up 46.9% from the same quarter one year ago. This is a record backlog that reflects growth across all business segments.

The company maintains a strong financial position with no long-term debt. In terms of valuation, PAREXEL currently sells at an enterprise value/EBITDA ratio of 12.2 on the basis of latest 12-month reported results. This compares with other companies in the medical field and in the research business that command an EV/EBITDA ratio around 15 times. Given the growth prospects of this company and the industry that it serves, I see no reason why this company's valuation should not attain more normal levels.

The Portfolio Update

The following table shows the current list of holdings in my IRA as of June 15, 2007:

Symbol	Name	Purchase Date	Cost	Price	Gain
Regular Holdings
ADPI	American Dental Partners	1/30/2007	$20.75	$28.64	38.02%
AHG	Apria Healthcare	11/16/2006	$24.42	$29.03	18.88%
AMP	Ameriprise Financial	12/18/2006	$55.09	$66.07	19.93%
AMSF	Amerisafe	12/18/2006	$14.18	$17.68	24.68%
BKI	Buckeye Technologies	11/16/2006	$11.83	$15.41	30.26%
CALM	Cal-Maine Foods	4/16/2007	$13.30	$14.80	11.28%
CF	CF Industries	5/3/2007	$40.57	$54.96	35.47%
CGX	Consolidated Graphics	5/1/2007	$76.88	$72.47	-5.74%
CHUX	O'Charleys	2/1/2007	$21.55	$21.11	-2.04%
GIB	CGI Group	3/9/2007	$8.52	$10.75	26.17%
INMD	Integramed America	2/6/2007	$11.47	$11.59	1.05%
JDAS	JDA Software	6/8/2007	$19.04	$19.78	3.89%
KCI	Kinetic Concepts	2/6/2007	$49.75	$49.99	0.48%
LAYN	Layne Christensen	5/22/2007	$41.26	$43.71	5.94%
METH	Methode Electronics	3/8/2007	$12.93	$16.63	28.62%
PRXL	PAREXEL Int'l	6/12/2007	$39.80	$40.45	1.63%
QD	Quadramed	3/19/2007	$3.06	$3.17	3.59%
SCHL	Scholastic	1/3/2007	$36.23	$36.27	0.11%
TBSI	TBS International	5/15/2007	$18.48	$22.52	21.86%
WEL	Boots & Coots	3/22/2007	$2.25	$1.80	-20.00%
WHQ	W-H Energy Services	5/17/2007	$60.96	$66.55	9.17%
WRNC	Warnaco Group	3/14/2007	$26.99	$36.97	36.98%
One Month Screen
CENX	Century Aluminum	6/15/2007	$54.40	$54.50	0.18%
DRS	DRS Technologies	6/15/2007	$54.20	$54.30	0.18%
KEYS	Keystone Automotive	6/15/2007	$41.80	$42.03	0.55%
LGF	Lions Gate Entertainment	6/15/2007	$11.40	$11.35	-0.44%
URS	URS Corp.	6/15/2007	$50.24	$50.15	-0.18%
Performance Results As Of 6/15/2007				IRA	S&P 500
Quarter To Date				10.4%	7.9%
Year To Date				19.9%	8.6%

Please note that due to factors including low market capitalization and/or insufficient public float, we consider American Dental Partners, Amerisafe, Cal-Maine Foods, O'Charleys, Integramed America, Quadramed, TBS International and Boots & Coots to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.