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52-Week Lows Warranting Further Research



It feels great to be actively viewing the 52-week low list and finding unusual characters in the list after the first four-day consecutive decline in 2013. All the companies below are sitting within 2% of a 52-week low as of August 19th, the most surprising being Royal Dutch Shell and International Business Machines.

IBM: Sitting at a price of $184.23 with a trailing twelve month P/E of 13.10 and a dividend yield of 1.9%. Shares outstanding have been consistently decreasing while free cash flow has been growing at over 11% annually in the last 10-years.

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MLNX: Closed at $41.01 sitting at a trailing twelve month P/E of 32.40 and no dividend. This was a very hyped name last summer but has continued to fall ever since topping out just past $100. Impressive 5-year growth numbers although 2013 revenues look to be light and share dilution will only make the engineered picture look worse.

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FIO: Finished off the day sitting at $10.63 down over 50% in 2013. Ugly misses in the first half of the year have led to the declines and with no dividend and negative earnings I don’t find it attractive and has become a show me story for Wall Street.

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DX: Has had a terrible six weeks, falling more than 25% and now trading at under B/V of around $8.50 and a 4.9 P/E. A very solid earnings trend and worth further research at first glance. The dividend is 15% annually with a 5-year growth rate of over 10% annually and only a payout ratio of 40%.

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EQIX: I have had the company on a watch list over the last eight weeks due to a personal hunch it may be temporarily overvalued. Equinix is resting at a B/V of 3.6, a P/E around 100 and no dividend. Growth numbers are impressive but a stretched valuation does not bode well for earnings misses.

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RDS.A: A steady grower (4.1% annual revenue growth, 10-year average) being priced at a no growth scenario, Royal Dutch Shell has an 8.5 P/E and is about 10% above B/V. The dividend yield is 4.7%, payout ratio is modest and Q2 depreciation looks to be unusual at first glance.

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About the author:

Tannor Pilatzke
I am a self taught investor through Warren Buffett, Charlie Munger, Ben Graham, Peter Lynch, Joel Greenblatt, David Einhorn, Seth Klarman, Howard Marks, Phillip Fisher and Thornton O'Glove. My focus is a bottoms up Value-GARP strategy with a mix of top down contrarianism.

"When you find yourself on the side of the majority, it is time to pause and reflect." - Mark Twain

Visit Tannor Pilatzke's Website


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