Some Stocks Worth Watching

Here are a few stocks that have caught my attention recently. I’m not adding them to the Buy List (I only do that once a year), but I think these stocks are good values right now.
First up is Mylan Labs (MYL). Mylan is one of the best generic drug stocks around. Generics tend to be counter-cyclical, meaning they do well when times are rough. Mylan’s sales have been flat recently and the stock got pounded. Shares of Mylan dropped from $28 to $15, but they’ve been steadily recovering since then.
The shares still look pretty inexpensive. In February, the company said that it’s expects to earn between $1.20 and $1.40 a share for Fiscal ’07 (ending in March 2007). That means that the stock is currently going for 16 to 19 times next year’s earnings.
Another interesting stock is Lowe’s (LOW). Frankly, this one surprises me. Although I decided to put Home Depot on this year’s Buy List, I can’t help but notice how good its main competitor looks. Make no mistake: Lowe’s is an earnings machine. Also, I don’t buy the idea that Lowe’s or Home Depot should follow the housing market. Both companies have clearly shown that they can thrive in all types of environments.
For the fourth quarter, Lowe’s earned 87 cents a share, seven cents more than Wall Street was expecting. The company also announced that it expects earnings for this year of $4.03 to $4.13 a share. I think it’s interesting that some investors will comb through all this crazy research on a stock, when sometime all you need to do is listen to what the company is saying. That’s also how I feel about Dell (DELL). I’ve been reading all these articles about how Dell’s business model is broken and out-of-date, yet the folks running the business keep telling us not to worry. Guess who I’m going to listen to?
Another good stock is Cintas (CTAS). This may be the best stock you’ve never heard of. They make workplace uniforms. No, I’m not making this one up. It’s hugely profitable. They’re even in the S&P 500.
Cintas was a big stock during the 1990’s, but it’s been flat for most of this decade. The company missed earnings a few times recently, which has weighed on the stock. But in January, Cintas raised its dividend by 9%. The company said that it expects to earn $1.92 to $1.96 a share this year, which is a nice improvement over the $1.74 it made last year.
There are also a few small banks and savings & loans I like to watch. These are great stocks to follow. There are lots of wonderful companies out there that almost no one knows about. Four of my favorites are Northern Empire Bancshares (NREB), Harleysville National (HNBC), NewMil Bancorp (NMIL) and Coastal Financial (CFCP). The first two are banks, the latter two are thrifts. Best of all, not a single analyst on Wall Street covers any of them.
To give you an example, here are Northern Empires’ EPS for the last few years.
2001 $0.77
2002 $0.85
2003 $1.01
2004 $1.23
2005 $1.59
Northern Empire is the holding company for Sonoma National Bank and is based in Santa Rosa, CA. The bank has eleven branches and 150 employees.

Posted by on April 11th, 2006 at 10:40 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.