Message-ID: <72553.1075840393901.JavaMail.evans@thyme> Date: Sun, 27 Jan 2002 13:30:22 -0800 (PST) From: members@premierinvestornetwork.com To: members@premierinvestornetwork.com Subject: Top Stock Picks for February - Premier Investor Network Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: 7bit X-From: Premier Investor Network @ENRON X-To: Active Investors X-cc: X-bcc: X-Folder: \ExMerge - Carson, Mike\Deleted Items X-Origin: CARSON-M X-FileName: mike carson 6-25-02.PST You received this email because you requested timely investment ideas from www.JustOptin.com Should you not wish to receive any future monthly investment newsletters there are remove instructions at the end of this email. ================================================================= PremierInvestorNetwork.com Monthly February 2002 Edition Stock Investing Section Copyright ? 2001, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= In this Stock Investing edition: PremierInvestor.com Presents: Non-Tech Monthly Pick by Stock Bottom, Man's Best Friend. The combination of strong sales growth, rising margins, and an investing public that wants to see results today will keep this train chugging higher. Tech Stock of the Month by NetBulls, Another Entry Point for Bulls. This is one software stock that we don't mind making a play for despite a lack of leadership in the group. ------------ Next Week -------------- Next week look for our Option Trading Picks for the month of February. ================================================================= Non-Tech Monthly Pick for Active Investors ================================================================= PETsMART, Inc. - PETM - close: 10.32 change: +0.06 stop: 9.49 Company Description PETsMART, Inc., is the largest specialty retailer of services and solutions for the lifetime needs of pets. The Phoenix, AZ-based company operates more than 550 pet stores in the United States and Canada, as well as a large pet supply catalog business, and is the major, controlling investor in the Internet's leading online provider of pet products and information (www.petsmart.com). PETsMART provides a broad range of competitively priced pet food and supplies, and offers complete pet training, grooming and adoption services. (source: company press release) Why We Like It: One glance at the chart of PETM and it is easy to see why investors might be drawn to the stock. Fortunately, it would appear that PETM actually has some earnings to back up this amazing rise in its stock price. For many investors, 2001 was not a fun year in the stock market. Yet for PETM shareholders they saw a $2.60 share price near its March 2001 lows rise to the $10.00 level by the end of December 2001. Management seems to have good control over some of the challenges of running a 550 store chain while still keeping growth as part of the equation. PETsMART's latest earnings report, which was for its Q3, came out back in November but inside there was plenty of information that investors liked to hear. We've grabbed a quote from their Q3 earnings press release: "Improvements in key areas such as in- stocks, inventory management and distribution efficiency, coupled with the continued growth in our pet services business, drove sales and profitability during the third quarter," said Phil Francis, chairman, president and chief executive officer of PETsMART, Inc. "We've gained a good deal of momentum, and are positioned for a solid fourth quarter and a strong 2002, when we'll bring our new store format to 200 existing stores, open 25 to 30 new stores, and continue to drive a company-wide culture of customer care." Phil has reason to be positive if the company's numbers keep up their current pace. The same Q3 report showed that gross margins had risen to 28.6 percent, up 390 basis points compared with the third quarter the year before. Total sales for the quarter had jumped 10.6% to $598.6 million while comparable store sales added 7.6 percent over the Q3 of 2000. The company recently announced that they had bought the remaining 16.3 percent interest in PETsMART.com that they didn't own for $9.5 million. In addition to the purchase they would consolidate the dot.com business and their PETsMART Direct, an equine direct marketing business, into their overall operations. Part of this plan would close certain offices in California and move the operations to their Phoenix, AZ headquarters. This announcement came out after the bell on Tuesday, January 22nd and investors were unsure how to interpret the news, which caused some volatility in the stock price the next day. Since then we've seen some selling in the stock but we feel the pull back towards the $10 level has merely offered us a better entry point. On a positive note, the same announcement revealed that the company had raised their sales growth outlook for the January quarter from 6 to 7 percent to about 9 percent. We could not confirm an actual date but believe PETM will announce its Q4 earnings in late February. How do we trade the stock from here? It would be easy to say that on a longer-term basis the stock could be considered overbought. However, in this current market environment where investors are asking, "show me the earnings" PETM should continue to draw investor interest. There aren't many companies right now with strong sales growth and growing profit margins. Technically, buyers have been supporting the stock price every time it dips to the 30-dma during the last three months (from Nov. 1st). Shares dipped below this level mid-week but quickly rebounded. At the moment, the 30-dma is near the $10 mark, which can also double as a strong psychological support level. We're going to start the play with a stop loss at $9.49, which is a few cents below the 50-dma but we're only giving the stock this extra room because we have a two to three month time frame. More conservative traders or short-term traders could easily use a tighter stop loss. One suggestion would be to place a stop under Wednesday's low of $9.84. PETM does have some overhead resistance at the $11 level but the overall bullish trend should be able to conquer it. Our objective is a $12 price target. This is almost 20% above current levels. We suspect that America's new tendency to stay home and spend money on the house and the family will also translate into more money on the family pet. Picked on January 25th at $10.32 Gain since picked: +0.00 Earnings Date Feb/02 (not confirmed) Chart = http://www.premierinvestor.com/charts/charts.asp?symbol=PETM ================================================================= Tech Stock of the Month for Tech Bulls ================================================================= Cognos Inc. - COGN - close: 25.47 change: +0.48 stop: 23.70 Company Description: Cognos is the leading global provider of business intelligence solutions that optimize the performance of the world's largest and most successful organizations. Founded in 1969, Cognos does business with more than 19,000 customers in 120 countries around the world. Cognos business intelligence solutions and services are also available from more than 3,000 worldwide partners and resellers. (source: company press release) Why We Like It: The software sector has been a jumpy group lately and we're not seeing a lot of leadership with MSFT trading below its 200-dma. However, we have noticed a few players in the "business solutions" group doing okay. One of those is Cognos Inc. Shares of the stock have done very well the last few months and really jumped higher in December after their Q3 earnings report. The stock ran into heavy resistance at the $27 level in early January but has since consolidated back to the $24 mark with a nice intraday dip last Wednesday. Volume was pretty strong on Friday as bulls pushed shares up almost 2% heading into the weekend. In the news, First Albany Corp. recently upgraded COGN to a "buy" and gave it a $30 price target. First Albany cited the recent earnings improvement over the last two quarters and a decent entry point supporting a decent risk/reward scenario in COGN. We happen to agree with them on the entry point idea and don't mind targeting the $30 level either. There is still a wall at $27 but hopefully this time COGN will be able to trade through it. We are going to start the play with a stop at $23.70, which is Wednesday's low. We still recommend keeping an eye on MSFT and the GSO.X software index to gauge the market atmosphere. Picked on January 25th at $25.47 Change since picked: +0.00 Earnings Date 04/10/02 (unconfirmed) Chart = http://www.premierinvestor.com/charts/charts.asp?symbol=COGN =============================================== ABOUT - PremierInvestor.com =============================================== WHO IS PREMIERINVESTOR.COM? For years investors and traders have been reading great newsletters like NetBulls.com for Internet and tech stock plays, SplitTrader.com for stock split strategies, and StockBottom for the active trader. Now all three newsletters have combined to join forces and produce one ultimate newsletter bringing you the best features of each service. 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