wall street nuggets

Friday December 15, 2006:

IMMUNICON CORP [IMMC] jumped 30.2% closing at $3.45 following the announcement that VERIDEX LLC, a JOHNSON & JOHNSON [JNJ] company, had received FDA clearance for the CellSearch™ Circulating Tumor Cell Kit from IMMUNICON for the monitoring of breast cancer.

W R GRACE & CO [GRA] surged up 9.3% closing at $20.35 following a bankruptcy court ruling, denying a motion for a summary judgment related to the asbestos claims associated with the company’s Zonolite attic-insulation product. Apparently the court decided that asbestos in the product did not pose “an unreasonable risk of harm.” So, given what we know about the carcinogenic properties of asbestos, we should logically assume this implies the product must pose a reasonable risk of harm!

QUIKSILVER INC [ZQK], which designs, produces and distributes a broad range of outdoor sports apparel brands, shot up 8.3% closing at $15.77 after announcing operating results for the fourth quarter ended October 31^st. The company reported net revenues of $778.4 million for the quarter, up 22% over the same period last year. Net income for the quarter was $65.3 million, up 94% over the same period last year. The stock was downgraded by Wedbush Morgan from “Buy” to “Hold.” Given expectations for a mild winter, and hence weakness for the Rossignol brand, and some weaker growth going forward, with a relatively high P/E ratio (32.7 based on trailing 12 months), we do not see a great deal of upside potential at the moment.

TEKTRONIX INC [TEK] (Scientific & Tech Instr) dropped 9.3% to close at $27.63 after announcing results for the second fiscal quarter ended November 25^th. The company reported net earnings from continuing operations of $19.6 million or $0.24 per share for the quarter, compared with earnings of $0.24 per share last year as well, which was well below the consensus estimate of $0.37 per share. The company reported net sales of $272.8 million, which matched the consensus estimate, up 7.7% from the same period last year. The stock was also downgraded by Robert W. Baird from “Outperform” to “Neutral.”

PRA INTERNATIONAL [PRAI], which provides product development services for pharmaceutical and biotech companies worldwide, plummeted 9.5% closing at $25.63 following the announcement of the resignation of Patrick K. Donnelly as Director, President and CEO. While the departure at this time appears cordial, the reason given – “to embrace new challenges and opportunities” – certainly raises more questions than it answers. The stock was downgraded by Robert W. Baird from “Neutral” to “Underperform,” and by Goldman Sachs from “Buy” to “Neutral.”

BLACK & DECKER CORP [BDK] was hammered down 10% to close at $78.26 following a press release in which it lowered earnings guidance for the fourth quarter and the full year. Earnings are now expected to be in the range of $1.30 to $1.35 per share for the fourth quarter and approximately $6.50 per share for the full year. The consensus estimate for fourth quarter earnings had been $1.86 per share. The company also projects a decline in sales of approximately 8% for the quarter, primarily attributed to the housing decline in the U.S. It would appear that the short-term outlook is still somewhat grim, but that the company is fundamentally very strong and generating strong positive cash flow. A good buying opportunity should materialize in a 3 to 6 month timeframe.

Daily Sector Performance Chart

The week ended on weak note with the average member of the SI Universe posting a loss of 0.11% and only 43.9% of the members posting a positive return for the day. The big sector moves on Friday were Mining (down 1.4%) and Railroads (down 1.1%).

TRUE RELIGION APPAREL [TRLG] was left tattered and threadbare after tumbling 27.3% to close at $15.46 (basically the same price it had at the beginning of 2006) after reporting third quarter results that fell below expectations. Sales for the third quarter were $42.9 million, up 22.6% over third quarter sales for 2005. Third quarter earnings were $8.2 million ($0.35 per share) up 6.3% over the earnings for the same period last year, however the consensus estimate had been for earnings to come in at $0.44 per share. The company’s revenue guidance for the full-year was revised to $138 to $140, well below the consensus estimate of $149.98 million but still implying a growth rate of 35% to 36% over 2005, and earnings guidance for the full-year was revised to $1.11 to $1.12 per share. Three downgrades didn’t help: CIBC World Markets from “Sector Outperform” to “Sector Perform,” Friedman Billings from “Outperform” to “Market Perform,” and Wedbush Morgan from “Buy” to “Hold.” Our sense is that the selling pressure was too extreme and that this is probably a very good time to find faith in TRUE RELIGION. Watch for the full 10-Q filing to get a better sense of how they are doing internationally.

HOLLIS EDEN PHARMACEUTICALS INC [HEPH] dropped 18.7% closing at $5.97 on the news that it would be raising $26 million through the sale of common stock to both new and existing institutional investors. The sale involves 4 million shares at $6.50 per share, with four-year warrants to purchase an additional 800,000 shares at an exercise price of $8.75. At the beginning of November, there were about 25 million shares outstanding. While any price significantly below $6.50 is probably an opportunity, development-stage pharmaceutical companies are very speculative and we would rather have more insight into how the proceeds of the sale are going to be used before assuming any risk in this area.

HOSPIRA INC [HSP] fell 11.9% closing at $33.30 after reporting third quarter revenues that came in well below expectations, although earnings after adjusted for special charges were in line with expectations. Third quarter revenues of $646.6 million actually fell 1.5% from the third quarter 2005, and with a P/E ratio of 24.6 we see no current opportunities.

UTSTARCOM INC [UTSI] slid 8.4% closing at $9.37 after announcing that it would be delaying the release of its third quarter results until it completes a review of its historical stock option award practices. Currently the company does not expect the review to be completed before the extended filing deadline of November 16^th. Given the losses that the company has been piling up over the past two years, we do not see this as a buying opportunity.

HUMAN GENOME SCIENCES INC [HGSI] sank 8.1% closing at $12.71 after reporting a bigger than expected loss in the third quarter. The company reported a loss of $0.46 per share, compared to a loss of $0.42 per share for the same period last year. Adding back in $0.05 per share for stock based compensation, the loss would have been $0.41 per share which is only a penny below the consensus estimate of $0.40 per share.

While the long-term debt of $750.9 million is a serious concern, the increase in long-term debt of about $240 million in the second quarter is associated with the sale and leaseback arrangement involving its facilities space. By selling the facility the company netted about $219 million (not $225,000 as footnoted in the 10-Q) and since it has a repurchase option, the company has chosen to add $225 million to the long-term debt, which seems prudent. We suppose the downgrade by Wachovia from “Outperform” to “Market Perform” was not helpful. There are apparently 8 new drugs in the pipeline, with Albuferon™ for the treatment of hepatitis C, which it is co-developing with Novartis, being the leading candidate. The company expects to initiate Phase 3 trials before the end of 2006.

SOTHEBYS HOLDINGS INC [BID] dropped 7.5% closing at $34.49 apparently only on the news of downgrades by JMP Securities from “Strong Buy” to “Market Outperform” and by Wedbush Morgan from “Buy” to “Hold.” We don’t see much risk here and probably a reasonable entry point with a modest dividend yield. Future growth probably comes from the international bidders and new auction technology.

PLAYBOY ENTERPRISES INC [PLA] hopped up 7.1% closing at $12.15 after announcing that although third quarter earnings were worse than last year, the company was still in the black, with earnings of $0.03 per share versus a consensus estimate of a loss of $0.03 per share. While the company is hopeful regarding advertising revenues both online and with the magazine, we are skeptical and do not see a long opportunity.

VERASUN ENERGY CORP [VSE] up another sunny 9% to close at $20.40

STEMCELLS INC [STEM] surged up 10.4% to close at $3.39 undoubtedly following the big wins for stem cell research in the midterm elections.

ARRAY BIOPHARMA INC [ARRY] rose 11.8% closing at $11.93 on the announcement that preliminary trials of an enzyme inhibitor (AZD6244) being developed by the company have shown that it is capable of producing long-lasting stable disease in patients with advanced solid cancers. Phase II clinical trials have been initiated in patients with skin, pancreatic, lung and colon cancers.

TRIMERIS INC [TRMS] shot up 22.7% closing at $9.73 following a swing to profitability in the third quarter. The company reported third quarter revenues of $9.7 million, which more than doubled its Q3 revenue for 2005 of $4.6 million. Earnings were $0.16 per share compared with a loss of ($0.15) per share for the same period last year. The results were driven by the global sales of the FUZEON, the first in a new class of anti-HIV drugs called fusion inhibitors. Analysts are skeptical about future growth potential given concerns about side effect reactions and competition, but the company is working on a next-generation version of the drug and looking for FDA approval of a needle-less means of administering the drug. So long as they stay in the black, this remains speculative but attractive.

NEUROMETRIX INC [NURO] recovered from most of the damage done on October 24^th, jumping 23.9% to close at $18.69 after announcing strong third quarter results. The company reported earnings of $0.18 per share which easily beat the consensus estimate of $0.10 per share. While the P/E is getting high again at about 50, the third quarter revenue growth of about 68% still points to some more upside potential. See also our previous post:

GREENFIELD ONLINE INC [SRVY] blossomed 26.3% closing at $12.86 after announcing a very strong third quarter and raising its annual guidance. Much of the success seems to be coming from the company’s Ciao comparison shopping site in Europe, which grew net revenues by 93% over the third quarter of 2005. Revenue for the entire company for the quarter was $24.875 million up 7.5% over the third quarter of 2005. The company now projects full-year revenue for fiscal 2006 to be in the range of $93 to $97 million, about 4% higher than previous guidance, with margins in the range of 73% to 75%, which is also about 4% higher than previous guidance. On the negative side, we were not impressed by the year-over-year, 0.7% growth in the North American Internet Survey Solutions segment. The Ciao Internet Survey Solutions segment was also rather weak with growth of only 1.9%. Given the strong growth in the Ciao comparison shopping segment (from $2.6 million in Q3 2005 to $5.1 million in Q3 2006), the company will be faced with some hard decisions. Maintaining an unbiased survey sample AND a comparison shopping service at the same time is not a walk in the park! Be very careful here!

Daily Sector Performance Chart

At first blush it appears that Pharmaceuticals did not take a big hit following the landslide win by the Democrats. However, when you look at the breakdown of the Pharmaceutical segment, it is pretty clear that the traditional big pharma stocks were almost uniformly in negative territory for the day. However, the drops were reasonably modest, ranging from ELI LILLY & CO [LLY] with a drop of 0.88% to MERCK & CO [MRK] with a drop of 3.4% and a median drop in “big pharma” of about 1.6%.

Across the entire SI Universe, the average gain for the day was 0.63% with 65.6% of the members posting positive returns for the day. The outliers on Wednesday were Alternative Energy (up 2.2%), Tobacco (up 2.1%) and Travel (up 2.4%).

CHEMED CORP [CHE] shed 17.2% closing at $32.26 following a series of announcements dominated by negatives. First, the company announced that its VITAS Healthcare Corporation unit would be exiting the Phoenix Hospice market because of current Medicare hospice reimbursement program limits. The company is projecting a full-year operating loss of $4.3 million for the Phoenix program. Across the company, the company expects that full-year 2006 earnings from continuing operations (i.e. excluding Phoenix), excluding stock-option compensation expenses, will be in the range of $2.00 to $2.10 per diluted share. Previously the consensus estimate had been for $2.13 per diluted share. The stock was downgraded by Deutsche Securities from “Buy” to “Hold.”

PRESSTEK INC [PRST] gapped down $1.25 at the open and for the day was off 13.5% closing at $5.39 on revised downward guidance including an 11% drop in sales in the third quarter. As suspected following yesterday’s 19.1% drop, the bad news probably leaked yesterday and given the fairly illiquid nature of the stock, it didn’t take much selling pressure to drive the price down quickly.

HARTMARX CORP [HMX] slid 12.1% closing at $6.77 following a press release in which the company reported its third quarter results with earnings of $0.01 per diluted share with net sales of $137.7 million, compared to $0.18 per diluted share with net revenues of $152.1 million for the same period last year. The consensus estimate had been for earnings of $0.23 per diluted share and net sales of $160.55 million. Ouch.

A financial services holding company that manages over $11 billion in client assets, SANDERS MORRIS HARRIS GROUP INC [SMHG] dropped 11.7% closing at $12.51 on the announcement of a secondary offering of 5 million shares of its common stock priced at $12.50 per share.

Bearing manufacturer, TIMKEN CO [TKR] plummeted 9.2% closing at $29.78 following a press release in which the company sharply revised downward its earnings estimates for the third quarter from $0.70 to $0.75 per share to an estimated $0.50 to $0.55 per share. The company cited auto industry production cuts as the major driver and indicated that it would be cutting approximately 700 positions (about 5%) in the Automotive Group.

CORINTHIAN COLLEGES INC [COCO] was down 8.8% closing at $10.81 after reporting fourth quarter and year ended June 30^th results and lowering guidance for fiscal 2007. Fourth quarter results were not too bad with the company reporting earnings of $0.10 per diluted share, compared with $0.02 per diluted share for the same period last year. However, the consensus estimate had been for $0.13 per share. Furthermore, net revenues for the quarter were $235.6 million, down from $239.3 million last year, reflecting an approximately 2% decline in total student population.

GLOBAL PAYMENTS INC [GPN] shot up 13% closing at $44.01 after its announcement of first fiscal quarter ended August 31^st results. Revenues for the first quarter grew 16% to $260.3 million compared to $224.5 million for the same period last year. Earnings were $0.51 per diluted share compared with $0.38 per diluted share for the same period last year. To help matters along, the stock was upgraded by Barrington Research from “Market Perform” to “Outperform.”

NII HOLDINGS INC [NIHD] was up 7.3% closing at $62.16 in response to the news of a 5 year extension of a supply agreement between NII HOLDINGS and MOTOROLA involving iDEN handsets and infrastructure. In addition, NEXTEL MEXICO, a subsidiary of NII HOLDINGS, has signed an agreement to acquire a Mexican wireless telecom, COSMOFRECUENCIAS S. A. de C.V. for $200 million. This deal will not only give NII HOLDINGS additional spectrum, but also offers opportunities to save costs and increase revenues.

From the Daily Sector Performance Chart it is clear that we ended the quarter on a sour note, but overall it was a strong week. The average return for the day was -0.56% with only 30.2% of the stocks in the SigmaInverse Universe posting positive returns for the day. Alternative Energy posted yet another impressive gain for the sector - up 1.8% on average.

AUTOBYTEL INC [ABTL], a major online automotive marketing services company, shot up 25.4% closing at $3.20 probably due to a 13D/A filing with the SEC containing a letter from Liberate Technologies (LT) (one of the largest shareholders), recommending either a restructuring and streamlining of the company, or a sale of the company, with a preference for the first option. Observing no real growth in the online reach of the autobytel.com site since the end of 2005, we see a real need for more effective demand creation. The video reviews are a step in the right direction, but being forced to watch a competitive video before the one you actually want is totally obnoxious (not to mention really stupid, since you will never be able to effectively measure ad effectiveness). The “My Autobytel” page is also a step in the right direction, but the full potential of collaboration on the consumer side fails to be communicated. We find LT’s recommendation interesting, but are not sanguine regarding the possible sale of the CRM software component given the current environment in the auto dealer world, and would like to see ABTL’s response.

COOPER TIRE & RUBBER CO [CTB] up 15.1% closing at $11.20 following the release of an 8-K filing describing a recovery plan involving cost cuttings of $70 million and inventory reductions of $100 million.

EQUIFAX INC [EFX] was up 12.1% closing at $36.34 following a press release in which it revised its guidance for calendar year 2006, from a range of $1.90 to $1.99 per share to something in excess of $2.00 per share. It also lowered its expenditure target for capital expenditures and reaffirmed its previous guidance for revenue growth of 7% to 10%.

BORDERS GROUP INC [BGP] shot up 7.2% closing at $20.60 with an upgrade by Credit Suisse from “Neutral” to “Outperform.” However, Credit Suisse also downgraded BARNES & NOBLE INC [BKS] on Friday from “Neutral” to “Underperform.” While BKS took a big hit at the open, it had almost fully recovered by the end of the day, whereas BGP’s response exhibited considerable hysteresis. The likely explanation is that the reasons given for the BGP upgrade (confidence in new CEO, conservative accounting, etc.) may have been relatively new factors, while the BKS downgrade factors (options related legal issues, competition, etc.) may have already been priced in.

QUICKSILVER INC [ZQK] slid down 10.8% closing at $12.17 after meeting earnings expectations for the third quarter which came in at $0.04 per share compared with $0.20 per share for the same period last year. However, the company revised its fourth quarter earnings guidance to $0.51 per share, including stock compensation expenses. The consensus estimate had been $0.54 per share for the quarter. WR Hambrecht initiated coverage Thursday with a “Buy” rating, but on Friday Morgan Keegan downgraded the stock from “Outperform” to “Market Perform.” Mercurial markets!

AIRTRAN HOLDINGS INC [AAI] lost altitude on Friday, slipping 11.1% to close at $9.49 following an 8-K filing in which it lowered guidance for the third quarter citing a softening in demand which became apparent by the end of August. The softening was attributed to the threat of terrorist attacks, tropical storm Ernesto and increased competition on the east coast. The company expects the trend to continue and projects third quarter revenue per available seat mile (RASM) to be “in a range of the low single digits year over year,” compared to previous guidance in the high single digits. It also had some good news indicating that non-fuel cost per available seat mile (CASM) was expected to decline 3% to 5% in the quarter and that the all-in fuel costs should be within a range of $2.28 to $2.33 per gallon (obviously on the high side given the drop in oil prices over the course of the last two days). But of course, as the market is prone to do lately, the good news apparently was filtered out and only the drop in demand was heard. The company does plan to reduce growth in the 2007 to 2008 time frame to get RASM higher, apparently anticipating continued pricing pressure from competitors. Given the relatively high P/E ratio, we do not see a significant opportunity at this time.

VOLT INFORMATION SCIENCES INC [VOL], a provider of both staffing and telecommunications and information systems, was down a shocking 15.1% closing at $34.66, after announcing financial results for the quarter ended July 30^th. While the company reported earnings of $0.53 per share compared to $0.32 per share for the same period last year, the consensus estimate had been for earnings of $0.62 per share. Revenue for the quarter was $584.9 million which also fell considerably shy of the consensus estimate of $605 million.

The Daily Sector Performance Chart provides clear evidence that we generally ended the week on an upbeat except in Mining (down on average 2.5%) and Oil & Gas Production (down on average 2.3%).  The decline in oil prices with crude settling at $66.25 per barrel, the lowest level in the past 5 months.  The average return for all 3,588 members of the SigmaInverse Universe was 0.27% with 58.1% posting a positive return for the day.

MILLS CORP [MLS] soared up 15.3% closing at $19.28 on the news that Colony Capital Acquisitions LLC would be providing additional funding for MILLS and partner Kan Am USA Management XXII Ltd. in developing the Meadowlands Xanadu mega shopping and entertainment center just outside New York City. The Xanadu Project was originally priced at $1.3 billion, but the cost has ballooned to $2 billion. Colony Capital is expected to invest $500 million and arrange for construction loan financing. In return, MILLS will issue 4.5 million shares of stock or units of The Mills Limited Partnership redeemable for MLS shares that will be allocated between Kan Am and Colony Capital.

For the original poem by Samuel Taylor Coleridge (whose last line provides our headline), click here.
And of course - the ultimate self reflection - we must provide a link to the original precursor of the amazing HTML that lies behind the entire www experience - Ted Nelson’s original hypertext vaporware project Xanadu.

WELLMAN INC [WLM] mysteriously gained 26.8% closing at $3.78 on Tuesday, with no apparent news event on volume that was about 4 times normal and confined to pretty much the first hour of trading. Looks like a major institutional buy of a relatively inexpensive stock. Given the lack of profitability (albeit the latest quarterly earnings are headed in the right direction and might even reach break-even next quarter) and huge long term debt, this is not one we would recommend.

XM SATELLITE RADIO HOLDINGS INC [XMSR] bounced up 20.3% closing at $13.52 with a two-step upgrade by Bear Stearns from “Underperform” to “Outperform.” The Bear Stearns observation that the company has solved the FM transmitter interference problem raised by the FCC is indeed positive news, and the observation that the XM fan base has remained loyal is encouraging but not surprising. However, the subscriber base forecast of 7.7 to 8.2 million for the year should definitely be achievable, since the company already had 7 million subscribers at the end of July and the new guidance appeared incredibly conservative. Our main fear is that they lower the upper end of the forecast which would still seem to be a major risk. For recent WSN posts on [XMSR], try here and here

AVI BIOPHARMA INC [AVII] up 19.6% closing at $4.28 on the news that Dutton Associates had upgraded the stock to “Strong Speculative Buy.” At the same time, it lowered its 12-month price target to $6.00 which is certainly a lot more reasonable than the consensus price target of $8.50 which appeared absurd. As we have noted before, this does not appear to be a company with any sort of plan to get to profitability in the near-term.

Alternative Energy plays MGP INGREDIENTS INC [MGPI] forged ahead 15.2% closing at $22.99 and PACIFIC ETHANOL INC [PEIX] rose 7.9% closing at $19.70 probably on a combination of oil concerns including the Iranian attack on the Roumanian oil rig, the price of light sweet crude settling above $73 per barrel for October futures, and the recognition of increasing Ethanol penetration in certain U.S. locations like Minnesota.

RAMBUS INC [RMBS] tumbled 9.7% closing at $11.21 probably due to its tardiness in submitting its 10-Q for the second quarter – now 13 days past the due date. The reason for the delay given in the NT 10-Q “Notification of Late Filing” was the need to complete the “internal investigation of past option grants and other potentially related issues.” See our previous post on Rambus as well.

CANDELA CORP [CLZR] crashed 28.7% closing at $10.33 after reporting fourth quarter results that fell well shy of expectations. While annual earnings were reported at $0.62 per diluted share, 94% more than last year’s $0.32 per diluted share, they still fell short of the consensus estimate of $0.76 per share. For the fourth quarter, the exposure was even more extreme. Fourth quarter earnings of $.10 per share fell well below the consensus estimate of $.23 per share and were actually below the earnings reported for the same period last year of $.14 per share. The obvious question is whether the fourth quarter is an exception or a signal of rough times ahead. I view the 31% increase in inventories over the past year as troubling and most likely indicative of a weakness in demand that will persist until some new product hits the market. The R&D expenditure, at 5% of sales in 2005, was probably too low, and apparently has been increased to 7.3% of sales, which hopefully will help turn the situation around. With the current P/E ratio at about 15, today’s price drop appears to be an overreaction and we would assume this is a buying opportunity. The downgrade by Cowen & Co. from “Outperform” to “Neutral” also helped to batter down the price.

The markets were marginally up today with only eleven sectors in negative territory.  The big outlier was Alternative Energy with an average return of 3.8% for the day.  Approximately 56.6% of the members of the SigmaInverse Universe of 3,591 stocks posted positive returns for the day.

MERCK [MRK] reported a very strong quarter (beating expectations) with lots of good news regarding new drugs (Vytorin, Guardasil, etc.) and undoubtedly benefited from a very positive article in Barron’s over the weekend, but VIOXX litigation risks probably limited the response with the stock up only 4.26%.

SILICON LABORATORIES INC [SLAB] soared up 21% closing at $35.70, after easily beating expectations for second quarter earnings. The stock has been steadily dropping since the beginning of May but still has a relatively high P/E ratio, so this needs deeper analysis. The balance sheet is very attractive.

EXCO RESOURCES INC [XCO] was up 18% closing at $12.10, after announcing its acquisition of Winchester Energy Co. (natural gas properties) from Progress Energy Inc. for $1.2 billion in cash. This price is in line with similar deals, but shares of PROGRESS ENERGY [PGN] were only up only about .5% on a day when the average return was 2.1%. The sale will help PROGRESS ENERGY cut it’s corporate debt very significantly and help to preserve its dividends.

POLO RALPH LAUREN CORP [RL] shot up 15.7% closing at $55.40 after raising its quarterly forecast of revenue growth to the mid twenties percent compared to first quarter 2005. Earlier estimates from the company had been for revenue growth to range between the high teens and low twenties percent.

NOVATEL WIRELESS INC [NVTL] up 11.1% closing at $11.67. I don’t see a compelling reason for this increase. Could it be that they might actually post a profit for the second quarter or is there an acquisition possible?

NVIDIA CORP [NVDA] up 10.1% closing at $19.56. Could be benefiting from either the acquisition of rival ATI by AMD or just the fact that it was absurdly undervalued.

It was a wild ride for the country’s second largest toymaker HASBRO INC [HAS] which ended the day up 9.5% closing at $19.15, after it dipped briefly announcing that earnings and revenues were down from the last year. However, the earnings of $.07 per share were in line with expectations and revenues of $527.8 million for the quarter ended July 2^nd were considerably above expectations of $517.85 million.

PARLUX FRAGRANCES INC [PARL] up 7.8% closing at $8.55 after finally getting their 10-K filed. The fourth quarter results were quite impressive with net sales for the quarter ended March 31^st more than double those of fourth quarter 2005. The PF Acquisition deal is off, but the P/E ratio here still seems to argue that there is an opportunity. Seems to be a lot of Florida real estate still on the books.

PACKETEER INC [PKTR] up 7.6% closing at $8.51. While certainly coming no where near to recovering from Friday’s drubbing, the modest recovery probably still leaves some reasonable upside potential.

PDL BIOPHARMA INC [PDLI] up 7.5% closing at $17.75 with an upgrade by Deutsche Securities which justified the upgrade on the basis of what is judged an overcorrection. The key here is certainly the current quarter results expected on August 3^rd. The company needs to report a profit.

SANDISK CORP [SNDK] flashed up 7.2% closing at $40.20 and is already at $47.92 in after hours trading. Following the very positive earnings conference, we expect that the irrationality of price drop that we observed two weeks ago will probably be completely erased.

ASTEC INDUSTRIES INC [ASTE] was tarred and feathered for missing expectations, but given the thin analyst coverage, reasonable earnings growth (21% year over year) and fundamental health of the road infrastructure industry, we sense a reasonable opportunity here with a 3 to 6 month horizon.

Strong corrections across the board (except for Tobacco) in the Daily Sector Performance Chart. While oil prices were up on some refinery and pipeline issues, the market seemed to finally wake up to the positive second quarter earnings stories. The average return in the SigmaInverse Universe was 2.18%, with 85% of the universe posting positive returns.