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New Profits In Alcon… and a Trip Across the Pond
The ADR Alert
Tuesday, May 3, 2005
By Alexander Green, Investment Director
#60
** New Profits In Alcon… and a Trip Across the Pond
We raised our sell stop on Swiss eye-care company Alcon (NYSE: ACL) last week to protect our profits. Then hit the new raised stop the very next day.
In the process, we also managed to double our money in our Alcon August $100 calls.
Elsewhere in our international portfolio, however, I’ve been disappointed with the performance of Shinhan Financial (NYSE: SHG) lately. True, recently-announced first- quarter results at the Korean bank were a record high. But weakness in the Korean market – due in no small part to global tensions concerning its neighbor to the north – has kept the stock under pressure lately.
The stock is now trading close to our sell stop at $50. For that reason, I suggest you sell Shinhan Financial at market today and replace it with a company that offers more short-term potential. In particular, Xyratex Ltd. (Nasdaq: XRTX).
Although it’s based in Havant, England, Xyratex actually started life as a division of IBM. It was founded to make computer disk drives. And today it is a leading global supplier to the data storage business.
In fact, Xyratex has made itself nearly indispensable to three big manufacturers: Network Appliance, Seagate Technology and Western Digital. Together these three are responsible for 82% of annual revenues at Xyratex.
Xyratex has two main business lines. One, a components business that supplies disk drive systems that go into large storage systems. And, second, testing, automation and manufacturing equipment for the disk drive industry.
Spending in these two sectors has been particularly strong lately. (And should stay that way for the next several months.) Revenues increased 19% in the first quarter to $142.5 million. Net income fell however, due to rising research and development costs.
But moderating expenses and heavier spending by Xyratex’s customers should drive earnings – and the stock – considerably higher in the weeks ahead.
- **Action to Take***
Buy Xyratex (Nasdaq: XRTX) at $17 or better. And place a sell stop at $13.50 for protection. This is a small-cap stock. So please don’t chase it. If you don’t get an immediate fill, wait for the stock to settle back to our buy limit.
There are no options on this one for speculators to consider.
If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or e-mail: viptrader@oxfordclub.com, or contact Pillar One Advisor Greg Galloway at 800.438.3040 or 407.667.4729.
Stock
Country
Current Price
Comments
Xyratex Ltd. (Nasdaq: XRTX)
England
New
Buy at $17.00 or better. Place a sell stop at $13.50.
Comp. Rio Doce (NYSE: RIO)
Brazil
$27.20
Buy. Sell stop is $23.
Canadian Nat. Res (NYSE: CNQ)
Canada
$51.81
Buy. Sell stop is $46.
Alcon (NYSE: ACL)
Switzerland
Take profits!
Stock hit trailing stop.
Statoil ASA (NYSE: STO)
Norway
$17.75
Buy. Sell stop is $15.
Shinhan Financial (NYSE: SHG)
South Korea
Sell
Sell.
Coca-Cola Femsa (NYSE: KOF)
Mexico
$22.84
Buy. Sell stop is $21.
Bio: Alexander Green is the Investment Director of The Oxford Club. A Wall Street veteran, he has over 16 years experience as a research analyst, investment advisor, and professional portfolio manager. Mr. Green is also considered one of the most talented financial writers in the business. He’s been featured on “The O’Reilly Factor,” profiled by Forbes and Marketwatch.com, and has written for Louis Rukeyser and several other leading financial publications. He currently writes and directs The Oxford Club Communiqué, the Oxford Insight e-letter, and four elite trading services: one focused on momentum stocks, another focused on companies with significant insider buying, another dedicated to international growth stocks and another focused on short-selling fundamentally flawed companies. Mr. Green is also a top-rated speaker at financial conferences around the country.
Copyright – 2005 The Oxford Club, LLC. The Oxford Club does not act as an investment advisor or advocate the purchase or sale of any security or investment. The Oxford Club expressly forbids its writers from having a financial interest in any security recommended to its readers. All of our employees and agents must wait 24 hours after an Internet publication prior to following an initial recommendation. And for hard-copy-only publications, 72 hours after the publication is mailed. Investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. The Oxford Club provides its members with unique opportunities to build and protect wealth, globally, under all market conditions. The executive staff, research department and editors who contribute to The Club’s recommendations are proud of the reputation The Oxford Club has built since its inception in 1984. We believe the advice presented to its members in our published resources and at our meetings and seminars is the best and most useful available to global investors today. The recommendations and analysis presented to members is for the exclusive use of members. Copying or disseminating any information published by The Oxford Club, electronic or otherwise is strictly prohibited. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time.
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