Aaron Katsman
www.IsraelNewsletter.com
With the NFL set to kick-off later tonight, Israelnewsletter would like to provide our own list of touchdown stocks, stocks poised for a big spike. These are stocks that will have you doing dances that will make Chad Johnson proud.
Teva Pharmaceuticals(TEVA), the world’s leading generic drug producer, continues to win new FDA approvals and has a great pipeline. Currently trading with a P/E of 19.22, and PEG of 1.12 the stock is not expensive and has plenty of room to run.
Alvarion(ALVR), the world’s leading provider of WiMAX and wireless broadband solutions, has been signing deals like they are going out of style. With expected 5 year earnings growth of 28% annually, and the increasing excitement over WiMax, Alvarion looks to soar.
Comverse Technology(CMVT.PK), one of our favorites at Israelnewsletter, has started to move up nicely. Renewed rumors of a potential M&A have surfaced, and today, Oppenheimer came out with a $27 target, saying, “We anticipate that within the next few months, Comverse will be undertaking significant restructuring actions that could include major asset sales or spin-offs. In our opinion, one of Comverse’s key assets is its carrier voicemail business, which enjoys an estimated global market share of 46%. We view Comverse as a major beneficiary of the Apple (AAPL) iPhone’s pending introduction in Europe. An announcement could occur as early as the end of this month.”
G. Willi Food(WILC) , the Kosher food company, continues it’s impressive domestic growth and is on schedule to break into the US kosher food market as planned. The stock has dropped of late and with a P/E under 20, it looks attractive. Plus, gotta eat while watching football.
Blue Square Israel (BSI), ditto vis-a-vis the eating thing, but I am told that there are people who actually like eating healthy foods as well. (Do they like watching football?)
Elbit Systems(ESLT), the Israeli defense manufacturer continues signing new deals at break-neck pace. The defense industry certainly looks like a good space to invest going forward and interesting to note the insiders hold 45% of Elbit stock.
After scoring a TD, we at Israelnewsletter are never satisfied with kicking an extra-point. We like to go for two. Our two-point conversion stock is:
ClickSoftware (CKSW), a provider of mobile workforce management and service optimization solutions, is another company showing strong growth. The company raised guidance for annual revenue growth of about 26.5% to 29.5%, compared to the 20% growth projection given at the beginning of the year. This is not a stock for the weak of heart but when going for a two-point conversion, you need to take a chance and this is the stock for that.
BTW- Sorry Zack and all you Dolphins fans, but this is the year of the Seahawks!
Please see our Disclaimer HERE.
Disclosure: Author has a position in TEVA, ALVR, CMVT.pk, WILC, ESLT of 9/06/07. Author has no holdings in any other stock mentioned.
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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
Globes article that Gazit is buying more Ormat (ORA). We first reported this back in June when Gazit initiated a 12% stake in the clean-tech energy play. Gazit-Globe president Dori Segal told “Globes” that the company believes that cleantech has a long-term upside, and that it has unreserved confidence in Ormat and its executives.
Interesting interview with NICE Systems (NICE) product manager, Brian Spraetz, on the IP communications industry and what NICE is up to.
Forbes reporting that generic pharmaceuticals giant, TEVA (TEVA), spent over $1M on lobbying in 2007. Specifically, the article mentions that TEVA lobbied on funding for Food and Drug Administration’s generic drug office, patent reform legislation, the children’s health insurance program and trade issues.
Blue Square-Israel (BSI) leaks their intention to build-out a big-box presence in the Health Food/Organics market. Read IsraelNewsletter’s Zack Miller’s recent analysis of the move.
What a roller coaster. Protalix BioTherapeutics (PLX) treats first patient in a Phase III trial of prGCD, a drug in research to treat Gaucher Disease. We’ve seen this stock tank over 40% in last week’s trading.
When I look back at the whole Whole Foods (WFMI) run up, I kick myself.
Like Peter Lynch’s “Buy what you know” mantra, I look back to my college years in Boston (Go Crimson!) and remember less fondly all the money I dropped at the Whole Foods in Brookline.
Whole Foods was amazing — a clean, friendly supermarket with the most beautiful looking produce I’d ever seen outside of Israel. Whole Foods was the grown-up big sister to your local produce market and just ran circles around other supermarkets in terms of quality and experience. Margins were better, revenues ramped, and investors were rewarded handsomely. Between 1995 and 2005, investors would have seen a 2700% gain in their investments.
Not too shabby.
Now the game is a bit harder. Most supermarkets have a “Green” section of the store. Other chains have emerged.
I think the health food industry today in Israel is where the health food industry was in America in 1995, pre- the massive Whole Foods thing.
Enter Blue Square-Israel (BSI), one of the leading food (and non-food) chains in the country. As of the end of 2006, BSI owned 175 supermarkets under the brand names, Mega, Super Center and Shefa Shuk. As of December 31, 2006, Blue Square operated 39 Mega Stores, consisting of approximately 160,500 square meters space, 95 Super Center stores, consisting of approximately 96,200 square meters space, and 41 Shefa Shuk stores, consisting of approximately 66,600 square meters space.
I happen to shop at Mega (prices good enough to make my colleague, Aaron “Instant Rebate” Katsman, take note) , so I read with interest a Globes article with the scoop that Blue Square may begin rolling-out a big-box health food chain based on their 51% investment in Eden Teva Market Ltd. ($22.5 million) a month ago.
I guess if I had been paying the attention required at a Cambridge-based school, I would have noticed Blue Square-Israel telegraph the same info about a month ago in a PR. See that press release here. In the PR, BSI says itself that it “intends to extend the Eden Teva Market brand quickly throughout Israel, leveraging its greater financial and organizational resources with a goal of opening 8-10 stores in the next 3 years.”
BSI sniffs an opportunity to consolidate the fledgling organic market. With less than 250 outlets of organic food in the entire country (most of them micro mom-and-pops), Eden Teva, and more specifically, Blue Square-Israel, is putting its money where other peoples’ mouths are. Dropping off my kids today for the first day 0f nursery school and primary schools, I was overwhelmed at the amount of healthy food (organic and macrobiotic) some of these kids carried with them (I am not convinced they ate any of it).
So much for a Snickers bar.
Anyway, Blue Square may be worth a look. BSI is launching a three-pronged approach to continue on a new growth trajectory:
In-Town Discount Shopping: Instead of making people drive out to the boonies to save a shekel or two, BSI’s Mega brand will be repurposing a number of in-town stores to begin discounting products for the price-sensitive Israeli shopper.
Expansion of the Non-Food Properties: Through its Kfar Ha’shaashuim subsidiary, BSI currently controls 73 toy stores, 45 dollar stores, 45 homeware stores and 21 baby supply outlets, most of which are operated via franchise. To take its Non-Food activities to the next level, Blue Square has begun carrying out an aggressive acquisition of Non-Food retail chains including interest in Vardinon, an Israeli company with 30 home textile shops, and another in Naaman Porcelain, an Israeli company with 20 houseware shops.
Health Food Expansion: As I mention above, BSI is getting serious about taking the lead on big-box health food retailing. Israel Today suggests the current market for organic and health food in Israel totals about $600M.
BSI has a market cap of $550M, so it flies under most radar screens. It has a trailing 12 month P/E of 11.22 and a Price/Sales ratio (TTM) of .34 — both ratios lower than its larger cap competitors. It looks pretty interesting here and if any of the strategic initiatives pan-out, BSI could perk up.
Disclosure: Author’s fund does not have a position in any of the stocks mentioned here as of 9/2/07.
Please see our Disclaimer HERE.
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Zack Miller is the lead equity analyst for America Israel Investment Associates, LLC. and a former equity analyst for a leading multinational hedge fund. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email zack@profile-financial.com
