Among the biggest winners in Friday's early trading are
Martek Biosciences (Nasdaq: MATK)
,
Quiksilver (
ZQK
)
and
Krispy Kreme (
KKD
)
.
|
Top Percentage Gainers -- Friday, June 4,
2010
|
|
Company Name (Ticker)
|
Intra-Day Price
|
Intra-Day
% Gain
|
52-Week High
|
52-Week Low
|
Martek Biosciences
(Nasdaq: MATK) |
$22.39 |
+16.3%
|
$25.43 |
$17.09 |
| Quiksilver (
ZQK
) |
$5.10 |
+10.2%
|
$6.09 |
$1.49 |
| Krispy Kreme (
KKD
) |
$4.00 |
+8.4%
|
$5.15 |
$2.51 |
|
*Table includes companies with minimum market
capitalizations of $200 million and three month trading
volumes of at least 100,000 shares. All percentage returns
are listed as of 11:54AM Eastern Standard Time . Click on
ticker symbols for up-to-the-minute price quotes and
percentage gain data.
|
Martek Biosciences surges on Strong Results
"Firing on all cylinders." That's always the goal of very company,
and a boast that
Martek Biosciences (Nasdaq: MATK)
can make right now. Cylinder one is a +14% jump in sales for the
company's line of fatty acids that are used to boost the health
profile of infant formula and other foodstuffs. Cylinder two is the
company's acquired Amerifit division, which sells health and
wellness supplements to major retail chains. Taken together, the
two cylinders fueled a +34% jump in sales. That robust report is
sending shares up +16% in Friday trading following release of the
company's second-quarter results after Thursday's close.
Annual sales for Martek had been stuck at around $350 million for
each of the last two years. But the combination of organic and
acquired growth should push sales up toward the $450 million mark
in the current fiscal year (October), and perhaps above $500
million by next year. In recent months, the company has made a big
push into international markets, most notably in China.
As an added kicker, Martek is conducting clinical trials in hopes
of proving that DHA, one of its primary fatty acids, is helpful in
reducing memory loss in senior citizens while also boosting heart
function. That could prove to be a fairly substantial new market
for the company.
Action to Take -->
Martek is set to boost profits roughly +20% next year to around
$1.75 a share. But that understates the company's earning power.
The company is depreciating a large manufacturing facility in South
Carolina, and amortizing the Amerifit acquisition. Excluding those
non-cash items, actual free cash flow could approach $2.50 a share.
Even with today's pop, shares trade at just 10 times that figure.
Shares surpassed the $20 mark today, but could approach $30 once
the company's growth drivers come into sharper focus.
Quiksilver Delivers
As we noted in our profile of the retail sector Thursday, it pays
to stick with those names that are pulling away from the
competition. There's no need to chase struggling retailers simply
because their stocks are very cheap. We suggested
Kohl's (
KSS
)
and
Aeropostale (
ARO
)
as examples of effective retailers that are boosting both the top
and bottom lines.
But you may also want to consider retailers that have little
top-line momentum right now, but hefty bottom-line momentum.
Surfer-focused retailer
Quiksliver (NYSE; ZQK)
fits that bill. Sales are falling at a low single-digit clip, but
rising gross margins are pushing profits up at a fast pace.
Quiksilver just topped profit forecasts by a wide margin for the
third straight quarter, which is pushing shares up +10% on Friday.
Surf apparel is a very discretionary item, so sales are unlikely to
substantially rebound for at least another year or two. But when
they do, Quiksilver should be a profit machine: The retailer earned
at least $0.74 a share in fiscal (October) 2006, 2007 and 2008. And
gross margins look even better now than they did then. So don't
focus on the near-term, as Quicksilver is unlikely to earn more
than $0.30 a share in fiscal 2011. Instead, look out to fiscal 2012
and 2013, when per-share profits might rise +50% each year as the
retailer finally benefits from impressive sales leverage .
Action to Take -->
From a top-down view, there's little to be excited about in retail
at the moment, so there's no need to chase these rallying shares
right now. More than likely, shares are going to stay in the $5
range, and will only start to rebound later in the year when
employment numbers improve and retail stocks move back into the
fore.
Krispy Kreme Continues to Re-Ascend
Roughly six years ago,
Krispy Kreme (
KKD
)
was seen as the next hot food chain. Shares hit $50 as analysts
predicted an ever-expanding store base and ever-rising same-store
sales. The first assumption seemed logical. But the second
assumption was clearly naïve, and as management continued to open
new stores at a rapid pace, over-saturation led to a steady decline
in same-store sales. Before long, the donut maker was reeling under
too much debt and too much overhead .
By 2009, shares lost more than -95% of their value, down to nearly
$1, and many assumed that Krispy Kreme would need to declare
bankruptcy. At that point, the board brought in a turnaround
specialist to pare expenses, close underperforming stores and
re-build the tarnished brand. That plan is working. Krispy Kreme
just announced a $4.5 million first quarter profit and a +3.6% jump
in same store sales. That's helping push shares up nearly +9% in
Friday trading.
The turnaround has taken place under the radar, as analysts no
longer bother to follow the food chain. But management is pushing
ahead in anonymity anyway, announcing plans to once again start
expanding the store base. Presumably, this round of expansion will
be more measured and sales and profits can grow at a respectable
pace. Right now, shares are fully valued at more than 20 times
projected profits, but as the expansion strategy is more deeply
articulated, growth rates may inspire analysts to jump back on and
talk up the "new growth story."
Action to Take -->
Better to get a firm sense of the company's specific store
expansion plans, and what that might mean for company profits a few
years down the road. Today's gain probably captured most of the
near-term upside.
-- David Sterman
Staff Writer
StreetAuthority
Disclosure: David Sterman does not own shares of any security
mentioned in this article.