January 2005 Director's Letter
January was another great month for Singular's research picks. Our research list was up 2.64% versus a 2.34% decline in the S&P 500 leading to an almost 500 basis point outperformance.
Performance was broad based, driven by strong performances from Travelzoo Inc. (TZOO:SELL) Adam's Energy (AE:BUY), Hansen Natural Corp. (HANS:BUY), Acme United Corp. (ACU:BUY), and American Physicians Service Group Inc. (AMPH:BUY).
Travelzoo Inc. dropped an eye popping 39.3% during the month as investors realized the company could never grow free cash flow fast enough to meet the expectations imbedded in the stock price. However, even at $58, TZOO still trades at a forward PE of 70, and a trailing PE of 174 and still has a way to go to our price target of $23.
Adam's Energy not only rose over 20% in January, but is up another 17% so far in February. The stock still has another 20% to our $30 price target. Hansen was up 12.3% in January and now exceeds our $32 price target. Since we initiated on Hansen with a BUY rating the stock is up 71%. Our rating is under review. Acme United put in another good month, up almost 9% as a competing firm put ACU on its list of to watch. ACU is up 90% since we launched with a BUY rating last year. Finally, AMPH was up 8.6% in January.
Of course not every call worked out. Image Sensing Systems (ISNS:BUY) was down 11.3% despite being picked as a "Hidden Gem" on the Motley Fool, a month and a half after we launched on it. Our $18 price target implies another 20% gain from current levels. Our calls on Interlink Electronics (LINK:BUY), CPI Aerostructures (CVU:BUY), NVE Corp. (NVEC:SELL) were down 10.8%, 10.6%, and 10.8% respectively.
In addition to our stock picks, we hope you'll find our screens and other resources valuable as well. If you are looking for quick trading ideas, check out our Swing Trades (Hyperlink) screen based on technical analysis. Value investors, check out our Mid Cap GARP screen (Hyperlink). Contrarians, looking for that list of stocks with endless success already baked into its price? Look no further than our list of "Cocktail Party" (Hyperlink) stocks.
Subscribers will find much more inside. Why not sign up for a free one month trial? If you believe as we do, that most asset classes are overvalued, and we're in for mid single digit type returns on the major US indices, then successful stock picking will become even more crucial for market beating returns. Let us help you to a prosperous 2005. Happy trading.