| The Green Baron Report |
| January 24, 2003 |
Our team of professionals brings
to our staff over 200 years-combined experience in the professional investment
community. The Green Baron staff includes published Authors, skilled investment
analysts, Investor Relations professionals, as well as former Stockbrokers &
Securities Dealers from the most prestigious Brokerage firms on Wall Street. Our
staff is dedicated to identifying and analyzing investment opportunities that
offer our members only limited downside and huge upside potential. This report
can also be viewed on our website.
| A Message to our Members |
The December 13th Green Baron Report
profiled 3 stocks for members to consider. We pointed out that Cybertel
Communications (CYTP), Reliant Energy (RRI), and The Williams Companies (WMB)
all demonstrated solid fundamental and technical characteristics that we admired
at the time. As always, we suggest that should you purchase any of the stocks we
profile, that you buy as close to the price profiled as possible. In the case of
WMB, members had a chance to buy on a dip that subsequently could have doubled
your money. However, we only display results from the profile date price, which
still resulted in some nice gains to date. The gains for our December picks from
the profiled price to their subsequent high, were as follows:
RRI up 107% CYTP up 177% WMB up 47.51%
Of
course it is impossible to know exactly when the high will come or exactly when
to sell, but we always recommend taking profits on a portion of your holdings as
the stocks go up. By now we hope you have grown to trust the stock selections
that The Green
Baron Report shows its members,
and believe our information is helpful in providing you with timely and
intelligent ideas. We think this month’s stock selections could be our best
yet over time! Please be sure to check our website periodically to view all our past stock selections, updated analysis, and if they continue to
make new highs. We will post The Green Baron Report
on the website after the close on the day of release and provide the next Green
Baron Report release date on the site at least one week prior to the
next issue. Thank you for your support and good luck to all.
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LJ International Inc. |
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(NASDAQ/NM: JADE) Closing price January 24, 2002 - $1.25 Short term target - $3.00 12 month target - $5.00 |
Once again, The Green Baron Report staff believes it has uncovered an extremely undervalued stock in LJ International (JADE) currently trading at about half its book value. The stock has been basing around the $1.20 level for over eight months, and we believe recent cost cutting and a new growth strategy will lead to a dramatic rise in the stock price shortly. For those that still question our stock selections, we at The Green Baron urge you to print out the JADE chart and follow along over the next several months. We stand behind every stock we profile and proudly display the results on our home page. Please visit our website today for additional information on all our featured stocks! If you have been following our selections to date and are now a believer, then you know what to do.
LJ International (JADE) is today the world’s largest publicly owned designer, manufacturer, and marketer of a full range of fine jewelry, particularly pieces with semiprecious gems. Based in Hong Kong with production facilities in southern China, the company uses a proven "mine to market" strategy which eliminates the middleman and ensures tighter control at every stage.
JADE’s strategic Hong Kong and Chinese mainland locations enable the company to enjoy tax advantages as well as labor cost savings. The company counts among its customers 27 of the top 40 jewelry retailers in the U.S. In the past year, the company has been adopting a two-prong approach of expanding its product lines and broadening its distribution channel to support its growth strategy.
Take a quick look at these numbers. JADE has cash and cash equivalents of about $6.5 million (equivalent to about .75 per share alone), total assets of almost $49 million, shareholder’s equity of more than $23.7 million and a book value of approximately $2.74 per share according to a December 16, 2002 release. Also noted in this last quarterly earnings release, the company earned $1.1 million or .13 per share. Although this is seasonally a strong quarter, JADE’s aggressive growth strategy portends even stronger earnings going forward next year.
The Green Baron Report sees many cost savings and operational improvements that will spur growth and should be noticeably seen in the bottom line in the year to come. In particular, we refer to an announcement just made on January 7, 2003 when JADE announced relocation of more than 600 workers from its Shantao, Guandong manufacturing plant to expanded space at its Shenzhen, China facility in the tax-free zone. The Company has purchased over 30,000 square feet and is in the process of purchasing additional 20,000 square feet of manufacturing space for approximately $1.13 million on three floors of a ten-story industrial building where LJI already occupies two floors. JADE is definitely a company with goals of major expansion. The relocation is expected to improve efficiency, decrease duplicated running costs in two locations and hence improve profit margins. "The Shenzhen plant expansion is a continuation of the LJI cost reduction drive which began in November 2001, and a major step towards profitably accommodating growing international orders and local China market demand," according to Chairman and CEO Yu Chuan Yih.
Just last Wednesday, January 22nd JADE also announced that its sophisticated diamond and other precious stone jewelry designing and assembly operations in its newly-opened Shenzhen, China facility is fully operational. The new facility can produce 60,000 pieces of jewelry per month at its full capacity. Yih said, "Our experience at trade shows and in the marketplace gives strong evidence that broadening our product line with more diamonds and precious jewelry will increase our sales and expand our customer base."
We find it interesting that JADE decided on December 5, 2002 to extend to April 15, 2005 its 1,679,000 warrants to purchase common shares at $5.75 each trading on the National Market System under the symbol JADEW. Is it possible that JADE believes the stock will approach or surpass this level again soon? Chairman Yih continued in this release, "LJI is pleased with recent operating results and its long-term strategic plan, so the Board extended the warrants from its 1998 IPO to allow additional time for original shareholders and those who subsequently purchased warrants to maximize their investment." The Green Baron Report will only focus on the common stock.
We summarize that JADE is an extremely attractive value stock at this level because of its commitment to manage costs, its ability to increase sales dramatically, and its experienced management. JADE may soon be awarded valuable licenses to sell in China itself. The potential for this and many other positive developments may be right around the corner. The Green Baron Report stands firmly behind this exciting Stock of the Month. For additional information on JADE please visit our website.
| Stocks on the Move |
Although the pace of stock trading is
difficult to predict during these uncertain economic times, The
Green Baron Report would like
to add Ameritrade Holding Corporation (NASDAQ NM: AMTD $5.16 ), a top online
brokerage, to its list of stocks that deserve recognition at this time. As
reported last week on Tuesday, January 21, Ameritrade said its quarterly
earnings rose on a jump in commission revenue. The company reported net income
of $22.0 million, or 5 cents a share, for its fiscal first quarter ended Dec.
31. That compared with a profit of $9.0 million, or 4 cents a share, a year
earlier.
We believe that Ameritrade will continue
to build business in a challenging stock market as evidenced in its recent
quarterly numbers that included 78,000 new accounts opened and funded, 141,000
average trades per day, and a 9 percent sequential increase in client assets to
$37.1 billion. Its merger with Datek last year will continue to realize
synergies throughout the year. Joe Moglia, chief executive officer said, "Our
performance thus far proves that we are a successful acquirer and our operating
leverage and scalability allows us to maximize our potential. Regardless of
market conditions, we will remain focused on completing our integration, finding
additional cost savings, and growing our business."
The Green Baron Report
also would suggest Cepheid (NASDAQ NM: CPHD $5.65 ) as a fantastic way to
participate in the war against terrorism through an investment. Although we
normally like to suggest stocks that carry a stronger balance sheet, the
potential for this company in our opinion far outweighs the downside. Cepheid,
based in Sunnyvale, CA, is a leading developer, manufacturer and marketer of
fully integrated systems that enable genetic assessment when and where it is
needed. Founded in 1996, the company is commercializing its technology and
products worldwide for research, medical and industrial applications requiring
assessment of the human genome, infectious disease and bio-threat agents.
Particularly exciting is the receipt of a
contract award from the U.S. Postal Service (USPS) to expand and continue
testing of the Bio-Agent Detection System (BDS) being developed by a Northrop
Grumman-led team, which includes Cepheid. The BDS incorporates Cepheid's
GeneXpert® modules as its detection and identification system and utilizes
Cepheid's patented test cartridges. Cepheid and Applied Bio-systems previously
announced a collaboration to develop and sell reagents designed to detect bio-threat
agents to be used in the cartridges. Should the USPS accept this process for
analyzing our mail as the standard, Cepheid is positioned to reap huge profits.
Cepheid also announced December 2, 2002
the launch of its next generation real-time DNA analysis system, the Smart
Cycler® II. The Smart Cycler® system, which has become a standard real-time
analysis instrument for DNA sequence detection, has been up-graded to meet the
rapidly evolving needs of today's molecular biology labs. Smart Cycler® II has
been designed to address the growing applications and expanding capabilities of
today's amplification and detection chemistries.
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