TFS - (recommended to subscribers on 2/11/03 at $3.80)

    On January 29th Three Five Systems, a maker of liquid crystal display components, reported 4th quarter revenues of $22.2 million, down 30% from the 2001 4th quarter, but up 20% sequentially. Net loss was $2.6 million or 12 cents a share. TFS expects revenues to grow to $140-160 million in 2003 with a loss of about 50 cents per share. There are 21.5 million shares outstanding. TFS has $80.6 million in cash and investments or $3.75 per share. Book value comes out to $7.26 a share. If you subtract total liabilities from just the cash, investments and receivables (ignoring inventory, property, and tax assets) you get $3.82 a share.

     Looking at the 10 year chart you can see a potential double bottom forming from the October 2002 low and the current price. On October 9th 2002 TFS had an intraday low of $3.47 and a closing low of $3.62. Longer term, bottoms have been formed in the $3.19-4.19 range. In October 1998 the low was $3.19. In 1999 the low was $4.00. In 1996 the low was $4.19. So from both a short term and long term view of the chart a bottom is likely. TFS carries no debt and trades at about .5x 2003 sales.

Update 5/12/03 - Recommend selling at the current price of $6.67. This gives you a gain of 76%.
 

               Next Pick                               Back to Closed Positions