For his Quantum Opportunity Value portfolio, Covestor model manager Tong Li uses quantitative methods in an effort to buy undervalued stocks and sell overvalued stocks and create a diversified small cap portfolio. Tong averages 24.6 trades per month, and this portfolio’s current top holdings include Mercer International Inc (MERC), Omega Protein Corp (OME), Kemet Corp (KEM) and Nova Measuring Instruments Ltd. (NVMI) (as of end of day 3/3/11).
On February 17, Tong added PC Mall Inc (MALL) to the model. MALL is a direct marketer of technology products, services and solutions to businesses, government and educational institutions as well as individual consumers. On February 15th, the company issued its fourth quarter 2010 results, showing impressive growth:
- Consolidated net sales for Q4 2010 were $425.4 million, up 26% y/y
- Consolidated gross profit for Q4 2010 was $49.5 million, up 22% y/y
- Consolidated operating profit for Q4 2010 was $6.8 million, up 891% y/y
- Adjusted EBITDA for Q4 2010 was $9.6 million, up 251% y/y
- Diluted earnings per share for Q4 2010 was $0.32 vs. diluted earnings per share of $0.01 in Q4 2009
Jim Van Meerten of Seeking Alpha was impressed both by MALL’s fundamentals and technicals. Van Meerten’s notes:
Technical Factors:
- 100% Barchart technical buy signal
- 17 new highs and up 37.59% in the last month
- Relative Strength Index is 85.79% and rising
- Trades around 9.62 with a 50 day moving average of 7.50
Fundamental Factors:
- Wall Street brokerage analysts have 2 buy recommendations released
- Sales are projected to increase by 5.40% this year and 6.80% next year
- Earnings are expected to increase by 49.20% this year, 24.40% next year and 15.00% annually for the next 5 years
Investor Sentiment:
- Motley Fool Caps members vote 130 to 10 that the stock will beat the market
- The All Stars agree with a vote of 33 to 0
Sources:
“PC Mall Reports Fourth Quarter 2010 Results” PC Mall Inc, 2/15/11. https://www.sec.gov/Archives/edgar/data/937941/000110465911007599/a11-6077_1ex99d1.htm
“PC Mall: Double Digit Earnings Growth for Technology Distribution Company” Jim Van Meerten. Seeking Alpha, 2/25/11. https://seekingalpha.com/article/255139-pc-mall-double-digit-earnings-growth-for-technology-distribution-company
