Enterprising Investor Forum

Once again, we witnessed Mr. Market in one of his crazy days where he completely misunderstands/undervalues a company.

Following news that Mr. Silverman, Quality Systems (QSII) CEO since 2000, resigned the stock dropped by almost 5%. Does this event change QSIIs numbers? No. This remains a strong business with a bright future operating in the right sector. Healthcare will continue to grow and QSII is in an ideal position to reap all potential gains.

All the key management team remains in place and this event does not change the outlook for the company. If anything, it will stop recent boardroom discussions and hopefully serve as a catalyst for more focus.

Having said this, despite recent upgrades and BUY ratings, QSII currently has a short percentage of the float of 30.20%! Is this justfified by the following numbers? Up to you to make your mind up:

• ROA - 23.67%
• ROE - 39.11%
• Net margins - 21.49%
• Operating margins - 31.84%
• Sales growth - 18.67%
• Profit growth - 20.60%
• EPS growth - 19.65%

Please read our disclaimer.

We wrote about Dr Pepper Snapple Group (DPS) on May 22nd when we talked about how we thought it was a classic case of a misunderstood spin-off - read post here.

Despite the fact that Mr. Market is still not looking favorably on this company, we wanted to update our readers on the fact that, apart from having posted great quarterly results, insiders are standind behind the company and taking advantage of these bargain prices:

• John Adams (Director) bought 20,000 shares on the open market at 24.97-25.00 USD for a total of 500,000 Dollars - reported on June 9th 2008.

We continue to believe this will turn our to be a Peter Lynch play!

Please read our disclaimer.

Following on from our previous post - Value in Ford: here - we think that the time has come for the long-term investor to open a position under 6 USD.

This could be a first third with the aim of adding to your position should we see 52 week lows again but the bottom line is that Ford is trading at -at least - a 30% discount to long-term value.

The reorganization is on track and despite higher fuel prices, Ford is on the right path. It’s strong international business will continue to allow them to off-set the slow US business and their strength in smaller segments and diesel outside the US will be an incredible asset should they need to go down that road in the home market.

Please read our disclaimer.

There has been a lot of talk surrounding Steve Job’s health following the recent iPhone presentation where he did appear to have lost a lot of weight.

We hope he is doing fine and that this is all just speculation, but here is an interesting video on the subject that raises some valid succession planning issues that Apple will have to deal with sooner or later.

Enjoy!

Why is the Street staying away from Dr Pepper Snapple Group (DPS)? Is this one of those classic misunderstood spin-offs that Peter Lynch always talks about? We definitely think so - this is a great company that holds a number of classic brands like r Pepper, Snapple, 7 UP, Sunkist, A&W, Hawaiian Punch and a lot more.

As most people already noted, when DPS started to trade towards the begging on this month, it presented investors with a big discount to the LBO price. However, the stock still went down; probably due to a lot of the UK based funds that did not want to or could not hold securities traded in the US.

DPS is currently trading at a discount to competitors with a P/E ratio that is one of the lowest among major food and beverage companies. Most analyst value the company above 32 USD per share which represents a premium of about 30% to current prices.

The company is moving in the right direction and despite the weakness in the economy, brands like Dr Pepper, Snapple and A&W will continue to be American classics! And don’t forget Mott’s Apple Juice, Canada Dry, Sunkist, and so on. Furthermore, despite troubles with 7-Up, they are also moving strong with brands like Orangina in Europe and Emerging Markets remain strong.

As Peter Lynch state, Spin-offs often are usually misunderstood and offer great investment opportunity also due to the fact that, once set free, their managers do their best to perform as independent entities!

Please read our disclaimer.

It is only a matter of time before the housing market picks up again and despite this slowdown, even the houses that are being foreclosed need to be fixed-up. Home Depot (HD) is ideally placed to reap all potential gains and is paying a healthy dividend while you wait.

Ahead of earnings and as a long-term buy-and-hold, we would be looking for a miss and therefore share price decline to open a position.

Please read our disclaimer.

We were taking a look at the latest insider activity on the MSN lists: here. And it looks like automotive executives keep on putting their money on the table - once again, Autozone (AZO) and Autonation (AN) are on the top 10 list…

…well, not really all automotive executives. A closer look reveals that it’s Lampert that keeps on increasing his stake in these two companies: he now ownes 38,7% of Autonation and 31% of Autozone.

He stepped down from AutoNation’s board in May to devote more time to his hedge fund, ESL Investments Inc., and Sears (which we all know needs it!) and it is exactly through ESL that he is making purchases… he must be pretty sure of his bet!

Let’s see how this plays out.

No matter how you look at it, we have to deal with waste. This is a growing concern not only in the States but all over the world: i.e. China, recent problems in Italy, etc..

Waste Management (WMI) is a provider of integrated waste services in North America. Through its subsidiaries the Company provides collection, transfer, recycling, disposal and waste-to-energy services. WMI’s customers include commercial, industrial, municipal and residential customers, other waste management companies, electric utilities and governmental entities.

Waste Management (WMI) has a solid track record and is also innovating in green technologies. The business models is recession proof (essential service) and will continue to provide strong and predictable cash flow.

The stock did get ahead of itself in recent times, also due to the hype around this sector. However, it has recently pulled back and we would recommend to keep an eye on it, especially if it retreats to under 30USD (which would also result in a 3,6% dividend yield).

Interesting Link - Cramer interview with Waste Management CEO: here.

Please read our disclaimer.

Ford (F) is getting things right and whilst it is still far away from a complete recovery, they are quickly moving in the right direction.

Most people tend to focus on their difficulties at home in the US and overlook how well they are doing abroad and how profitable the are. With this momentum and new strong products, we feel that Ford offers interesting prospects for the patient investor.

Allan Mullaly has a great track record of turning around multinationals and has considerably strengthened the management team. Furthermore, they are free to focus even more on the operational turnaround and future strategy now that the new UAW contract has been finalized.

Most investors thought that this was simply a stock to trade or a contrarian pick but the street is realizing that this could easily be a 10 dollar stock in the near future.

Currently, the stock has been pushed up also due to the Kirk Kerkorian bid but we feel that it is worth seriously considering opening a position under 8 USD.

Please read our disclaimer.