SPAR

SPAR

It operates through three segments: Emergency Response Vehicles, Delivery and Service Vehicles, and Specialty Chassis and Vehicles. The Emergency Response Vehicles segment offers emergency response chassis and bodies, and aerial ladder components. The Delivery and Service Vehicles segment provides walk-in vans for use in the package delivery, one-way truck rental, bakery/snack delivery, utility, and linen/uniform rental businesses; and commercial truck bodies, as well as interior equipment up fitting and aftermarket parts. The Specialty Chassis and Vehicles segment offers motor home chassis, defense vehicles, and other specialty chassis, as well as distributes related aftermarket parts and assemblies.

EARNINGS WINNER in previous quarter

Spartan Motors (NASDAQ:SPAR): Q1 EPS of $0.02 beats by $0.07.

Revenue of $133.73M (+4.2% Y/Y) beats by $1.33M.

This represents the first time since 2010 that the company has recorded positive net income in the first quarter

“Considering that the first quarter is typically one of our weaker periods, we believe we’re that we’re starting to see the favorable impact of initiatives we’ve taken to improve our financial results, including launching the Spartan production system, implementing lean manufacturing across our production facilities and closely managing overhead and operating expenses.”

” Demand for our product remains strong with sales of our most popular products showing gains for the first quarter of 2015.”

Strong Backlog Growth

Order backlog of $318.9 million at March 31, 2016, an increase of $54.3 million, or 20.5% from our backlog of $264.6 million at March 31, 2015.

Operating Leverage and Increasing Margins

Gross Margin of 11.8% in the first quarter of 2016, compared to 9.0% in 2015, driven by favorable product mix in 2016 that included a higher proportion of parts and up-fit revenue.

“Our expected range of operating income is now between $7 million and $10 million based on higher revenue, favorable product mix, increased manufacturing efficiencies and lower overhead and operating expenses.”

“Based on the strong demand for our products, we’re raising our revenue estimate for the year by $10 million to a range of $570 million to $590 million. Our expected range of operating income is now between $7 million and $10 million based on higher revenue, favorable product mix, increased manufacturing efficiencies and lower overhead and operating expenses.”

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Insider Buying

Insiders have been buying like crazy

CEO and CFO as long as other directors now have a sizable amount of shares, CFO owns 112,550, while the CEO holds around 200k  shares.

Possible New Products and Catalysts

• The introduction of the Velocity, a new delivery vehicle design that combines the productivity of a walk-in van for multi-stop deliveries with the superior fuel economy of the Ford Transit chassis. (alr introduced)

 

• The Spartan Advanced Climate Control heating, ventilation and air conditioning (HVAC) system that improves heating and cooling within our fire truck cabs. This new HVAC system boasts a dynamic air velocity that on average is over 300 percent higher than our current system and greatly reduces the time needed to warm up or cool down the cab.

Spartan was “well received by our dealers and OEM partners.”

 

• New active braking system for motor home chassis. They were shown to our customers and received positive reviews. We believe this will be a meaningful contributor to growth in the motor home chassis business in the future.

 

• The expansion of our alliance with Isuzu to include the assembly of Isuzu’s new F-Series truck 

“We are proud to be their assembly partner and looking forward to beginning production        in early 2017.”

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My Note and thoughts:

This guidance would mean profitable quarters coming ahead, based on past earnings report. While SPAR is set to meet tougher earnings comparison for the upcoming quarter and report on 3 July, with the 6/2015 quarter reporting 0.04, it is likely to deliver a good blockbuster earnings headline as long as they meet estimates, i.e SPAR reports 100% EPS growth.

The current revenue estimate for the next quarter is at 152.62m, a record high in recent years. With SGA pretty much constant at the 14-15 million(if no xtra R&D undertaken)  and with a favorable product mix – current backlog growth largely attributed to a $15.7 million increase in equipment up-fit orders (will boost margins) and $34.5 million increase in vehicle orders,

I think the earnings estimate of 0.08 is pretty much conservative, and my own estimate is around 0.10ish or more if they hit the revenue guidance.

Looking at the past, the previous time they reported such earnings (0.10 eps) was at 10/30/2014  (albeit with an upside surprise of 100%), the stock flew.

Going even further back, in 2006,

It was a super momentum stock. Having a textbook breakout out of a sound base, and it increased around 5x in the short span of a year. So it has a history of moving and attracting attention from momentum players and institutions.

When looking at the subsequent quarters, the easy comparisons ( against 0.00, -$0.13), would serve as additional catalyst for the stock’s price, if holding for the longer term.

Technicals

This stock has a beautiful staircase chart, these kind of charts are the most powerful and potent. And it was also the chart that changed Jesse Stine’s life, the one that started his unbelievable run from 2003-2006.

Things i like

1. Big volume Bars on up days are signs of insitutional accumulation.
2. It is in a strong industry, with itself, STS and SRI being price leaders.
3. Tight weekly closes prior to breakout******

Earnings on 8 August, still a while more.  It would be ideal for the stock to trend down heading towards earnings, if we want to play the earnings breakout.

What is great about this chart is the extreme tight trading.

Tight trading often leads to strong breakouts.

“On a weekly chart, tightness is defined as small price variations from high to low for the week, with several consecutive weeks’ prices closing unchanged or remarkably near the previous week’s close.”

Tight trading is often a sign of institutional accumulation , with institutions accumulating stocks in a price zone with limit orders so as to not drive prices up. It also shows that selling pressure has stopped coming into the market and people are contented to hold on. This is generally very bullish and constructive, particularly in the  context of an uptrend. It indicates, a temporary period of profit taking by weak investors, and that stocks are changing hands orderly to stronger investors.

 

Interested in talking to more traders! bored.

email at derekng97@gmail.com

 

BEAT – superstock that i missed.

BEAT is one company i tracked but did not consider due to the lack of a proper base on the weekly chart. Still, it has strong fundamentals and strong breakouts recently out of key changing developments.

BioTelemetry, Inc. provides cardiac monitoring, cardiac monitoring device manufacturing, and centralized cardiac core laboratory services. It operates in three segments: Healthcare, Technology, and Research. The Healthcare segment focuses on the diagnosis and monitoring of cardiac arrhythmias or heart rhythm disorders.

Three Prong Stategy – For Growth

1. 1)Solidify our leadership position in cardiac monitoring,
2. Establish a leading research services business around the cardio core platform
3. Look to identify markets that would benefit from the application of a wireless platform and proprietary technology

Recent Quarter Earnings Winner

Q1 was another record breaking quarter with revenue coming in ahead of our expectations at $48.6 million. Healthcare revenue was strong with an increase of $6.1 million or 18% growth over the prior year. Our research revenue was essentially flat and technology revenue declined $900,000.

EPS increased from 0.06 in the prior year, to 0.20. At the same timing beating analyst estimates by 100%, (estimate at 0.10)

Increase in Sales Volume (mainly for healthcare service)

In our healthcare services division, we continue to generate greater market penetration, with record highs in all three major service types, MCT, event and Holter. As I mentioned a moment ago, overall volume was up 10%, with MCT up an incredible 19% in the quarter.

Reason : Increase in productivity

Another factor driving our growth is the overall productivity improvement of our sales organization. We have the best equipped, best trained and best led sales team in our industry. We have had relatively low turnover amongst our highest performing sales team member. As a result, we are realizing increases in nearly all of our key sales metrics.

Reason : MEDICARE  Medicare Telehealth Parity Act of 2015 was introduced in Congress in July.

Medicare approved increased prices for their patient reimbursement rates for BEAT services. The company estimates this will increase their bottom line by $5 million or $.17. This boosts the 2016 estimate to $.72 or 75% higher than the 2015 estimate with 2016 sales to $205 million. Future Medicaid approvals will continue to expand the size and scope of BEAT’s potential as Telehealth takes a larger and larger share of the medical pie.

Huge Market potential for telehealth

U.S. telehealth market is expected to reach USD 2.8 billion by 2022, according to a new report by Grand View Research Inc. Increasing access to basic healthcare is the major aim of telehealth along with improved healthcare quality and patient safety by early detection and diagnosis.

Also, rising geriatric population requires round-the-clock monitoring in homes as they are prone to various chronic ailments. Telehealth system reduces hospital visits and re-hospitalization of patients, along with round-the-clock remote monitoring and allows patients to recover within the comforts of their own home. Telehealth and tele-monitoring devices tender numerous benefits to cater to these demands and hence propel market growth.

source: https://www.grandviewresearch.com/press-release/us-telehealth-market-analysis

Unique Product to drive growth (GREAT THEME) 

Cardiac monitoring

MCOT (The MCOT system, developed by CardioNet^{®(BEAT’s previous name)}, is like Hospital Telemetry outside the hospital, monitoring patients in real-time during normal daily activities, using built-in detection algorithms and cellular technology. With 96 hours worth of memory, the system allows doctors to capture significant arrhythmic events, even when no symptoms are experienced.)

The company’s remote cardiac monitoring telemetry systems transmit heart beats , heart rates and cardiac events looking for irregular heart beats- arrhythmias to receiving centers that diagnose heart problems and potentially fatal episodes like irregular heartbeats.

“Given that numerous studies have shown MCOT to have a diagnostic yield approximately five times greater than that of Medtronic’s (Rival) device at 21 days, the most appropriate standard of care is MCOT, prior to an implantable loop recorder, 100% of the time for cryptogenic stroke patients. In fact, we have yet to see another device that approaches MCOT’s sensitivity and specificity in the tech in AFib.”

Acquisition of Delta Technology (04/16)- provides potential future catalyst and cost savings.

“Consistent with our strategic intent to strengthen our leadership position in remote cardiac monitoring, we recently completed the acquisition of ePatch division of DELTA Technology, a Denmark-based independent technology company”

“DELTA have been one of our longstanding partners working on the development of our next-generation MCT platform, currently in FDA review. As we move closer to the commercial introduction of this system, we thought it was important to take control of the critical components DELTA had developed and capture the associated cost savings that will come with integration.’.

EPatch device, an extended-wear cardiac monitor, utilizing proprietary patch and sensor technology.  The ePatch device will be integrated into BioTelemetry’s suite of Healthcare products and will provide international growth opportunities for the Company’s Technology division.

Operating leverage and Increasing Margins

“Moving to gross profit. Our margin was 63%, which was 500 basis points higher than the prior-year quarter. This margin improvement comes from favorable pricing dynamics in the healthcare segment as well as operational and volume efficiencies”

With a look at the 10Q 

While revenue for healthcare increased from 34981 to 41149 (thousands), cost of revenue actually fell by around 15000.

“These positive benefits were partially offset by lower margins in our research segment due to investments made in the business during 2015 and slightly lower technology margin stemming from the lower revenue and product mix.”.

“We generated adjusted EBITDA of $10.8 million for the first quarter of 2016, a 68% increase, as compared to our Q1 2015 adjusted EBITDA of $6.4 million and a 22% return on revenue. This is our eighth consecutive quarter of EBITDA margin expansion.”.

Annual ROE is also at a respectable 19%

William O’Neil ” It will improve your batting average if the latest quarter’s after tax profit margins for your stock selections are at or near a new high and among the very best in the company’s industry”

Mark Minervini” The ideal situation is when a company has higher sales volume with new and current products in new and existing markets as well as a higher prices and reduced costs. That’s a winning combination”.

Conservative Management

Well this is my own inference from questions from the analysts.

Question from Jan Wald

Jan Wald – Analyst

I guess in terms of EBITDA, I guess, given the guidance for the second quarter, I’m surprised that EBITDA guidance is sort of flat with the first quarter.

Alex Silverman – Analyst

Really great quarter, 22% EBITDA margins, pretty shocking. Wondering your prior 2016 guidance was for low double-digit revenue growth with patient reps growth rate sort of continuing at these levels, product sales looking positive in the second half, research services turning positive in the second half, that former guidance seems low, am I wrong?

Joseph Capper – President and Chief Executive Officer

No. I think the low double-digit got you to the midpoint of $195 million to $200 million, we’re probably a little bit more bullish on the upper end of that, but it’s only one quarter, so we basically have a year or so to unfold.

IBSS “Superstock management teams never predict big things. They consistently under-promise and over-deliver and let their results speak for themselves” .

It must be noted that the recent quarter is a seasonally the lowest performing quarter.

Beat has been consistently beating analyst estimates. And it will be interesting to look at the next earnings.

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 Research and Technology  revenue likely to increase.

While revenue for for research was flat for the quarter, there was increase in the backlog

“I think the good news is we continue fill the backlog at an accelerated rate and we’re making some progress obviously with some of the strategic initiatives that we spoke about. So it’s a good healthy business, nice margin, nice return, it complements our healthcare services business”.

Future catalyst

“During the quarter we took an extremely important strategic step, when we reached an agreement to acquire Rochester, New York based VirtualScopics. As a leading provider of clinical trial imaging solutions.

“As we have discussed on numerous occasions, expanding our research services offering has been one of our high priority initiatives aimed at improving the long-term competitiveness of this division. The imaging market is growing between 6% to 7% annually and is expected to be approximately $1 billion per year in the next few years”

“In our technology segment, the softness experienced in the second half of 2015 continued into Q1 2016, as customers have delayed purchases pending the release of our 3G devices to the market. We expect this buying pattern to reverse in the second half of 2016.”

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BEAT has a staircase chart on the daily chart. It is currently consolidating tightly.

Might make a good swing trade by entering on the next 3-4% breakout from this consolidation.

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Things i do not like

High valuation.

Low Analyst estimate for year 2017.

HIIQ Superstock Scan

Health Insurance Innovations, Inc. operates as a developer and administrator of web-based individual health insurance plans and ancillary products. Its product portfolio consists of short-term medical plans, accident, sickness & hospital medical plans, ancillary insurance, life insurance, lifestyle and discount services. Health Insurance Innovations, Inc. is based in Tampa, Florida.

EARNINGS WINNER

Our adjusted earnings per share for the quarter were $0.17 and this compares to $0.01 in the first quarter of 2015.

“Our team continues to drive top-line growth and bottom-line results with strong disciplined execution”

Note the revenue growth over the last few years and more importantly, THE EARNINGS SURPRISE AND INCREASE IN THE MOST RECENT QUARTER. This is the C in CANSLIM, and perhaps the most important factor.

 Operating Leverage

i.e HIIQ has low variable to fixed cost ratio. While revenue increased 89% from 22541 (000)to 42490 (000),  SGA expenses merely increased 11 164 to 11970.

Insider buying

“Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise”  – Peter Lynch

Entry Criteria:

Stock had a weird reversal on earnings day.

recent breakout above resistance of 7 presents a breakout entry point.

Short post: because i am spending more time on research these days.

 

YRD up 50%from time on entry.

Another winner in the bag. Great 2016.

 

Anyway here is another VCP setup breaking out today