Excerpts from
July 2010 (No. 7)

BOUGHT LIGHTING COMPANY ---

As you may recall, I sold stocks as the market approached a near-term high of 10,800 on the Dow and have been buying below 10,400.  --- sells lighting and energy management systems.... I bought this company because it has the potential to double (it's been twice as high in the last year) and has a margin of safety - good short-term liquidity (current ratio), low long-term debt, a share price below book value, and a rough patch behind it (settled litigation, softness in orders and lower guidance already price in). The risk-reward here is propitious.

BOUGHT MEDICAL WASTE DISPOSER ---

--- is winding up a government medical waste disposal contract (think used needles), has other smaller government contracts in place, and markets its disposal-by-mail service to smaller outfits like doctors' offices. The business has low entry barriers but --- recently added 10 internal sales people to seek new non-government customers. Disposal-by-mail makes perfect sense. Pick-up services are expensive and the post office already goes there, so why not turn postal carriers into your labor force? This part of the business is growing at 9 percent. --- has good short-term liquidity and NO DEBT. The PEG ratio is favorable (the growth rate is higher than the PE). The stock was twice as high just 6 months ago, but has come down because the big government contract is concluding, something that is already priced in. --- hit a once-in-a-cycle low around $4 but has since recovered. Anything under $4.50 is a good level. So this stock may wander back up when the market goes up again, or the stock may jump on contract news (opportunities in California and Texas are pending). Stocks that move on contract news have the added attraction of not being correlated with general market moves - the day a big contract comes in is not the day the market becomes convinced the overall economy is out of the woods. So, while there's no real catalyst here for the moment and no real moat around the company (there are larger competitors like ---), --- represents a reasonably good upside speculation while appearing to have minimal downside. The purchase of --- concludes my buying campaign ... undertaken as the market retreated from its short-term 10,800 high.

EARNINGS

* --- - Quarterly sales were $20.6 million versus $21 million a year ago. Net income was up - $1.99 million versus $1.24 million. Cash rose and long term debt declined. The company is proud of holding sales steady in a tough environment. This is a pretty good report, all things considered. The company is doing fine on an operating basis. I figure the PE is about 10 now, less than the market average. It's been a long time getting out of the woods (minnow-swallows-whale merger, financial crisis, recession), but this company is now undervalued - OK

TIDBITS

* Beyond Tomorrow - A sand-swimming robot in development could be used to ...

* Country Watch (North Korea) / Freedom Watch - North Korea has lifted all restrictions on private markets for the sale of food, admitting that all attempts at central planning have failed and people are starving as a result. Previously, the government had condemned the evil capitalist system as egotistical and anti-social. Now, capitalism is seen as the only means by which to avoid mass starvation. HA HA HA HA HA - I told you so! When are you Leftists going to get the message that your ideas stink? You mean all those pious sentiments about taking care of everybody and having a right to life's necessities didn't keep people from dropping dead of hunger on North Korean streets? You Leftists are complete and total morons and idiots! You can debate ideology all you want but, empirically, it is incontrovertible that economic freedom works and socialism does not. No amount of left-wing blathering can change that fact. And the Left wants the U.S. to take the socialist road? Over my dead body.

DISCLAIMERS

The opinions expressed herein are subject to change without notice.

The factual representations contained herein are drawn from sources believed to be reliable but accuracy or completeness cannot be guaranteed.

etc.