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Five stocks, five winners, hot coffee coming through!
by Christian DeHaemer
Last month, Taipan recommended that you buy the Three Q’s based on the Flying V Supply Indicator. This month, chock full of braggadocio, I’m poised to get all up in your grill and hawk my claims of validation.
The Three Q’s (QQQ:AMEX) leaped, jumped and climbed from US$38 to US$49 in a little over a month, for a smooth 28% gain. All the while, people were pulling out what was left of their hair as the Dow and the NASDAQ went to heck in a hand basket. And, not to be outdone, the 58 September Calls (QQQIF:AOE) hit a high of US$2.70. It’s up a capacious 125 percent. That’s capacious with a “p” as in phat.
(I must admit that these call options have since fallen off to US$1.90. Taipan recommends that you hold on to them and brace yourself for a flagrant summer rally.)
Who let the dogs out?
Taipan’s basic investment philosophy is that there is always an opportunity to make a handsome profit, no matter how bad the markets are. And we have proven it time and time again. Of course, if everyone around you is prognosticating the end of the world, it’s often hard to stay optimistic. Depression may have yet to be classified as a social disease, but it sure is catching. Be that as it may: it’s the trials of life... and the trials of investing in a market gone haywire... that separate the wheat from the chaff, and the weak from the strong.
Taipan’s motto of “Courage, Foresight, and Profits” has once again borne fruit!
While I’m blowing my own horn, I hope you’ll agree that thus far, 2001 has been a very good year. South African Breweries (SAB.L) is up some 19%. Taipan booked 37% in one month on Indonesian Telecom (TLK:NYSE-ADR), and we locked in 41% on our Medicines Company short (MDCO:NASDAQ).
And if those gains aren’t enough out of your favorite Taipan analyst, I also recommended Cipla Ltd. (Script code 87, Bombay Stock Exchange). In the April issue of Taipan, I recommended that you purchase this Indian generic drug maker on dips below 900 rupees. Sure, the Wall Street Journal jumped on the bandwagon while we were still going to print.
But we turned around and made the story available to our subscribers on taipanonline.com the very same day. (Don’t you just love technology?) But even if you got your issue the old-fashioned way, you still had ample opportunity to buy below our recommended price when the stock hit 875 rupees on April 12. Yesterday, it closed at 1125 rupees. That’s a gain of 28%. Yee-haw, as they say in Midland, Texas.
| REVENUE |
| Quarters |
1999 |
2000 |
| MAR |
1,753,403 |
2,228,764 |
| JUN |
1,978,572 |
2,282,318 |
| SEP |
2,008,675 |
2,432,743 |
| DEC |
2,049,559 |
2,431,881 |
| Totals |
7,790,209 |
9,375,706 |
| Note: Units in Millions of Rupiah |
| EARNINGS PER SHARE |
| Quarters |
1999 |
2000 |
| MAR |
32.79 |
74.6 |
| JUN |
125.13 |
49.4 |
| SEP |
0.01 |
92.49 |
| DEC |
72.4 |
35.39 |
| Totals |
230.33 |
251.88 |
| Note: Units in Rupiah |
Head hunters of Borneo
Being five for five is a nice feat in any endeavor, in the markets it’s downright impossible. But then again, we’re Taipan — built for winners from the ground up.
Therefore, I’m going to press my luck. In fact, one of the same companies we’ve bought and sold twice now just announced better-than-expected profits and seems poised for another rebound.
Of course, I’m talking about P.T. Telekomunikasi (TLK:NYSE-ADR). This company, widely known as TELKOM, has consistently built its business regardless of the overall chaos in Indonesia or the headhunting philosophy of Borneo.
Buy when no one cares
The trick is to get in when no one is looking and get out when Indonesia shows up on the possibility list. We are playing the bottom end of the range and taking profits on the bounces. One can calculate that this company should trade at a P/E ratio similar to that of its peers — around 22 instead of its current P/E of 8.
 It can be argued that its current dividend yield of 5.62 percent is more than enough incentive to buy this undervalued telecom with a monopolistic hold on its home country. Or that the macro view of Indonesia can’t get any worse, and therefore can only get better. (What’s worse than genocidal headhunters?)
To refresh your memory, TLK is the national telecom provider for Indonesia. Indonesia has the fourth highest population on earth, with one of the lowest phone per capita rates. I also like to recommend this stock because, to date, not a single national telephone company has gone out of business. So if things go very wrong, you know that someday they will get better.
Buy for the long haul and be quick to take profits. TLK is a solid company. They currently have a P/E of 8 and a market cap of US$2.25 billion. As you can see from the revenue and EPS tables below, both are expanding at a healthy clip.
Operating margins are at a whopping 43 percent, and TLK has US$669 million in cash. TLK trades at less than two times book — very nice. Buy TLK under US$4.50 as a speculative play on a solid company in a distraught country. Any positive news coming out of Indonesia will likely send TLK’s share price above US$7.
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