So far this earnings season we've had 3 stars in terms of reaction to earnings - F5 Networks (FFIV), Priceline.com (PCLN), and as of yesterday evening Polypore International (PPO). The latter stock is becoming to 2010 what Wyndham Worldwide (WYN) was to the portfolio in 2009; a tucked out of the corner stock not dominated by HFT / EFT trading that has excellent appreciation for a core position, along with being a nice stock to trade. Not bad for a company I had never heard of coming into the year.
The last 48 hours has shown the downside of not 'betting' on earnings reports, just as last week showed the upside; I cut position sizes in Priceline.com and Polypore International by significant amounts going into earnings, so I've left some opportunities on the table for appreciation. But the upside is not taking any big hits during earnings season and keeping capital near all time highs - there is no perfect system that only gives you upside without the risk. Now we have to figure out where to chase the stocks we got out of, because short of full scale market rout stocks that tend to act like this right after an earnings report tend to do very well the next 90 days.
Specific to Polypore, the company came in at 33 cents versus the 24 cent estimate. I am not sure how much they beat on revenues since there is no news report on this quiet company. The reason we bought (a secular growth story within a rather staid company): energy storage, namely a below the radar lithium battery play - continue to bear fruit. [May 20, 2010: Polypore International - Derivative Play on Electronic Battery Growth]
Full report here.
- Sales were $150.1 million, an increase of $31.9 million, or 27%, compared with the prior-year period. Excluding the effect of foreign currency translation, sales increased 29%.
- Adjusted Net Income and Adjusted EPS were $15.2 million and $0.33 per diluted share, compared with $5.2 million and $0.12 per diluted share in the prior-year period. Net income was $15.9 million and $0.34 per diluted share.
- Robert B. Toth, President and Chief Executive Officer, said, We're pleased with the ongoing robust growth during the quarter, and we're continuing to experience positive trends in all of our businesses. The demand drivers remain solid and the investments we have made and continue to make across our businesses--namely in Electric Drive Vehicles, healthcare and expansion in Asia--position us well for long term growth.
- In the quarter, sales for the Energy Storage segment were $107.5 million, an increase of $25.2 million, or 31%, compared with the prior-year period. Lithium battery separator sales were $32.6 million, an increase of $11.9 million, or 57%. The increase reflected economic improvement in consumer electronics, as well as continued application proliferation and new product launches, including emerging Electric Drive Vehicles (EDVs).
Long Polypore International, Priceline.com, F5 Networks in fund; no personal position