Top 20 Mid Caps In Our Radar






























































Stock Market Cap Price Yield Profile Pros Cons
CIT Group Inc. (CIT) 5.24B 27.65 3.62 Commercial & Consumer Finance. Exited Home Lending Business end of August - Announced closing of student lending business as well. It could be up for sale. Trading 50% below the 52-week high. Concerns regarding consumer-lending business have driven the share price to an attractive level. The remaining businesses will generate lesser profits going forward.
Trimble Navigation (TRMB) 4.65B 38.36 None 700 patents. Positioning and Navigation pioneer (1978). Offers an extensive portfolio of products though acquisitions and has turned itself into a global company. A growth over 20% for the foreseeable future should not be a far cry. Trades at 34 times this years earnings, which can be termed expensive.
Trane (TT) 7.24B 37.58 1.7 Previously American Standard. Dealt in bed and bath products as well as in vehicle control systems (anti lock brakes). Now primarily focused on air conditioning systems (commercial and residential). The Bed and Bath business was sold for 1.8B to a private equity firm July 2007. The Vehicle Control Systems business was spun off as WABCO end of July 2007. Energy efficient air conditioners (both commercial & residential) is a growth industry. The Wall Street projection of 13% growth in the next 5 years may be bordering too conservative, May have hard time realizing growth expectation if the residential side of the business tumble in the wake of the housing downturn.
USG Corporation (USG) 3.78B 38.14 None Vertically Integrated Gypsum (Sheetrock) manufacturer. Exited bankruptcy (asbestos litigation) in 2003. Buffet accumulated stake from 2000. During 2003, Buffet accumulated more as part of a backdoor bankruptcy deal. Now owns 20% of USG. His cost basis is around $29 per an msn discussion on the topic. Asbestos litigation trust is fully funded and there are no further obligations. Stock significantly down partly due to the housing collapse. Extended housing downturn has a direct impact on its business.
Ameritrade (AMTD) 11.72B 19.68 None One of the largest discount brokerages. Etrade, OptionsExpress, and newer players like Zecco are some of the other players. Fairly valued at about 20 times trailing earnings and growth expectation is at 15%. Competition in the discount brokerage area has reduced with consolidation. A bear market that drives volumes down will have a negative impact on Ameritrade.
SiRF Technology Holdings (SIRF) 1.57B 26.14 None GPS chipsets and software for high volume GPS market. The products are targeted for wireless devices, automotive electronic systems, and consumer and computer devices. Soft guidance brought down the shares and the valuation seems attractive. GPS makers have the ability to switch chip providers. Global Locate acquired by Broadcom, Texas Instruments, and STM Microelectronics are competitors. These three have taken market share from SiRF in the last year. There is ongoing litigation with Global Locate.
Sanmina SCI (SANM) 927M 1.75 None Integrated electronics manufacturing service provider. Attractive Valuation. May not be profitable for a while.
ABM Industries (ABM) 1.06B 21.33 2.25 Facility Services contractor (Janitorial, Security, Parking, Engineering, and Lighting). Recently acquired One Source, a similar business in UK. Attractive Valuation. Low Margin Business.
Cousins Properties (CUZ) 1.25B 24.04 6.16 Commercial Real Estate Investment Trust (REIT) unduly punished as part of the housing weakness although the company is primarily in the commercial area. Liquidity in the sector is a concern.
Radian (RDN) 947M 11.78 0.68 Mortgage Insurance, Servicing, and Investment firm. A rebound in housing will result in the company’s shares to be viewed as undervalued. Highly speculative and it is a game of judging the bottom. There is an outside chance that the firm will end up bankrupt.
OpenText (OTEX) 1.73B 34.20 None Enterprise content management solutions. Its software helps enterprises manage their online content. Trades at close to 52 week high. Based in Waterloo, Canada. Excellent growth and at 2 times revenue it is still reasonably valued, Consolidation is the name of the game in the enterprise software business and so the best strategy for the company is to position itself to be acquired. Instead, the company is continuing to pursue an independent strategy.
Blackboard (BBBB) 1.19B 41 None Software for education industry. Growth projected to be 25% for the next 5 years. Valuation is high but growth justifies it. Blackboard is having a tough time defending its patent portfolio in the face of negative press and opposition from its academic customer base.
Tibco (TIBX) 1.43B 7.53 None Business Integration & Process Management software. May be an acquisition target. Service Oriented Architecture (SOA) migration space is a growth area, The company has a shrinking window of opportunity to get acquired and if the CEO’s efforts on that count is not successful, the company may find it hard to grow on its own.
Integra Life Sciences (IART) 1.1B 41.67 None Manufacturing and Marketing of Surgical Implants and Medical Instruments. At 27 times earnings and projected 5-year growth at 22%, the valuation is reasonable. The Company’s fast paced acquisition strategy has integration risks.
ev3 (EVVV) 1.41B 13.5 None Minimally intrusive cardio vascular products (cardio peripheral & neuro vascular). Trading close to the 52-week low. The company is expected to grow at a very fast pace. Fox Hollow acquisition is expected to be a drag on earnings in the short-term.
Quinatana Maritime (QMAR) 1.53 26.62 4.56 Dry Bulk Carrier. Highflier due to all-time high Baltic Dry Index (BDI). There is some speculation of a takeover based on comments from the board of directors. Two ships coming off long-term contracts in the next two quarters might enable the company to sign lucrative contracts, if BDI stays high. BDI is currently at 10 times the value it was 5 years ago. That kind of growth is unsustainable and so at some point the trend will reverse.
Diana Shipping (DSX) 2.58B 34.65 6.7 Similar story as QMAR. DSX has more ships coming off charter contracts and so may offer better returns. BDI is currently at 10 times the value it was 5 years ago. That kind of growth is unsustainable and so at some point the trend will reverse.
HDFC Bank Limited (HDB) 14.77B 138.74 None Indian bank focused in the areas of retail, wholesale, and treasury services. Has the potential for sustained high growth. Trades at a very high PE of around 40.



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