Hyping Stocks

Anyone who pretends to give stock tips should report transparent performance. Faro holds itself to that standard. Below is a brief update of all companies recommended on this site, with an unbiased view of how the three stocks have done. There's no massaging the numbers, no justifications or excuses; it's just the performance based on the adjusted closing price as of 5/9/08. All positions are still held in the Faro portfolio with no plans of selling. Additional shares of LOJN were purchased after the stock dropped 25%.

Nordstrom (JWN)
April same-store sales figures came in at -3.8%. That's a bigger decline than the '01-'02 downturn. There could be more shoes to drop. The Nordstrom name and franchise, however, is strong. JWN trades at a forward multiple of 12x earnings, 6.7x ebitda, .85x sales; it earns an enviable return on equity of 43%; Interest coverage ratio is 15x.

-10.8% vs. S&P -8.6%
Recommended: 10/27/07

Discover Financial Services (DFS)
In the current economic environment, few companies--outside mortgage originators, "greedy" banks, and brothels--get more flak than does DFS. Households continue to worry about expenses. Credit card issuers are often the scapegoats for America's vast financial illiteracy. A key indicator of the firm's business, the net charge-off rate, stood at 3.84% for fiscal 2007. Discover is priced at 11x forward earnings, 2x sales, and has 17.29 in cash per share.


39.3% vs. S&P 5.9%
Recommended: 1/20/08


LoJack (LOJN)
People keep stealing cars. Revenue for LoJack, however, fell 15%. The company faces a challenging near-term outlook as cash-strapped consumers delay big-ticket purchases. Car dealers are focused on clearing out sales lots and less on the added revenue from LoJack units.
Shares are at 10x forward earnings and .83x sales. The company earns a slight excess of its cost of capital: return on equity is about 14%.

-28.7% vs. S&P 1.7%
Recommended: 2/23/08


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