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Wed, September 10, 2008 02:03:31 AMFrom:
Bottom Line Secrets
Subject:
Profits from International Cost Cutters
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September 10, 2008 |
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Dear Friend, With labor and raw materials prices rising around the world -- even in China -- it’s no longer an easy “slam dunk” for a US company to increase profits by moving production overseas. Not easy, but not impossible, says Jason Ronovech, co-portfolio manager of the Paradigm Select Fund. If done right, relocating production can still reduce costs and increase margins. Ronovech tells us about two interesting companies that are doing just that. Investors often get pumped up when the stock market is soaring or plunging. And most people get pumped up automatically when they wake up in the morning -- that is, they have a slightly elevated blood pressure. Samuel J. Mann, MD, explains when this is just a normal occurrence and when it might indicate a health risk. All the best, Jessica Kent Editor BottomLineSecrets.com Cost-Cutting for Profits Jason Ronovech
Paradigm Select Fund  und manager Jason Ronovech’s first step is to identify profitable companies that generate plenty of free cash flow. Many of his favorites are using some of their cash to buy back their own shares (thus increasing earnings per share for other shareholders). He leans toward stocks with price-earnings (P/E) ratios below their historical averages. To find such bargains, he buys solid
companies with temporary problems. His favorites include… Steris Corp. (STE). This Ohio-based company makes sterilizers and related devices used by hospitals and research laboratories. The company recently moved production from the US to Mexico. Costs of the move hurt earnings last year, but sales and profits are climbing now. Recent share price: $36.00. Verigy, Ltd. (VRGY). This two-year-old company is a spin-off of a spin-off of Hewlett-Packard. It makes equipment that is used to test semiconductor chips. Verigy has American roots, a Singapore headquarters, and a new manufacturing facility in China. Sales of semiconductors have been sluggish lately, but the company is gaining market share and cutting costs through its Chinese operations. Recent share price: $18.77.
Bottom Line interviewed Jason Ronovech, co-portfolio manager of the Paradigm Select Fund (PFSLX). It had an annualized return of 7.6% during the three years through August 27, about three percentage points higher than the average return of mid-cap blend funds, according to Morningstar, Inc.
Q: My systolic blood pressure is mildly elevated shortly after I wake up. Should I be worried? A: Probably not. Most people have slightly higher blood pressure in the morning, usually as a result of the autonomic nervous system (which controls such processes as heartbeat and breathing rate) getting pumped up to start the day. If the elevation is mild and brief, nothing needs to be done about it. But recent studies suggest that an exaggerated morning "surge" of systolic blood pressure (top number up to about 160 mmHg to 180 mmHg) is an indicator for future stroke risk. Such a surge could be a sign that a patient has stiff, aging arteries or is experiencing age-related retention of sodium and fluid, which elevates morning blood volume and blood pressure. If your systolic pressure exceeds 140 mmHg, or the elevation lasts for hours rather than several minutes (wearing a 24-hour blood pressure monitor provided by your doctor could detect blood pressure elevation before awakening), your doctor probably will recommend that you reduce your salt intake and/or adjust your blood pressure medication.
Our inside source: Samuel J. Mann, MD, professor of clinical medicine, Weill Medical College of Cornell University, New York City.
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