- - Thursday, January 6, 2011


In last week’s column, I mentioned that “just because something is cheap does not mean it is going to rise in value.” What’s also needed, I said, is “a catalyst,” and I went on to describe some of those value-changing events. A few readers e-mailed me to ask: How do we know when a catalyst is coming?

That, as you can imagine, is something that runs through most investors’ minds, whether they approach things with an individual or institutional mindset.

Just as we must keep on the lookout for solid investments, we must keep an eye peeled for those events that may give rise to new product announcements, strategic shifts or an update to a company’s outlook. The question then becomes, “How do we know when a company may make such news?”

In general, we don’t. But by examining a company’s investor relations Web page and by tracking key industry events, we can piece together potential dates when a company may share some information that we as investors would deem a noteworthy catalyst for the company’s stock.

After rereading that last sentence, it seems to me a few illustrative examples are called for:

• Industry events. If you were simply to scan a general news site and look at technology news, you would find a smattering of headlines relating to CES. For the uninitiated, CES is the Consumer Electronics Show that runs every year in early January and is one of the larger venues to introduce consumer electronic devices, including new TVs, mobile phones, gaming devices and iPad competitors. CES is not only the first major event of year but it’s where nearly all the major players tend to make announcements.

Already, AT&T has shared its plans for its next-generation 4G mobile network; Research In Motion has announced that its 4G Playbook, an iPad competitor, will be coming to Sprint this year; and Microsoft has shared the news that it sold more than 8 million Kinect units during the first 60 days of its release.

Now let’s take a step back to see what other industry events are on the horizon for the intersecting worlds of consumer devices and connected devices. There are a few worth noting. From Feb. 14-17, the Mobile World Congress (MWC) will be held in Barcelona. The International CTIA Wireless 2011 convention is on tap from March 21-24 in Orlando, Fla. Both of these gatherings tend to feature mobile product announcements, and I suspect this year that will mean more smart phones, pads and other connected devices.

These industry events are not relegated to certain industries such as technology, even though those tend to grab far more headlines. A quick Google search reveals that the 13th annual ICR XChange, an event that allows public and private companies to pitch to investors and more, is on tap for next week. I count more than 100 public companies — including Caribou Coffee, Physician’s Formula, Urban Outfitters and Chipotle Mexican Grill — discussing their businesses at this event.

These industry conferences and events tend to lend themselves to new product or service announcements and other strategic initiatives.

• Investment bank conferences. Kopin Corp. is a company that I have been following for some time, and a few days ago I received an e-mail notification that the management team will be presenting at the Needham & Co. Growth Conference. There are many of these types of conferences throughout the year, put on by firms such as Citigroup Inc., Morgan Stanley and JPMorgan Chase & Co. The easiest way to learn where and when a company that interests you is presenting at one of these conferences is to look at the “events and presentations” section of the company’s investor relations Web page. I tend to look for press releases around the time of these events to see whether a company is updating or affirming its near-term outlook.

• Company earnings. Like clockwork, we once again have corporate earnings in front of us.

Kicking off things is Alcoa Inc. on Monday, and the barrage of corporate numbers will run its course over the next few weeks. Again, companies you are following will post these reporting dates on the investor relations pages of their websites.

Earnings announcements can serve as investor catalysts in two ways. The first is whether or not the company meets, beats or exceeds the market’s consensus revenue and earnings expectations. You can find these expectations via the “analyst estimates” tab on Yahoo Finance. The current expectations for Alcoa’s December 2010 quarter, for example, are $5.68 billion in revenue and earnings of $0.19 per share.

The other catalyst is whether or not the company meets, beats or exceeds the consensus expectation on future earnings. Generally speaking, good things tend to happen when a company raises its outlook and negative things follow when the projections are lowered. As I write this, the Street expects Alcoa to earn $1.10 in earnings per share on $23.43 billion in revenue in 2011. Stay tuned.

As with most investing, there is no silver bullet and, at least in my view, a mosaic is called for. This calendar-building exercise is but part of that mosaic, and keeping an eye on key upcoming dates falls into the category of basic homework for an informed investor.

Good hunting.

Chris Versace, the Thematic Investor, is the director of research of Think 20/20, an independent equity-research and corporate access firm located in the Washington, D.C., area. He can be reached at [email protected] At the time of publication, Mr. Versace had no positions in companies mentioned. However, positions can change.

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