Battle Royale - NASDAQ Losers for November 21

This sad array of tickers appeared on the NASDAQ 52-week low list yesterday:

ARDM, BANFP, BARI, CIPHE, DYII, FBMI, HAST, MDCA, MCCC, NTEC, PCOP, PLUG, POTP, SYMC, YBTVA

They're mostly unfamiliar to me, too. I weeded out the sub-dollar stocks, as well as the issues with narrow 52-week trading ranges, namely a couple of local banks. I noticed some stocks that appeared on the list last week. I left those free-fallers off. That left:

CIPHE, DYII, HAST, MDCA, MCCC, NTEC, PLUG, POTP, SYMC, YBTVA

Quickly scanned the Key Statistics page at SmartMoney.com for each of the above to see if any had positive signs, or were profitable, so I wouldn't waste more time than I needed to on obvious duds.

And then there were three: DYII, HAST, and SYMC.

It's time for battle. Allez cuisine!

DYII - Dynacq Healthcare - Down $0.35 to $2.80. 52-week range: $2.81-$5.60

Here's what DYII does, as explained on their website:

Dynacq focuses on efficient, high-volume specialty surgical hospitals and ambulatory surgery centers to provide excellent healthcare for our patients. Our facilities specialize in a small number of higher-margin specialties and procedures – orthopedics, neurosurgery and general surgery.

DYII operates these surgery centers in Pasadena, West Houston, and Dallas, Texas, as well as in Baton Rouge, Louisiana. They are working on a joint venture project in China.

The Dynacq website is pitching pretty hard to surgeons, a refreshing relief from small companies who often seem desperate to woo investors on their websites. Dynacq plays up their business' benefits to surgeons: increased efficiency, numbers of procedures performed, and of course, income.

Why did the stock hit a 52-week low? Dynacq's press release for its 2005 fiscal year results explains:

HOUSTON--(BUSINESS WIRE)--Nov. 16, 2005--Dynacq Healthcare, Inc. (NASDAQ Capital Market:DYII) announced audited financial results for the fiscal year ended August 31, 2005. For the fiscal year ended August 31, 2005, net patient revenue decreased by $7,574,517 or 12% from $62,849,378 in fiscal 2004 to $55,274,861 in fiscal 2005 primarily due to declines in both net patient service revenue and patient procedures at the Pasadena, West Houston and Baton Rouge Facilities. Net loss increased by $3,528,674 from a net loss of $1,608,260 in fiscal 2004 to a net loss of $5,136,934 in fiscal 2005.

Dynacq's business declined at three of its four locations. And Dynacq is more unprofitable in 2005, than in 2004, with a net loss increase of 219%.

I don't know how this weak contender slipped into the competition. I can't find anything positive on their Key Statistics data sheet.

HAST - Hastings Entertainment - Down $0.54 to $4.96. 52-week range: $5.05-$9.99
Fool.com just posted a negative review of Hastings yesterday. I've included it here with some edits for clarity:

Hastings Wasted

By Nathan Slaughter
November 21, 2005

With Thanksgiving fast approaching, retailers far and wide are anxiously awaiting Black Friday, the start of the frenzied holiday shopping season. Cooler weather, enticing promotions, parking lots crammed with early bird shoppers ... it's an ideal time for a struggling company like Hastings (Nasdaq: HAST) to lift its sluggish sales out of the doldrums.

However, I seem to recall having a similar amount of optimism this time last year -- misplaced optimism, as it turned out. The one-stop shopping specialist has struggled ths year, and those hoping it might gain some traction heading into the critical fourth quarter will be disappointed. Yesterday, the company announced that third-quarter losses widened from $0.14 to $0.24 year over year, while revenues that slipped 4.2% to $114.6 million.

The company's game and movie rental operations continue to deteriorate, faced with competition from online sources like Netflix (Nasdaq: NFLX) and consumers' increasing preference to buy films rather than rent them. For the quarter, rental revenues dropped 10% to $21 million. Unfortunately, the merchandise segment wasn't able to bail the company out this time, as comps for music, books, and video sales all showed a decline. Even the traditionally strong video game department registered a disappointing 9.4% same-store sales drop, though last year's impressive 51% gain made for difficult year-over-year comparisons.

After hearing the news, investors headed quickly for the exits. The stock tumbled 12% to a new 52-week low below the $5 mark. The sharp pullback has made these cheap shares even cheaper:

Industry Average vs. HAST
Price/Sales - 0.1 vs. 4.9
Price/Book - 0.7 vs. 5.0
Price/Cash Flow - 1.0 vs. 25.1
PEG - 0.8 vs. 1.0
EV/EBITDA - 3.5 vs. N/A

The format in Hastings' 150 superstores is a bit unconventional. Video game and movie rental sections share space with trade-in counters for used CDs and movies, along with sections for new books, software, DVDs, cassette tapes, stereo equipment, and greeting cards. Look hard enough, and you might even find a Ted Nugent eight-track tape tucked away somewhere.

While the stores are a convenient place to shop, their recent numbers have been less than encouraging. On the positive side, Hastings managed to expand its gross margins more than 200 basis points during the seasonally weak third quarter, and the lone analyst who tracks the company has pegged its long-term growth rate at a respectable 10%.

Still, until the higher-margin rental side of the business shows signs of leveling off and merchandise comps return to positive territory, even Hastings' compelling price tag may not make it worth buying.

I buy completely into the conventional wisdom that the brick-and-mortar media retail business model is a terrible investment. When I think of buying CD's, which is getting rarer these days, I buy online, or go to a specialty store like Other Music. DVD's come from DeepDiscountDVD.com and Amazon.com. If I were to rent DVD's, I would use Netflix. If I were stuck living near a Hastings, I doubt I would feel compelled to shop there. And I don't think I'm out-of-the-ordinary here.

However, HAST has some cheap numbers. Its Price/Sales, Price/Book, and Price/Cash Flow ratios are are very low. Its PEG is 1.01. HAST is profitable, but not very, with a Net Margin of 0.90%. ROE/ROA/ROIC is 5.50%/1.93%/3.59%, also lower than its competition. The Fool.com writer is spot-on that this is an mediocre company with an unfocused, unconventional business model in an unappealing sector. That's why the stock is cheap.

SYMC - Symantec Corp. - Down $0.47 to $17.96. 52-week range: $18.01-$34.05

I wrote a short description of SYMC, but then I found a surprisingly well-done overview and recommendation of the stock:

With innovative technology solutions and services, Symantec helps individuals and enterprises protect and manage their digital assets. Symantec provides a wide range of solutions, including enterprise and consumer security, data management, application and infrastructure management, security management, storage and service management, and response and managed security services.

Symantec is the world leader in providing solutions to help individuals and enterprises assure the security, availability and integrity of their information.

Symantec's recently completed merger with Veritas leaves no doubt: Symantec is the best security software company in the world. The announcement of the Veritas merger started a prolonged decline in Symantec shares that I believe culminated earlier this month when the company lowered its revenue guidance and announced the resignation of its CFO.

At this point, I believe all the bad news is priced into the stock. Yes, Symantec lowered its 2006 revenue forecast but is still projecting $5 billion of sales in the coming year, has minimal debt, more than $4 in cash per share on the books, and cash flow above $840 million in the past 12 months.

I would be a buyer right here in the $19.50 range. If you are a trader and like to book short-term profits, I would sell at the 21-day moving average of $21.69.

Because this company is so undervalued, I would set a stop-loss just above the 52-week low of $18.01. If it goes back to that area, I would buy more.

Y'know who wrote the above piece? Former Phillies centerfielder, Lenny Dykstra.

Why is SYMC down? A slew of analysts downgraded the stock this past month. Bear Stearns initiated coverage with an underperform call.

How about some numbers? PEG of 1.07. ROE/ROA/ROIC of 3.50%/2.51%/3.50%. Net profit margin of 7.30%. SYMC's numbers are lower than its competitors, Internet Security Systems (ISSX) and VeriSign (VRSN). For the PEG, that's good. For the others, not so much.

Lenny's poised for a SYMC comeback. It's certainly the winner of this battle royale, but noting the strength of this field of competitors, it's not much of a victory.