Four Stocks that will Take Advantage of the Christmas Spending Spree…

Christmas is over – some people are sad and some people are glad.  I’m sure that the post holiday depression is probably setting in for half of you reading this article – the other half are just happy that their bank account drain has finally been plugged. 

I completely understand and I have good news for you.  News that will not only turn those frowns upside down, but possibly ease that little problem we like to call – The After Christmas Cash Flow Crunch.

Below are four companies that are each in an extremely profitable situation this holiday season.  These companies have hot products that without a doubt -  “are selling like hot cakes.”

What does this mean for you?

If these companies bring in higher-than-average revenue in December, than we will see a nice spike in the corresponding quarterly earnings announcement.  And as we all know, earnings are one of the main catalysts for stock price appreciation.

It seems very basic, but sometime the most fundamental ideas are the most profitable.  So with out further ado, here are four Diamonds of the Holidays:

Garmin (GRMN)

Garmin is a global provider of navigation devices – most famously known for its global positioning system (GPS) technology. It designs, manufactures and markets a wide variety of hand-held and portable GPS products.

GPS is without a doubt one of the hottest holiday gifts of 2007.  I know a number of people who purchased this revolutionary technology for a loved one this Christmas – I even bought a Garmin StreetPilot for my father not too long ago.

Garmin is a front-runner in this market and will continue to be for quite some time.  Here are some of its recently announced financial highlights for 2007, as of the end of the 3^rd quarter:  

• Total 2007 year-to-date revenue of $1.96 billion, up 69% from $1.16 billion year-to-date 2006
• Automotive/Mobile segment revenue increased 109% to $1.34 billion in year-to-date 2007
• North America revenue was $1.23 billion compared to $700 million, up 76%
• Europe revenue was $631 million compared to $400 million, up 58%
• Asia revenue was $101 million compared to $63 million, up 60%
• Diluted earnings per share increased 64% to $2.50 from $1.52 in year-to-date 2006.
• 2.69 million units were sold in the third quarter of 2007, up 119% from the same quarter in 2006; year-to-date units sold increased 97% from the same period in 2006.
• Garmin has reported that its initial order book for the holiday season is strong; they feel that personal navigation devices are positioned to be a popular item during the holiday season.

One cannot argue with growth numbers like these.  GPS is becoming a household name and it is the perfect holiday gift.  It is a distinct possibility that Garmin is going to blow away 4^th quarter earnings expectations.

Apple (AAPL)

Of course I couldn’t leave out Apple:  The darling of the investor community.  For those of you who are not aware of what Apple does, let me just run a quick background by you.  Apple designs and manufactures personal computers (iMac/iBook), portable digital music players (iPod), and mobile communication devices (iPhone).    The newest and most attractive technology for consumers this holiday season is the Apple iPhone:  The infamous user-friendly iPod/Cell phone/PDA/Internet browser.  I can say one thing about Apple from personal experience – the stores are always packed full of people looking to drain their bank accounts to be apart of the posh Apple community. 

Apple’s stock price has gone up over 110% since January 1^st 2007 and it doesn’t look like it is stopping anytime soon.  The iPhone, iMac, and iPod are the quintessential Christmas gifts for 2007.

 Financially, Apples is an investor’s gem – first of all it have no debt and over $15 billion in cash.  Apple’s financial results for its fiscal quarter ending September 29, 2007 are as follows: 

• The Company posted revenue of $6.22 billion and net quarterly profit of $904 million, or $1.01 per diluted share. These results compare to revenue of $4.84 billion and net quarterly profit of $542 million, or $.62 per diluted share, in the year-ago quarter.
• Gross margin was 33.6 percent, up from 29.2 percent in the year-ago quarter.
• International sales accounted for 40 percent of the quarter’s revenue.
• Apple shipped 2,164,000 Macintosh computers, representing 34 percent growth over the year-ago quarter and exceeding the previous quarterly record for Mac shipments by 400,000.
• The Company sold 10,200,000 iPods during the quarter, representing 17 percent growth over the year-ago quarter.
• Quarterly iPhone sales were 1,119,000, bringing cumulative fiscal 2007 sales to 1,389,000.

I think it is safe to say that Apple is almost a sure-fire winner in the immediate future.  With Steve Jobs at the forefront – I don’t think this company can ever do wrong.

TASER International (TASR)

TASER International is a developer and manufacturer of electronic control devices designed for use in law enforcement, corrections, private security and personal defense. This company makes electronic control devices for four main target markets: Law enforcement, the military, the corrections market, and the consumer market. The name gives it all away – this company is the producer of the infamous electric taser gun.

For the third quarter of 2007 TASER revenues were $28.5 million.  This is the second consecutive quarter of record revenue and a 56% increase over the same quarter 2006. Income from operations for the third quarter were $6.9 million compared to $3.7 million in the prior year, this is an incredible increase of 84%. Net income and diluted earnings per share for the third quarter of 2007 were $6.2 million and $0.09, respectively, as compared to $2.4 million and $0.04 for the third quarter of 2006.

Below are some of the many significant things going on at TASER:

• A significant increase in sales orders were received and shipped to law enforcement agencies in the United States. The orders were from both new agencies deploying TASER technology following extensive test and evaluation periods and from agencies continuing to expand the use of TASER electronic control devices to their first responders. Some of its larger orders announced during the third quarter include the California Highway Patrol, Miami-Dade County Police Department, Kern County Sheriff’s Department, San Diego County Sheriff’s Department, Brevard County Sheriff’s Office, and Onondaga County Sheriff’s Office in Syracuse.
• International sales continue to be an important part of TASER’s business and accounted for approximately $4.3 million or 15% of its total sales in the third quarter. This included partial fulfillment of a follow-on order from the French Ministry of the Interior to provide the French Gendarmerie and the French National Police with TASER technology.
• TASER received purchase orders to provide U.S. Federal Agencies with TASER technology and accessories. This included orders from the United States Forest Service and the U.S. Marshals Service.
• TASER commenced shipment of the TASER Personal Protector in July 2007 and shipped about 7,000 units in the third quarter to its retail partners and online web store customers.

This isn’t the typical Christmas gift and you probably wouldn’t buy it for anyone you know.  However individuals working in the aforementioned target markets – know all about TASER and it is becoming a very popular tool.  Not to mention that the numbers are amazing – TASER is growing at a rapid rate as they expand operations over seas and continue to corner the self-defense market. 

Research in Motion (RIMM)

Research In Motion is a designer and manufacturer of wireless technology for the global mobile market. RIM provides the necessary technology for access to widely used communication mediums – including email, phone, text messaging, and Internet based applications. The company’s main revenue stream is generated by the BlackBerry wireless technology, which I am positive everyone has heard of. The wireless mobile market is expanding by leaps and bounds.

RIM’s revenue for the third quarter was $1.67 billion, which is up 22% from $1.37 billion in the previous quarter and up 100% from $835.1 million in the same quarter last year. About 1.65 million BlackBerry subscriber accounts were added in the third quarter and over 3.9 million devices were shipped. The total BlackBerry subscriber account base at the end of the third quarter was approximately 12 million.

Here is what the Co- CEO, Jim Balsillie, of Research in Motion has to say about things:

“RIM’s performance in the third quarter was solid with strong adoption of BlackBerry products and services continuing across multiple market sectors, including enterprise, small and medium business and consumer market segments. RIM and its partners continue to execute our business plans effectively. We are pleased to see continuing growth amongst business and government users, with the BlackBerry platform being deployed for a widening range of applications, and we are also pleased with the excellent consumer sales results achieved so far in the holiday buying season.”

The BlackBerry was the first phone to combine email, PDA, and phone into one package and Research in Motion is behind it all. This is the company that everyone else is chasing.  Yes, the Apple Iphone is great, but it is still working the kinks out.  The BlackBerry has been around for sometime now and it is a reliable device – surely a hot Christmas gift this season…

Neil DeFalco, ndefalco@venturafunds.com