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Friday, 01/30/2004

Eye Spy Profits
By Nich Sheldon
BOL - Bausch & Lomb, Inc

Company Description

Bausch & Lomb is the eye health company, dedicated to perfecting vision and enhancing life for consumers around the world. Its core businesses include soft and rigid gas permeable contact lenses and lens care products, and ophthalmic surgical and pharmaceutical products. The Bausch & Lomb name is one of the best known and most respected healthcare brands in the world. Celebrating its 150th anniversary, the Company is headquartered in Rochester, New York. Bausch & Lomb's 2003 revenues were $2.0 billion; it employs approximately 11,500 people worldwide and its products are available in more than 100 countries. More information about the Company can be found on the Bausch & Lomb Web site at Copyright Bausch & Lomb.

[Source: Company Press Release]

Reasons to Invest:

Is January already over? Man time flies in a bull market. With only a few days left until February, it can only mean one thing... its Super Bowl Weekend. Okay, so maybe I am not to excited for this year's Super Bowl match up, but one thing is certain... I am excited about this week's Drip of the Week!

Bausch & Lomb, Inc (NYSE:BOL) looks fundamentally solid as well as technically sound, however I am going to use a trigger on this Drip plan (more on this in a bit). Revenues were up 11% last year, to $2.02 billion. More impressively, their net income grew by a margin of 74% after an accounting change. The company noted that the huge rise in their sales and income reflect an increase in contact lens, lens care and pharmaceutical sales, as well as the absence of a $49 million restructuring charge and asset write-offs.

The company also has a few financial highlights worth mentioning. Their revenue growth was recorded at being 6.10 percent, with a gross profit of 1.02 billion. BOL's earnings growth for the past fiscal year was a whopping 242.00 percent, with diluted earnings per share of 2.359.

According to their Price History statistics, Bausch & Lomb reported a 52-week change of 61.32 percent, which is 20.14 percent relative to the S&P 500. These numbers are quite impressive, when you consider that nothing was reported in the red last year.

On top of that, BOL has been in an up trend regression channel since February of 2003, adding on more than 20 points since its 2003 low of 29.35. From a technical standpoint, BOL has far more than impressed me, especially when you consider the stocks performance in 2002. Furthermore, the point and figure chart indicates that BOL is on an ascending Triple Top Breakout, with a price target of 59.00.

Over the past four weeks BOL's price performance has been ranked in the top 25 percent of its industry. Yesterday (January 29th) BOL announced that they had raised their 2004 earnings per share projections to the range of $2.60-$2.65. They also said that they expect year-on-year growth of approximately 15% over each of their 2003 quarters. Bausch and Lomb cited strong constant- currency revenue growth as the primary reason for their positive outlook.

While contact sales were up for BOL last year, so were the numbers of LASIK surgeries. Well, what does corrective eye surgery do to a retailer of contacts? Would you not think that with the increase of eye surgeries, that there would be a decrease in corrective lens sales? This could be true, but it's not holding backing BOL's growth, because on December 22nd, 2003 the LASIK Vision Institute announced that they had decided to make Bausch & Lomb's Bausch & Lomb Technolas laser their preferred lasers in their LASIK centers across the United States. I think this is a genius way to get a handle on corrective eye surgery. If they can't sell you lenses, why not still make money on the surgery?

BOL has an average dividend yield of 0.99 percent, which calculates out to an annual dividend of $0.52 per share owned.

All the signs say that BOL is definitely on a bullish trend higher, but one thing still concerns me. That one thing is the 54 level. Fifty-four has served as long term resistance for the stock since September of 2000. This is where the trigger comes into play and where I would like to see a few things happen before I actually add the play to my portfolio. I would like to see a retest of the top of BOL's February regression channel, which is right around 56. If the stock can break out over its 3- year resistance level, this is the first indication that we may be in for a ride to its 2000 highs (over 80). We'll call a breakout to 56 the first set of criteria. The second would then be a retest of 54. I would like to see 54 hold up as support for at least a week. If the stock continues to close over 54 (which would be the middle support bar of the regression channel) then this is a good indication that old resistance of 54 has turned into new support for the stock. If both of these two things happen, I would be intrigued to add the stock to my portfolio and to ride it back up to 80 (which I would expect to be hit over the next few years).

This ends another exciting episode of the Drip of the Week. Stay tuned next week, as we will spotlight another stock worthy of the limelight.

Until Next Week,
Nich Sheldon

Broker Recommendations

Strong Buy         3
Buy                1
Hold               7
Sell               2
Strong Sell        1

Brokers Covering  14

DRIP Information:
Shares to Qualify = 1
Auto-reinvestment = Yes
Accept Foreign Accounts: Yes
Temper Enrollment: Yes

Min/Max Investment = $25-$500,000/Year

Reinvestment Fees - 
Dividend investment fees: 0
Cash investment fees: 0
Auto reinvestment fees: $1

Transfer Agent:
First Chicago Trust

Corporate Headquarters:
One Bausch & Lomb Place
Rochester, NY 14604
Phone: (585) 338-6000
Fax: (585) 338-6007


Copyright 2003

Do not duplicate or redistribute in any form.
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