Katharine Schildt of Investment U says profits in Cornell Companies Inc. (NYSE: CRN) are on the rise, sadly because during these hard times, crimes rates are skyrocketing.

This from Katharine:

Unfortunately, in tough economic times – like everyone is currently experiencing – crime rates go up. But there are companies that take advantage of this fact, doing well during normal cycles and better during down times.

Cornell Companies Inc. (NYSE: CRN), a leading provider of corrections and treatment services for both adults and juveniles, saw its fourth quarter profit rise 37% on Thursday.

This jump is attributed in large part to the expansion of three of its prisons: Big Spring Correctional Center, D. Ray James Prison and Great Plains Correctional Facility.

Some of the services Cornell’s facilities provide include incarceration and detention, drug and alcohol treatment, behavioral rehabilitation and treatment, and transition from incarceration.

With a total of 69 facilities in 15 states (plus the District of Columbia), Cornell’s business is spread over numerous municipalities and its social impact is far reaching. But its profits are what we’re excited about.

For the fourth quarter of 2008, Cornell earned $7.4 million, or 50 cents per share, compared with $5.4 million, or 37 cents per share, for the same quarter last year. Analysts expected a profit of 40 cents per share.

But don’t think that the recent performance is a one-and-done deal.

Going back to 2008, Cornell earned $22.2 million, or $1.51 per share, up 86% from $11.9 million, or 82 cents per share, in 2007. Revenue rose 7.2% to $386.7 million from $360.6 million. They’ve been increasing profits and returns for shareholders for quite some time.

Management released its expectations for the rest of the year: all favorable. With earnings per share for the first quarter expected to be between $0.30 and $0.34.

This positive outlook is partly due to the 700-bed expansion at its D. Ray James Prison, beginning in the third quarter of this year.

Aside from prison expansions and organic growth, their strategy hinges on cost-cutting and government incentives. For example, 2008’s fourth quarter benefited from a lower effective tax rate of 37.6%, compared with 39.6% a year earlier. This was largely due to the employment of payroll tax credits.

And many of these incentives don’t look to be temporary, either.

Cornell’s Chairman, President and Chief Executive Officer, James E. Hyman, said, “Cornell finished the year with another quarter of strong execution of our business plan and a resulting increase in earnings above the prior year’s quarter. Looking to 2009, the company expects to deliver another year of solid growth while recognizing the uncertainty in the current budget environment.”

In a period of stagnant – or negative – growth prospects, the phrase recession-proof gets thrown around a lot. But in a broad market decline, like the one we’re in now, no one is unaffected. But there are companies that are safer than others.

It remains to be seen if the political and municipal environments will continue to buffer privately run prisons. But there seems to be no signs that the current positive situation will change. This means good things for Cornell, and good things for investors.

Source: Cornell Companies Inc. (NYSE: CRN): Stock of the day

This from Katherine:

While most oil companies continue to report less than desirable earnings results, one refiner recently reported improved refining margins, announcing a 51% increase from one year ago.

Based in San Antonio, Tesero Corp. (NYSE: TSO), one of the leading independent refiners and marketers of petroleum products, reported quarterly profit of $97 million, compared with a loss of $40 million just a year earlier.

Yes, that’s in spite the precipitous fall in oil prices.

Other areas of the company’s operations saw an increase as well, including its operating income, which was $196 million higher than the fourth quarter of 2007. This was in part due to success in its Hawaii and California regions, as well as improved results in retail.

Increased crude recipients in Los Angeles were partly responsible for the success in Tesoro’s California region. And a 10% increase in heavy crude helped its Hawaiian region report favorable earnings.

“The actions we’ve been taking since late in 2007 have positioned the company to succeed even in this weak market environment,” said Bruce Smith, Tesoro’s Chairman, President and CEO.

“While falling commodity prices did benefit our wholesale and retail marketing channels, the capital and non-capital initiatives we implemented beginning in early 2008 have enhanced our ability to deliver substantial and sustainable improvements in our capture of the available margin, and I am pleased to see these successful efforts reflected in our fourth quarter results.”

Tesoro was able to increase crude flexibility and distillate production, which helped its margin realization. It took great pains to take full advantage of production, which led to a 4% increase in diesel and jet fuel compared to 2007’s fourth quarter.

Another important aspect of Tesoro’s accomplishments in such an otherwise dreary market was its ability to decrease costs. Direct manufacturing costs were $248 million in the fourth quarter compared to $300 million in the third quarter.

Capital spending for the entire year was $724 million, down significantly from the $932 million it spent in 2007. It says it expects its expenses for 2009 to be around $600 million, an even better improvement than it already reported.

“While the strength in first quarter West Coast margins has been a pleasant surprise, we plan to continue to follow our 2009 business plan which is based on industry benchmark margins that are lower than 2008, and our expectation that we will realize continued improvement in margin capture. Our program of non-capital objectives and benefits of our 2008 income capital spending is resilient and continues to provide the platform for our organic growth opportunities,” said Smith.

The company has obvious investment merit. To endure the fall in oil prices from $147 a barrel to under $40 – yet still improve margins, is significant. If anything, Tesoro represents a great way to keep your portfolio diversified with exposure to the energy sector.

Source: Tesoro Corporation (NYSE: TSO): Stock of the Day

Katherine Schildt of Investment U tells us more here:

In part because of the new stimulus package, spending for military defense in 2009 is around $650 billion – twice what it was after 9/11. This is an early present for companies concerned with aerospace and defense.

Companies such as FLIR Systems, Inc. (Nasdaq: FLIR) – the global leader in design, manufacturing and marketing of Infrared cameras, night vision and thermal imaging systems – who posted very favorable fourth quarter earnings just a couple of weeks ago.

Revenue was $302.3 million, up 25% compared to fourth quarter 2007 revenue of $242.6 million; operating income for the quarter was $88.1 million, up 40% from $62.9 million in the fourth quarter of 2007; and net income was $65.3 million compared with net income of $46.6 million in the fourth quarter a year ago.

Growth was strong in many of their divisions. Particularly, revenue in FLIR’s Government Systems and Commercial Vision Systems divisions also increased by 50% and 12% respectively.

One reason for this boost is FLIR’s profitable acquisition strategy. The purchase of the Extech Instruments and Cedip Infrared Systems contributed $13.2 million in thermography revenue, up from $5.4 million in the 2007’s fourth quarter.

It’s no wonder the CEO has been so pleased…

“We are very pleased with our financial performance in 2008, as we recorded our eighth straight year of record revenue, operating income and earnings per share, and achieved the highest operating income margin and cash flow from operations in the Company’s history,” said President and CEO Earl Lewis.

“We are well positioned for continued growth, and each of our divisions remains focused on their core strategies. Our 2009 outlook anticipates continued growth in all three divisions, particularly our Government Systems and Commercial Vision Systems businesses, which are supported by strong backlogs.”

The company backlog is another one of the big reasons for FLIR’s recent success: Orders for delivery in the next 12 months increased about $13 million for the quarter – $270 million for the year – to $663 million. A healthy backlog allows a company to plan and budget expenses better.

Because the company’s products “play pivotal roles in a wide range of industrial, commercial and government activities in more than 60 countries,” things should only go up from here.

FLIR expects net revenue in 2009 to be between $1.2 billion and $1.25 billion, which compared to 2008 would be an increase 14%. It also anticipates net earnings to increase 12%, around $1.40 to $1.47 per diluted share.

And demand continues to remain strong in most of its product lines. Lewis stated that, “While our entire community is facing unprecedented challenges, we remain committed to pursuing the proven strategies that have delivered superior long-term results for our shareholders.”

You don’t need infrared technology to see that this stock is going up.

Source: FLIR Systems, Inc. (Nasdaq: FLIR): Stock of the Day

Navigation devices have become increasingly popular over the years, and the leader in the United States is Garmin Ltd. (Nasdaq: GRMN).

Shares of Garmin Ltd., headquartered in Olathe, KS, soared 17% this morning from Friday’s close, giving hope to a company that has been struggling over past few months.

Its biggest issue recently has been inventory, but it was able to reduce that by $274 million in the quarter.

“It’s a sign that they may not have to price as aggressively to move the inventory in a slower economic environment,” John Bright said, analyst for Avondale Partners LLC.

Despite poor fourth-quarter results, analysts are focusing on the past year and the coming months. Garmin’s total unit shipments increased, up 15%, sales rose 10% to $3.49 billion and its outdoor and fitness sales are up 26%.

Marketwatch reported, “CEO Min Kao said Garmin experienced ‘a challenging economic environment’ but inventory reductions and Garmin’s margins for the quarter helped the company’s unit-sales increase and keep business relatively stable.”

“We continue to experience unit growth in both the North American and Asia-Pacific regions in the fourth quarter and were pleased with our market-share gains around the globe,” Kao said.

“We recognize that 2009 is going to be a difficult year and we are prepared to manage our business accordingly. While economic conditions are very challenging and are affecting most of our markets, we continue to see opportunities to invest selectively and grow our business through new product development and market share gains.”

It is also “evaluating adjustments” in order to “increase cost efficiency and match operations to market demand over the near to immediate term.”

Garmin is launching its first navigation-centric cell phones (the G60 and the M20) in select markets during the first half of this year.

Analysts seemed to have been waiting to pass judgment on this company, but with new products on the horizon, and an obvious demand for its products, Garmin’s future is looking much brighter.

Garmin Ltd. (Nasdaq: GRMN): Stock of the Day

Good Food, Plenty of Beer AND Profits?

At a time when most consumers are pinching pennies by forgoing dinners out, there are still some restaurant chains that are doing something right.

Put Buffalo Wild Wings (Nasdaq: BWLD) at the top of that list. Beating Wall Street’s expectations caused the stock to shoot up close to 35% yesterday.

Despite a failing economy – and the rising price of chicken wings – this restaurant has obviously been well received by hungry patrons.

Based in Minneapolis, Buffalo Wild Wings specializes in chicken and beer, a favorite combination among many Americans. Throw in a ton of jumbo TVs (usually tuned to a big-time sporting event) and you have the perfect all-American atmosphere.

That’s likely what led to the earnings surprise. Its fourth-quarter earnings beat analysts’ profit estimates by four cents per share.

Net income increased 28.7% to $7.7 million, or 43 cents per share. Total revenue increased 32.6% to $121.2 million. Same-restaurant sales (the key metric for gauging restaurant health) jumped 4.5% at company-owned stores and 2.5% at franchise restaurants.

The best news by far, and what’s really riled up the analysts, is that the company also announced that it expects to meet its goals of 15% unit growth, 25% revenue growth, and 20% to 25% net earnings growth in 2009.

Are you kidding me? In this market?

Throw in their nonexistent debt and plenty of cash on hand, and you can see why the CEO is optimistic…

CEO, Sally Smith, accredits much of its increasing numbers to highly disciplined management and constant customer feedback. She says the company will rely on much of the same in the coming quarters.

“We realize these are challenging economic times. Changes in commodity prices and tightening of credit markets are just a few of the many variables that are present in our business.”

The above-mentioned variables haven’t been a problem (so far).

Taking Wednesday’s surge into account, along with its impressive growth and yearly earnings increase – and don’t forget it’s affordable prices and delicious food – Buffalo Wild Wings is a stock worthy of anyone’s Watch List.

Source: Buffalo Wild Wings (Nasdaq: BWLD): Stock of the Day

This Small-Cap Biotech Just Hit its Stride

One of the most recession-proof industries is health care. No matter what happens to the economy people will always need medical attention – and new developments will always be in the works.

On Thursday, a small-cap pharmaceutical company, Pozen, Inc. (Nasdaq: POZN), soared after the Food and Drug Administration agreed to allow testing of two of its experimental drugs.

The stock is up over 50% in a week. Yesterday (Thursday), it was one of the top-five percentage gainers on the Nasdaq.

Pozen Inc. - Helping Those With Chronic Pain

Pozen is a drugmaker that creates new medicines to help patients with diseases that cause chronic pain. Its goal is to improve these patients’ quality of life by providing them with therapies that are more effective, safer and convenient.

The go-ahead by the FDA is huge for the company. Obviously, the success of its business is highly dependent on the marketplace value of its ideas and the related patents obtained.

But Pozen’s ability to obtain from the required regulatory agencies approval to sell the developed products, and its ability to find strong commercial partners to successfully commercialize the products, cannot be understated.

Pozen paired with AstraZeneca in August 2006 in order to license the product(s) and to collaborate in the remaining development and commercialization. Upon reaching certain goals, AstraZeneca has promised to pay them $345 million, what is being referred to as “milestone payments.”

Pozen’s PN 400 – Treating Types of Arthritis

One of its drugs, PN 400, will be used to treat various types of arthritis. The second, PA32540, is intended to give the same cardiovascular benefits as aspirin. Both are designed to help patients without developing ulcers that come from current drugs used.

These developments bode well for Pozen, which plans to file for regulatory approval of the two drugs – allowing it to then market and sell the products to those who would benefit.

There is a clear need in the drug market for a medicine that can relieve inflammation and help to manage pain – Pozen can fill that void. Given the roughly 20 to 30 million people who suffer from osteoarthritis, not to mention the millions of others with chronic pain, this product is likely to have mass appeal.

And according to Bill Hodges, Pozen’s Chief Financial Officer, “The acceptance of the filing would fetch us a milestone payment of $10 million.” That’s money in the bank for Pozen.

Pozen is pulling back a little this morning, and it’ll probably come down a little more in the coming days. Once the euphoria of FDA approval wears off, and the emotion gets driven out of the buying, serious investors can start looking at purchasing this stock before it makes its next big gains. And with the pipeline this company has, that could be considerable.

Source: Pozen Inc. (Nasdaq: POZN): Stock of the Day