Retalix Ltd. (RTLX)

[midastouch017]

Some older articles/info,

*Tue: How to assemble an Israeli portfolio
I make my portfolio up out of 60-70% leading companies, 15-20% almost leading companies, 5-10% companies with potential, and at most 5% dream companies.
Shlomo Greenberg

I think it’s worthwhile saying a word or two about companies that underwent considerable upheaval last week, including Eltek (Nasdaq: ELTK), Healthcare Technologies (Nasdaq: HCTL), G. Willi-Food International (Nasdaq: WILCF; TASE: WLFD), and certainly Mind CTI (Nasdaq: MNDO; TASE: MNDO), but also companies like Radware (Nasdaq: RDWR; TASE: RDWR), and even Irish pharmaceutical company Elan Corporation (NYSE: ELN), whose share price has collapsed twice because of a drug that was supposed to beat Copaxone.
Eltek made a profit after thirteen losing quarters, and the share has gone into orbit. Why? Does making a profit guarantee investors that the company’s management will treat them better than in the past? Does the profit constitute economic justification for such a large jump in the share price? Obviously not, but Eltek rose 326.6% between the beginning of March and the last week of the month. It has since dropped by 39.7%. If you ask me, a market cap of $21 million for this company is certainly economical and attractive, but what about the economic value? Did anyone take that into account when the share was rising sky-high?

In general, stock market investors fall into distinct categories. I’m not sure this applies to the Tel Aviv Stock Exchange, but it is certainly true of US stock exchanges, and what is true there is usually also true here. A conservative and serious investor usually invests in shares with a proven record of success.

Conservative investors will never touch a share like Elan. In the medical field, they’ll take Pfizer (NYSE: PFE; LSE: PFZ), Johnson and Johnson (NYSE: JNJ), or Amgen )Nasdaq: AMGN), and perhaps a little Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) as a speculative investment in their portfolio. Note that Eltek and Healthcare skyrocketed without a single word of explanation or comment from management, or from anyone else in the market.

In the case of Elan, the experts and analysts can be blamed for creating the Frankenstein monster of multiple sclerosis drug Tysabri and worshipping it, until it turned on them, then returned to being a lifeless corpse. In all the other shares I mentioned, the ups and downs were a result of greed, not economic logic.

It is hard to explain what happens with these shares, and a thousand others like them, and hard to predict, too. Furthermore, it is also very difficult to affect these fluctuations, because they are totally unpredictable.

When I wrote more than six months ago that an $11 billion value for Elan was insane, with or without Tysabri, I received many complaints. Now that the company’s market cap is $1.4 billion, is the share expensive or cheap? It’s extremely expensive. Elan loses $390 million on $490 million in sales. A year ago, however, when the company’s situation was the same as now, but the Tysabri dream still existed, Elan was valued differently.

In order to prevent misunderstandings, I want to clarify my method of selecting shares. There is a leading group of companies with a clear record of proven long-term success. These companies have a history of sales, profits, growth, and, of course, and most important of all, proven management ability. This group includes Teva, Elbit Systems (Nasdaq: ESLT; TASE: ESLT), Marvell Technology Group (Nasdaq: MRVL), Check Point (Nasdaq: CHKP), Amdocs (NYSE: DOX), Mercury Interactive Corporation (Nasdaq: MERQ), NDS Group (Nasdaq: NNDS), Elron Electronic Industries (Nasdaq: ELRN; TASE: ELRN), and even ECI Telecom (Nasdaq: ECIL). From these companies, it’s possible to construct a long-term investment portfolio, and they will constitute 60-70% of an Israeli investment portfolio.

Next in line is a group of companies that I call the middle group. These are companies in which the business indications and management ability are not far behind those of companies in the first group. What they lack is another two or three years of proven track record. This group includes companies like Retalix (Nasdaq: RTLX; TASE: RTLX), M-Systems Flash Disk Pioneers (Nasdaq: FLSH), Harmonic (Nasdaq: HLIT), AudioCodes (Nasdaq: AUDC; TASE: AUDC), Alvarion (Nasdaq: ALVR; TASE: ALVR), and perhaps one or two companies like Given Imaging (Nasdaq: GIVN; TASE: GIVN) and Syneron Medical Ltd. (Nasdaq: ELOS). This group makes up 15-20% of the portfolio.

The third group is the group of potential, with companies ranging from Mind CTI to Top Image Systems (TiS) (Nasdaq: TISA), Orckit Communications (Nasdaq: ORCT; TASE: ORCT), and G. Willi-Food. I choose companies in this category according to the uniqueness of their business niches and their management ability. If their management is capable of maneuvering, they will gradually move into the second group, on their way to the first. I make 5-10% of my investment portfolio from these companies.

There is a fourth category the speculative one, ranging from Pharmos (Nasdaq: PARS) to Pluristem Life Systems (OTCBB: PLRS). The companies in this group are a gamble with a dream. No more than 5% of my portfolio is made up of such companies. That’s my way.

Published by Globes [online], Israel business news - www.globes.co.il - on April 5, 2005


**Wed: Don’t be caught Retalix-less
This share has everything the long-term investor needs.
Shlomo Greenberg

Retalix (Nasdaq: RTLX; TASE: RTLX) thinks that 2005 will be a good year, with $185 million in sales and a net profit of $15 million. CE Unterberg Towbin and Oscar Gruss & Son have published revised reports on the company. Oscar Gruss give Retalix a "Buy" recommendation, and Unterberg gives a "Hold" recommendation, and both recommendations are right. If you are a cautious and stolid investor, wait, but if you think that Retalix will continue to perform as it has performed so far, then buy.
In any event, don't sell the share, and don’t find yourself without this share in your portfolio. I believe that Retalix CEO Barry Shaked is creating an important company in field of retail modernization. Shaked is a true industrialist, and, who knows? Maybe in a few years, we'll look back at Retalix as we now look at Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA), Amdocs (NYSE: DOX) and other companies. In any case, this share has everything the long-term investor needs.

Shamir Optical Industries Ltd. (Nasdaq:SHMR) has published its financial reports for the fourth quarter of 2004 and the year, and they're impressive. I won't express an opinion about this company's future, because I don’t yet know it, but this is definitely one of the more interesting solutions around for the kibbutzim industries. After the century-long Socialism-Capitalism struggle, as always, justice turns out to be somewhere in the middle. If every kibbutz (collective community) and moshav (cooperative agricultural village) had its own Shamir Optical, it could well happen that Israel will be a light unto the gentiles.

After years of stubborn but successful struggle, Aladdin Knowledge Systems (Nasdaq: ALDN; TASE: ALDN) (especially as it lies in the shadow of the second large Israeli company in the sector, Check Point (Nasdaq: CHKP)) has taken its first steps in entering the Wall Street Premier League. All right, so I'm exaggerating a little, since a tough road still lies ahead to the upper echelon and the hearts of the top analysts, but it seems to me that Aladdin president Yanki Margalit, whose abilities as a manager I questioned long ago, is definitely one of the leading managers among the Israeli companies on Wall Street. I say this not only because of his achievements, but because some very serious people over there are beginning to think this. After Aladdin's secondary issue, which, as expected, provided an opportunity to buy the share at a slightly lower price, I'm seeing a recovery, which is also supported by the company's business circumstances and guidance for this year, as well as initial interest shown in the share by investment institutions. Trading volume in Aladdin's is also up sharply.

CIBC World Markets published a very positive recommendation for Aladdin on Monday. It thinks that Aladdin is at the point where it will reap the fruits of prior investments in development. The company's current products are also selling well. CIBC analysts predict that Aladdin will post earnings per share of $0.87 for 2005 and $1.07 for 2006, which is quite impressive. Piper Jaffray gave Aladdin a "Hold" recommendation on Monday. I tend to agree with CIBC, solely because of Aladdin's managerial capabilities, because even if we take the upper limit of the analysts' consensus of earnings per share of $1.12 for 2006, I think that $24 per share is pricey, except that the share's management premium will grow.

On second thought, Margalit ought to ponder whether he wants to reach Check Point's status on Wall Street, because on Wall Street, too much love can kill you. So move carefully.

Published by Globes [online], Israel business news - www.globes.co.il - on April 6, 2005


***Retalix, Pay By Touch to provide finger scan payment system

Retalix will integrate Pay By Touch's biometric authentication payment system into its point of sale (POS) solutions.

Globes correspondent 25 Sep 05 15:37

Retalix (Nasdaq: RTLX; TASE: RTLX) and Pay By Touch last week announced an alliance to integrate Pay By Touch's biometric authentication payment system with Retalix's point of sale solutions for grocery retailers.
Retalix provides integrated enterprise-wide software solutions for the food and consumer goods retail and distribution industries worldwide. Retalix's StoreLine solution is installed in over 25,000 sites around the world.

Pay By Touch has patented a consumer biometric authentication payment system that allows shoppers to pay for purchases with a simple finger scan linked to their financial accounts.

The partnership between Retalix and Pay By Touch expands the biometric payment service offering into new vertical markets. Through this partnership, grocery retailers will be able to integrate the Retalix StoreLine software with the Pay By Touch consumer biometric payment service, providing shoppers the option of paying for goods with the touch of a finger.

Pay By Touch Solutions is the only company that has more than two-dozen US issued patents covering biometric transactions.

In addition to improving the efficiency of the payment process, Retalix's integration with Pay By Touch will provide retailers with a faster, more convenient method of linking to loyalty programs and validating a consumer's age for restricted products such as lottery tickets and alcohol, all of which will help to reduce the amount of time spent at checkout.

Published by Globes [online], Israel business news - www.globes.co.il - on Sunday, September 25, 2005

http://www.globes.co.il/serveen/globes/docview.asp?did=1000015667&fid=942

Dubi