Michael Markowski, "The Best picker on Wallstreet" - Smart money http://www.smartmoney.com/onthestreet/index.cfm?story=20031121 had the following to say and I have provided the graphs so you can see what he is talking about.

Michael Markowski submits: Logility, Inc. (NasdaqGM:LGTY) (Price at

yesterday’s close: 7.70 - 52Week  Range 5.05-12.43)  produces and markets

integrated software suits that provide supply chain management, including

collaborative planning, strategic network design, optimized supply sourcing,

production management, warehouse management and collaborative logistics

services. Logility, Inc. has a growing client base in industries such as

Consumer Goods, Softgoods/Apparel, Food & Beverage, Service/Aftermarket

Parts, Wholesale Distribution, Specialty retail.

 

Logility, Inc. is growing significantly. Trailing 12 months sales grew at a

40% clip for the last 4 quarters. Profit margins are above 20% for the

second consecutive quarter after 20 quarters below that. Total liability

growth is at 9.6%, which is the lowest in 8 quarters. Tangible book value

grew 31% over the last 12 months, which is at its highest going back at

least 20 quarters. Logility has generated seven consecutive quarters of

positive Cash Flow from Operations. Cash Flow from Operations for the most

recent quarter also reached a six year high. For Logility's twelve months

ended July 31, 2006 cash flow from operations was $7,561,000, compared with

$6,792,000, an 11.3% increase over the comparable year earlier twelve months.

 

After a significant decline the stock appears to be under accumulation and

is beginning to stabilize.  The risk reward ratio at this point looks good

and thus its shares should be accumulated.

 

By looking and understanding the graphs below you will see what Michael is talking about.  Below you can see the 5 year operational cash flow (OPS) chart.

If you have read our discussions on cash flow investing and understand how to read the graphs you will understand the 5 year chart does not give us a good enough indication of what is taking place within the financial statements and is only the starting point. (To learn about these graphs go to the free tutorial a www.free-cash-flow.com/tutorial.html and you will learn the basics.)

Next we look at the graph below depicting the last 4 quarters.

After looking at the last 4 quarters we need to look at the 20 quarter charts to really understand the business and to look at quarterly trends year over year.

However, the great investors we all try and follow, including Michael, really only concentrate on the following two graphs.  It is these graphs that cause Michael's picks to outperform the market year after year.

As stated earlier we need to look at the 20 quarter chart to get the real picture.

 

Here you can see what Michael is getting at and why this stock is poised to do well. If you go down to line 2 you can see the tweleve month sales growth is greater than 40% for the last 4 quarters.  At line 8 you can see the profit margins are above 20% for the last two quarters while they are much lower in the preceeding 18 quarters.  At line 19 you can see the total liability growth at 9.6% which is the lowest in 8 quarters.  At line 22 you can see the tangible book value grew at 31% over the last tweleve months, the highest figure on the line.  If you look at the bars on the top you will see the light green bar.  If you look at each Q1 that is Q1/03, Q1/04,Q1/05 and Q1/06 you will see the Q1/07 OC bar is higher than any of these others, hence the highest cash flow from operations over the last 4 years.

 

With these metrics as his comfort base Michael now turns to the technical charts which I have not published but which he mentions at the top of the article.  This stock appears to be under accumulation and with these metrics you can see why.  With the stock price near the bottom of the range, Michael feels the "risk reward ratio looks good"

 

The results of this analytical view of LGTY combined with a technical analysis lead Michael to believe this stock is poised to move up.

Due to the fundamentals shown here this stocks will hold its' own through this volatile market and will explode when the volatility subsides.

Please take the time to read through the tutorial at www.free-cash-flow.com/tutorial.html it is free and will help you understand why Michael picks the stocks he does every week.

 

If you would like more information on the system Michael uses please send me an e-mail to marc@free-cash-flow.com

Look for these analyses showing up on Yahoo shortly