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The Value Investment Survey ranks about 100 industries on a weekly basis, based on the average rank of all of the stocks within each industry for that week. The assigned Industry Rank indicates the expected performance of the industry over the upcoming 12 months. Industry ranks range from 1 (Highest) to 99 (Lowest).

The rank assigned to a common stock depends on the issue’s historical price movements and earnings momentum, as well as “surprise” earnings factors. That is, if reported earnings differ from expectations by a certain percentage, then that “surprise” factor will be taken into account. Ranks assigned to common stocks also indicate expected price performance over the next six to 12 months. The Industry ranks are an average of the individual stock ranks within the overall groups.

The rank assigned to a convertible depends a great deal on the rank of its underlying common stock. But unlike the common rank, which predicts price performance only, the convertible rank is risk-adjusted, and gives an indication of the convertible’s year-ahead total return potential. Below is a partial list of convertibles with above-average total return potential whose underlying common stocks are ranked for above-average year-ahead performance and reside in industries with above-average Timeliness ranks as well.

 

Maturity

Recent

Curr

YTM

I.V.

 

Com

CmYld

Convertible Securities

Date

Price*

Yld(%)

(%)

Gde

Industry

Price*

(%)

O'Reilly (CSK Auto) 4.63s25 Stp

12/15/2025

148.25

4.6

2.8

H

RetSpc

$54.35

 NIL

Photronics 5.5s2014            

10/1/2014

144.32

3.8

 NMF

G

Semicn

$6.36

 NIL

Time Warner Telecom 2.375s2026 

4/1/2026

115.11

2.1

1.3

H

TelSrv

$18.12

 NIL

Xilinx 3.125s2037 (144A)       

3/15/2037

100.25

3.1

3.1

E

Semicn

$25.31

2.5

Iconix Brand 1.875s2012        

6/29/2012

98.13

1.9

3.0

H

Apprl

$17.76

 NIL

Micron Technology 1.875s2014   

6/1/2014

92.79

2.0

4.1

F

Semicn

$7.72

 NIL

ON Semicond 2.625s2026         

12/15/2026

103.88

2.5

2.3

H

Semicn

$7.36

 NIL

Alaska Commun 5.75s2013 (144A) 

3/1/2013

100.68

5.7

5.5

G

TelSrv

$10.12

8.5

Linear Technology 3s2027 A     

5/1/2027

103.04

2.9

2.8

F

Semicn

$31.16

3

Highlighted Convertibles:

Iconix Brand Group (ICON) changed its business model from manufacturing shoes to the licensing of various trademarks in 2003. In mid-2005, it changed its name from Candies. It now owns and manages a portfolio of consumer brands, including Candie's, Badgley Mischka, Joe Boxer, Danskin, Rampage, Ocean Pacific, Mossimo, London Fog, Rocawear, Bongo, Starter, Mudd, and others. The company licenses its brands to retailers and manufacturers worldwide. Iconix supports its brands through advertising, product development, and public relations. Revenue and earnings are on track to advance about 45% and 25%, respectively, according to our equity analyst. And foreign operations could have meaningful contributions in the next three years. The Iconix Brand 1.875% convertible notes due 2012 trade at a “busted” conversion premium level, but still allows for a fair amount of upside participation in the stock’s advancement. As a bond, it offers solid downside protection. The convertible matures in about two years.

Linear Technology (LLTC) designs and manufactures high-end linear chips, which monitor, condition, amplify, or transform continuous analog signals associated with real-world phenomena (temperature, pressure, weight, position, light, sound, and speed). The company sells about 4,700 products to more than 15,000 OEMs directly and via distributors. LLTC has been recovering nicely as bookings picked up in all geographical markets, and cancellations remain low. The fiscal 2010 year (ended June 30, 2010) saw a 21% rise in sales, and a like gain in earnings. And as the economy strengthens, business from the industrial, automotive, and computer markets should pick up. Moreover, management’s tight control of costs should enhance the bottom line. Linear Technology’s 3% convertible notes due 2027 are not callable before May 1, 2014, which gives the stock ample time for recovery. In fact, the stock price needs to advance 43%, to $45.36 to recover some of the premium at which it trades. The convertible offers more stable pricing and will increase in value as the stock increases. In addition, the convertible should presumably not fall as much as the stock, should there be a decline in the latter.