SurModics is a provider of surface modification solutions to the medical device industry. SRDX%s primary focus is the commercialization of its patented PhotoLink process through licensing agreements. For the three months ended 12/00, total revenues rose 16% to $4.8M. Net income rose 45% to $1.4M. Results reflects increased PhotoLink related revenue. Earnings also reflect higher investment income of $781K vs. $294K in 12/99.

June 3, 2001

This chemical provider to the medical industry has had a very good year thus far. Since January first it is up 57.5%. Moreover, it has been advancing in stages and bursts that result in the stock moving higher without ever being heavily overbought. SRDX just broke out of its current seven-week base on Monday and did so on convincing volume of 266,000 shares. We decided to wait one day for the inevitable pullback in order to get in at a slightly better price. Tuesday's volume on the pullback move was a heavy 440,000 shares, but we were encouraged by the fact that most of this volume came in while the stock was advancing higher into the close. We are also encouraged by the fact that the stock only retraced as far as support at $50.40. Traders that might be interested in getting into this high flyer could look to do so on a break above today's high of $59.25 on volume that puts the stock on track to do at least 300,000 for the day. This type of move would be confirmation of the new uptrend in the stock.

Picked on June 5th @ $58.00
Change Since Picked 0.00
Stop Loss @ $54.00

SRDX sold off on Tuesday morning and hit our stop at $54.00. The drop didn't come on increased volume and furthermore, it wasn't prompted by any news. SRDX dropped all the way to its 50-dma at $50 before it bounced higher. We exit this chemical play on Tuesday.

Picked on June 5th @ $58.00
Profit/Loss = -4.00 (-7%) (Stopped out Friday @ $54.00)
Best Profit = +0.96 (+2%)

June 10, 2001

Interestingly enough, SRDX made Investors Business Daily's Friday list of stocks with the highest combined earnings per share rating and highest relative price strength. They must have read the Splittrader new play list this week! SRDX has indeed been strong this year. In fact, on Friday, shares of SRDX looked as if they were going to head for a retest of support at $54.25 before they turned around and headed higher by $1.45 to close at $57.75. We still like how the stock is acting and just hope that next week bring a bit more volume into our chemical play. That said traders should look for a break above $59 on volume of at least 200,000 shares before initiating a new play in SRDX.

Picked on June 5th @ $58.00
Change Since Picked -0.25
Stop Loss @ $54.00