On Jul 3, we maintained our Neutral recommendation on Navistar International Corp. (NAV). We appreciate the company's leading position in the global truck market and steady revenue stream from government contracts. However, we are disappointed about its wider loss in fiscal 2013-second quarter and rising pressure on revenues owing to the transition to clean engine systems as per EPA regulation.
Why the Reiteration?
On Jun 10, Navistar reported a wider loss of $353 million or $4.39 per share in the second quarter (ended Apr 30, 2013) compared with $137 million or $1.99 per share (excluding special items) in the year-ago quarter. Reported loss was also significantly wider than the Zacks Consensus Estimate of a loss of $1.09 per share. Lower volumes and higher pre-existing warranty adjustments, related to EPA 2010 emissions level engines, primarily dragged down the profits.
Revenues declined 22.5% year over year to $2.5 billion in the quarter, missing the Zacks Consensus Estimate of $2.9 billion. The year-over-year decrease in revenues was due to a decline in industry demand and lower market share of the company.
Following the release of the second quarter results, the Zacks Consensus Estimate for 2013 has gone down more than threefold to a loss of $7.80 per share from the previous estimate of a loss of $2.40. The Zacks Consensus Estimate for 2014 declined 30.3% to $1.54 per share.
Navistar generates a significant amount of revenues based on contract wins from the U.S. government. The U.S government contributes about 25% of the company's revenue and the contracts are on long-term basis.
In addition, the company is focusing on different joint ventures, which will help it expand globally. Further, business acquisitions will also have a favorable impact on the company.
However, Navistar has to bear the brunt of increased expenditure due to the investment in research, development and tooling costs, which will meet the Environmental Protection Agency (EP! A) and the California Air Resources Board (CARB) emission, noise and safety standards. The company also faces significant supplier risk, owing to higher dependence on some suppliers of components.
Other Stocks to Consider
Some stocks that are performing well in the same industry where Navistar operates include Visteon Corp. (VC), Magna International Inc. (MGA) and Johnson Controls Inc. (JCI). Visteon and Magna carry a Zacks Rank #1 (Strong Buy), while Johnson Controls has a Zacks Rank #2 (Buy).
Thursday, August 29, 2013
Tuesday, August 27, 2013
BB&T In Good Shape With Credit, But Growth Is Iffy
Top 10 Casino Stocks To Watch For 2014
Southeast regional bank BB&T (NYSE:BBT) definitely got the memo this quarter about the themes being higher fee income and lower credit costs. Unfortunately, BB&T also had significantly higher non-operating expenses and a little more covered loan run-off than expected, leading to pretty uninspiring operating profit performance. BB&T should be in a good position to benefit from the above-average population and economic growth expected in the southeast part of the U.S., but it's hard to call the shares a screaming bargain at today's price.
Sharp Cross-Currents In Q2 Results
Although BB&T's bottom line reported results looked relatively sound compared to analyst expectations, there were a lot of surprising cross-currents in the details. All told, there was nothing particularly alarming about BB&T's results and the company's core/intrinsic growth and profitability look pretty good.
SEE: Bank Of America Brings The Growth
Revenue rose 1% from the year-ago period and about 2% on a sequential basis, good for a roughly 4% beat compared to expectations. Net interest income was down slightly on a sequential basis due in large part to covered loan run-off, as net interest margin erosion wasn't as bad as expected (down 6bp sequentially, or 3bp on a core basis). On a core basis, BB&T's net interest margin of 3.4% compares pretty well with U.S. Bancorp's (NYSE:USB) 3.43%, Wells Fargo's (NYSE:WFC) 3.46%, Comerica's (NYSE:CMA) 2.83%, Fifth Third's (Nasdaq:FITB) 3.33%, and PNC's (NYSE:PNC) 3.58%.
BB&T also did quite well with its fee-generating businesses, as adjusted income rose about 7% here sequentially. Mortgage banking was a headwind as expected (down about 7%), but BB&T saw strong contributions from its large insurance operations (nearly 40% of fee income).
Where things got shaky was at the expense line. Expenses jumped 5% sequentially and were considerably higher than expected. That said, a lot of this increase was due to resubmitting the company's CCAR capital plan and preparing for future spending cuts. Moreover, while BB&T's efficiency ratio was inferior to U.S. Bancorp, even this quarter of elevated expenses left BB&T's efficiency ratio pretty good compared to other regionals/money centers like Wells Fargo and PNC.
SEE: A Look At Corporate Profit Margins
Credit Very Solid, And The Loan Book Is Growing
On a much more positive note, BB&T's credit costs continue to get much better. Non-performing loans dropped 30% from last year and 10% sequentially, a much better performance than its peer group. Likewise, the 64bp decline in the non-performing asset ratio and the 50bp decline in the net charge-off ratio were pretty exceptional (though, to be fair, Wells Fargo had a similar improvement). Although I am a little concerned that BB&T's loan reserves are a bit thin (just under 1.7%), the non-performing loans are well-covered and BB&T's lower credit costs more than compensated for the pre-provision shortfall.
BB&T is also still growing. Year-on-year loan growth of 4% (and sequential growth of 1%) is nothing to shout about, but it's no worse than in-line with the peer group. What's more, the loan growth was pretty balanced across the banks business units.
The Bottom Line
All things considered, I don't expect a tremendously positive reaction to BB&T's earnings, given the still-sluggish loan growth, the ongoing net interest margin erosion, and the higher expenses. Even so, I continue to believe that this is a quality regional bank with above-average growth potential in the coming years.
That potential does seem to be largely in the shares, though. Using a long-term return on equity estimate of 12.5%, an excess returns model suggests a fair value of about $38 to $39 today. On the other hand, looking at the company's return on tangible assets and return on equity net of the cost of capital suggests a price/tangible book value multiple of about 1.8x, which means a $33 target price. Split the difference ($36) and the shares aren't tremendously cheap today.
I will continue to hold my BB&T shares, but investors looking to put new money into the sector may want to look at Wells Fargo or U.S. Bancorp first, or even consider a smaller bank like Eagle (Nasdaq: EGBN) in the D.C. area for better near-term capital appreciation potential.
Disclosure – As of this writing, the author owns shares of BB&T.
Monday, August 26, 2013
Is Wells Fargo a Buy Ahead of Earnings?
Wells Fargo (NYSE:WFC) emerged from the financial crisis relatively unscathed. As the country's largest mortgage originator, it has benefitted from the rebounding housing market in the past year; however, some investors and analysts worry that since home loan growth is losing steam and interest rates remain low, Wells Fargo will be unable to maintain its growth. Only time will tell, as the bank is scheduled to report its second quarter earnings this Friday. Let's use our CHEAT SHEET investing framework to decide whether Wells Fargo is an OUTPERFORM, WAIT AND SEE, or STAY AWAY.
C = Catalysts for the Stock's MovementFriday’s earnings announcement is huge for Wells Fargo. Investors and analysts were skeptical of the bank's first quarter earnings report because its mortgage origination business appeared to be losing steam. Around 65 percent of mortgage applications were for refinancing purposes, down 76 percent in the previous year's quarter. That percentage is likely to decrease further as long-term interest rates begin to rise again; however; as refinancing has tapered off, the housing market has hit its stride again. The bank will be able to generate more new home loans to buyers as demand increases and will be able to write down more loans on its balance sheet as housing prices appreciate.
E = Earnings Are Increasing Year-over-YearWells Fargo has demonstrated strong earnings per share growth over the last five quarters. In the most recent quarter, the bank reported earnings per share of $0.94, higher than analysts' estimates of $0.88. Despite beating estimates and reporting another quarter of earnings growth, the market reacted adversely to the report, because the mortgage origination business showed slowing growth and Wells' net interest margin decreased yet again to $3.48. New home loan applications decreased by around 9 percent—a relatively large number when you consider that mortgage originations make up around a third of the bank's business.
The third row of the table shows Wells Fargo's net interest margin—the difference between the interest the bank pays to depositors versus the interest it collects on loans. Wells Fargo's profitability is greatly influenced by how large or small the NIM is. The steady contraction of this margin, shown in the table below, is a red flag for the bank's future profitability. Looking at the attractive growth in the table below, its difficult to imagine Wells Fargo's growth taking a substantial hit; however if both net interest margins and mortgage originations continue to fall, this will most certainly be the case.
| 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | 2012 Q1 | |
| EPS Growth YoY | 22.67% | 24.41% | 22.22% | 17.14% | 11.94% |
| Rev. Growth YoY | -1.74% | 6.52% | 8.08% | 4.43% | 6.43% |
| Net Interest Margin | 3.48% | 3.56% | 3.66% | 3.91% | $3.91 |
*Data sourced from YCharts
S = Support is Provided by Institutional InvestorsWells Fargo has enjoyed longtime support from legendary investor Warren Buffett. His company, Berkshire Hathaway (BRK.A & BRK.B), added 18 million shares last quarter, bringing its total position in the bank to 458,170,323—working out to roughly 20 percent of his portfolio. Wells Fargo is the largest holding in Berkshire's portfolio. Its never a bad thing to have the Oracle of Omaha on your side.
E = Exceptional Performance Relative to Its PeersWhile Wells Fargo trades at a higher forward price to earnings multiple than its chief competitors—Citigroup (NYSE:C), Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM), and Goldman Sachs (NYSE:GS)—it maintains the highest return on equity of the five megabanks and the highest dividend yield at 2.9%. Wells Fargo is more expensive relative to the rest of the banks because it engages in more straightforward banking operations and has less exposure to overseas risks and derivatives trading. Still, its price to equity multiple is cheap compared to the industry and the S&P 500 average. Wells Fargo just announced a dividend increase from $0.25 to $0.30 and, with a payout ratio of 26 percent, it has room to increase this dividend in the future.
| WFC | C | BAC | JPM | GS | |
| Forward P/E | 10.88 | 9.16 | 10.19 | 9.13 | 10.13 |
| ROE | 13.07% | 4.65% | 2.14% | 11.55% | 10.12% |
| Dividend Yield | 2.90% | 0.10% | 0.30% | 2.80% | 1.30% |
*Data sourced from Yahoo! Finance
T = Technicals Are Strong on the ChartAt the end of Tuesday's trading day, Wells Fargo traded at $42.69, above both its 200-day moving average of $37.39 and its 50-day moving average of $40.78. The bank has experienced a definitive uptrend and is up almost 30 percent in the past 12 months. Additionally, it recently hit a 52-week high of $42.97 on Monday. Wells Fargo could see a new 52-week high depending how its earnings announcement is received this Friday.
Conclusion
Despite slowing growth in mortgage refinancing and a compressed net interest margin, Wells Fargo will continue to earn steady earnings in the coming quarters. Compared with its peers, Wells is slightly more expensive, but relies less on revenues from riskier areas of banking, such as derivatives trading and international banking. The company pays out an attractive dividend, which has increased twice in the past several years. Additionally, the stock's technicals are very strong. If you are looking for a relatively low-risk player in the banking sector, Wells Fargo is an OUTPERFORM.
Sunday, August 25, 2013
Top 10 Growth Companies For 2014
The following video is from Wednesday's installment of The Motley Fool's Weekly Tech Review, in which analysts Eric Bleeker and Jason Moser look at the biggest stories driving the tech sector this week.
According to South Korean news outlet ETNews, Samsung is in crisis mode over its fading Galaxy S4 sales. Samsung's realizing what Apple has been confronting -- namely, that high-end smartphone growth is at an end. The conglomerate's solution to the problem? Release more phones! As a point of contrast, it's in Apple's (NASDAQ: AAPL ) DNA to do yearly releases. Could Apple benefit from Samsung's crisis?
Apple has a history of cranking out revolutionary products ... and then creatively destroying them with something better. Read about the future of Apple in the free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.
Top 10 Growth Companies For 2014: Sara Lee Corporation(SLE)
Sara Lee Corporation engages in the manufacture and marketing of a range of branded packaged meat, bakery, and beverage products worldwide. Its packaged meat products include hot dogs and corn dogs, breakfast sausages, sandwiches and bowls, smoked and dinner sausages, premium deli and luncheon meats, bacon, beef, turkey, and cooked ham. It also offers frozen baked products, which comprise frozen pies, cakes, cheesecakes, pastries, and other desserts. In addition, Sara Lee provides roast, ground, and liquid coffee; cappuccinos; lattes; and hot and iced teas, as well as refrigerated dough products. The company sells its products under Hillshire Farm, Ball Park, Jimmy Dean, Sara Lee, State Fair, Douwe Egberts, Senseo, Maison du Caf Advisors' Opinion:
- [By Carlson]
Director of Sara Lee Corp., James S Crown, bought 37,500 shares on 9/12/2011 at an average price of $17.5. Sara Lee Corporation is a global manufacturer and marketer of high-quality, brand-name products for consumers throughout the world. Sara Lee Corp. has a market cap of $10.24 billion; its shares were traded at around $17.5 with a P/E ratio of 19.9 and P/S ratio of 1.2. The dividend yield of Sara Lee Corp. stocks is 2.7%.
On August 11, Sara Lee Corp. reported earnings for the fourth quarter 2011. The fourth quarter included an 8% increase in adjusted net sales from continuing operations to $2.3 billion; 9% reported net sales increase, 40% increase in adjusted operating income to $189 million; and reported operating income increase of 19%.
Last week, Director James S Crown bought 37,500 shares of SLE stock. Executive Chairman Jan Bennink bought 58,400 shares in August.
Top 10 Growth Companies For 2014: Thoratec Corporation(THOR)
Thoratec Corporation engages in the development, manufacture, and marketing of proprietary medical devices used for circulatory support. The company?s primary product lines include ventricular assist devices, such as HeartMate II, an implantable left ventricular assist device consisting of a rotary blood pump to provide intermediate and long-term mechanical circulatory support (MCS); and HeartMate XVE, an implantable and pulsatile left ventricular assist device for intermediate and longer-term MCS. Its ventricular assist devices also comprise Paracorporeal Ventricular Assist Device, an external pulsatile ventricular assist device, which provides left, right, and biventricular MCS approved for bridge-to-transplantation (BTT), including home discharge, and post-cardiotomy myocardial recovery; and Implantable Ventricular Assist Device, an implantable and pulsatile ventricular assist device designed to provide left, right, and biventricular MCS approved for BTT comprising hom e discharge, and post-cardiotomy myocardial recovery. The company also provides CentriMag, an extracorporeal full-flow acute surgical support platform that offers support up to 30 days for cardiac and respiratory failure. In addition, it offers PediMag and PediVAS extracorporeal full-flow acute surgical support platforms designed to provide acute surgical support to pediatric patients. The company sells its products through direct sales force in the United States, as well as through a network of distributors internationally. Thoratec Corporation was founded in 1976 and is headquartered in Pleasanton, California.
Advisors' Opinion:- [By McWillams]
Wall Street is expecting Thoratec’s (THOR: 30.70 0.00%) growth rate to accelerate to 15% next year with earnings growth of over 20%. That type of growth has Wall Street analysts bullish on the medical device stock. The stock has a consensus price target of $38 and some analysts think THOR could go to $50.
Top 5 Small Cap Stocks To Watch Right Now: Eastern Insurance Holdings Inc.(EIHI)
Eastern Insurance Holdings, Inc., through its subsidiaries, provides workers compensation insurance and reinsurance products in the United States. The company?s Workers Compensation Insurance segment provides traditional workers compensation insurance coverage products, including guaranteed cost policies, policyholder dividend policies, retrospectively-rated policies, deductible policies, and alternative market products to employers. This segment distributes its workers? compensation products and services through its independent insurance agents primarily in Pennsylvania, Delaware, North Carolina, Maryland, Indiana, and Virginia. Its Segregated Portfolio Cell Reinsurance segment offers alternative market workers compensation solutions comprising program design, fronting, claims administration, risk management, segregated portfolio cell rental, asset management, and segregated portfolio management services to individual companies, groups, and associations. Eastern Insurance Holdings, Inc. is headquartered in Lancaster, Pennsylvania.
Top 10 Growth Companies For 2014: Nordstrom Inc.(JWN)
Nordstrom, Inc., a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for women, men, and children in the United States. It offers a selection of brand name and private label merchandise. The company sells its products through various channels, including Nordstrom full-line stores, off-price Nordstrom Rack stores, Jeffrey? boutiques, treasure & bond, and Last Chance clearance stores; and its online store, nordstrom.com, as well as through catalog. Nordstrom also provides a private label card, two Nordstrom VISA credit cards, and a debit card for Nordstrom purchases. The company?s credit and debit cards feature a shopping-based loyalty program. As of September 30, 2011, it operated 222 stores, including 117 full-line stores, 101 Nordstrom Racks, 2 Jeffrey boutiques, 1 treasure & bond store, and 1 clearance store in 30 states. The company was founded in 1901 and is based in Seattle, Washington.
Advisors' Opinion:- [By Kevin1977]
Director of Nordstrom Inc., Felicia D Thornton, bought 1,140 shares on 9/09/2011 at an average price of $47.89. Nordstrom, Inc. is one of the nation's fashion specialty retailers, with stores located in a number of states, including full-line stores, Nordstrom Racks, Faconnable boutiques, and free-standing shoe stores. Nordstrom Inc. has a market cap of $10.44 billion; its shares were traded at around $47.89 with a P/E ratio of 15.7 and P/S ratio of 1.1. The dividend yield of Nordstrom Inc. stocks is 2% Nordstrom Inc. had an annual average earnings growth of 27.3% over the past 10 years. GuruFocus rated Nordstrom Inc. the business predictability rank of 3.5-star.
On August 11, Nordstrom Inc. reported net earnings of $175 million, or $0.80 per diluted share, for the second quarter ended July 30, 2011. This represented an increase of 20 percent compared with net earnings of $146 million, or $0.66 per diluted share, for the same quarter last year.Second quarter same-store sales increased 7.3 percent compared with the same period in fiscal 2010. Net sales in the second quarter were $2.72 billion, an increase of 12.4 percent compared with net sales of $2.42 billion during the same period in fiscal 2010.
Last week, Director Felicia D Thornton bought 1,140 shares of JWN stock.
Executive Vice President Ken Worzel and Director Philip G Satre bought shares in August.
Top 10 Growth Companies For 2014: Waste Management Inc.(WM)
Waste Management, Inc., through its subsidiaries, provides waste management services to residential, commercial, industrial, and municipal customers in North America. It offers collection, transfer, recycling, and disposal services. The company also owns, develops, and operates waste-to-energy and landfill gas-to-energy facilities in the United States. Its collection services involves in picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility, or disposal site; and recycling operations include collection and materials processing, plastics materials recycling, and commodities recycling. In addition, it provides recycling brokerage, which includes managing the marketing of recyclable materials for third parties; and electronic recycling services, such as collection, sorting, and disassembling of discarded computers, communications equipment, and other electronic equipment. Further, the company e ngages in renting and servicing portable restroom facilities to municipalities and commercial customers under the Port-o-Let name; and involves in landfill gas-to-energy operations comprising recovering and processing the methane gas produced naturally by landfills into a renewable energy source, as well as provides street and parking lot sweeping services. Additionally, it offers portable self-storage, fluorescent lamp recycling, and medical waste services for healthcare facilities, pharmacies, and individuals, as well as provides services on behalf of third parties to construct waste facilities. The company was formerly known as USA Waste Services, Inc. and changed its name to Waste Management, Inc. in 1998. Waste Management, Inc. was incorporated in 1987 and is based in Houston, Texas.
Advisors' Opinion:- [By Tom Konrad]
The only household name in this year's list, Waste Management is coming back for an encore performance in 2013. WM is the North American leader in recycling and renewable biogas among waste and environmental services companies. The industry has been in a cyclical downturn, and WM's well-covered 4.2% dividend makes it a solid anchor for this portfolio of small and micro-cap clean energy stocks.
- [By Jonas Elmerraji]
Investors think Waste Management (WM) is a garbage stock right now. Why else would WM's short interest ratio hover around 12.6? Of course, Waste Management is in fact a garbage stock of sorts -- it is the largest waste management service provider in the country. The firm boasts more than 270 landfills and a massive fleet of trash collection vehicles that spans the U.S.
When I think garbage firms, the first thing that comes to mind is dividends: WM and its peers historically have generous, recession-resistant dividend payouts. Currently, Waste Management's yield adds up to 3.36% annually. Don't forget, dividends are like kryptonite to short sellers.
WM's willingness to embrace innovation has big potential in the years ahead. Right now, the firm's portfolio includes 22 waste-to-energy plants that are designed to turn the waste that WM literally gets paid to collect into renewable energy that the firm gets paid for again. At this point, the firm's energy plants make up a very small part of its total business, but waste-to-energy projects and the recent acquisition of small oil service firms should look attractive to investors right now.
Earnings in two months look like the next big catalyst for a short squeeze in WM.
Top 10 Growth Companies For 2014: Intuitive Surgical Inc.(ISRG)
Intuitive Surgical, Inc. designs, manufactures, and markets da Vinci surgical systems for various surgical procedures, including urologic, gynecologic, cardiothoracic, general, and head and neck surgeries. Its da Vinci surgical system consists of a surgeon?s console or consoles, a patient-side cart, a 3-D vision system, and proprietary ?wristed? instruments. The company?s da Vinci surgical system translates the surgeon?s natural hand movements on instrument controls at the console into corresponding micro-movements of instruments positioned inside the patient through small puncture incisions, or ports. It also manufactures a range of EndoWrist instruments, which incorporate wrist joints for natural dexterity for various surgical procedures. Its EndoWrist instruments consist of forceps, scissors, electrocautery, scalpels, and other surgical tools. In addition, it sells various vision and accessory products for use in conjunction with the da Vinci Surgical System as surgical procedures are performed. The company?s accessory products include sterile drapes used to ensure a sterile field during surgery; vision products, such as replacement 3-D stereo endoscopes, camera heads, light guides, and other items. It markets its products through sales representatives in the United States, and through sales representatives and distributors in international markets. The company was founded in 1995 and is headquartered in Sunnyvale, California.
Advisors' Opinion:- [By Holly LaFon] Intuitive Surgical is the maker of the da Vinci Surgical System, a breakthrough in robotic-assisted minimally invasive surgery. It provides technology and procedural innovation across cardiac, thoracic, urology, gynecologic, colorectal, pediatric and general surgical disciplines and allows patients to recover in record time.
In the last year, this fast-growing company�� stock has surged 66% to $529.54. Its revenue over the last ten years has grown at a rate of 38%, and it grew 24.5% last year with 72.5% gross profit and 39.5% operating margin. The company expects fiscal 2012 revenue growth of 17-19%.
The da Vinci System is new technology first introduced to market in July 2000 after the US FDA approved it for laparoscopic surgery. Its new S model was released in April 2009. Already there are more than 1,933 systems installed in over 1,560 hospitals worldwide.
Apple Inc. (AAPL)
Apple Inc. is the maker of popular consumer products such as the Mac, iPod, iPhone and iPad. Its stock has famously increased 569% over the past five years to hit a record of $600 per share last week. Apple has split its stock 2 for 1 three times in the past on June 15, 1987, June 21, 2000 and February 28, 2005. CEO Tim Cook said as recently as this morning that the company saw little reason to that a split would help the stock but if it was in the best interest of shareholder the company would have one. The company also announced this morning that it would initiate a $2.65 per share quarterly dividend and buy back up to $10 billion of its common stock.
In the last ten years, Apple�� annual growth rate for revenue was 34.5%, EBITDA 112.4% and book value 36.3%. Free cash flow increased 11% in the last five years and 58% in the last year. The rapidly growing company still has a relatively low P/E ratio of 16.68.
Google Inc. Cl A (GOOG)
Google Inc. is the search engine company founded in 1998 that has expanded to offer dozens of advertising and web services. Since going public i! n 2004, its stock has increased 485% to $633.98 per share on Monday. It has never had a stock split or paid a dividend.
Google has also grown rapidly. Its revenue per share over the last 10 years has increased at an annual rate of 52.3%, EBITDA at 51.9%, free cash flow at 64.8% and book value at 74.8%.Its P/E ratio is 20.
The company is also launching its 7-inch Nexus table in May to compete with Apple�� iPad and Amazon�� Kind Fire and is in the process of the biggest revamp of its Internet search formula in company history.
Google has an expressed long-term focus in its business, rather than quarter-to-quarter goals, as stated in its IPO letter which quotes Warren Buffett. The company�� higher stock price may help discourage frequent trading and encourage high-quality shareholders, as Buffett has mentioned in the past.
Priceline.com (PCLN)
Priceline.com Inc. is an online travel booking company that debuted on the Nasdaq in 1999. In the last five years its stock increased 1,248%. Priceline.com�� stock price cratered to under $10 after the dot-com bubble and driven it up to almost $1,000. In 2003 it announced a 1 for 6 reverse stock split.
"This reverse stock split enhances our position by expanding investor interest, reducing transaction costs for trading our stock, making our results more comparable to peer companies with far fewer outstanding shares, and allowing priceline.com's earnings per share on a post-split basis to more precisely reflect the Company's operating results," said priceline.com President and CEO Jeffery H. Boyd.
On Monday it had climbed to $696.93 per share and its financial results have been strong and growing once again. Revenue in 2011 was $4.4 billion from $3 billion in 2010, earnings increased to $1.1 billion from $528 billion and free cash flow increased to $1.3 billion from $755 million. The company also has over $2.7 billion in cash, $164 in long-term liabilities and no debt.
The stock has become expensive ! in the la! st several years and has a P/E of 30.3.
NVR Inc. (NVR)
NVR Inc. consists of two operating segments: homebuilding and mortgage banking. The homebuilding unit makes homes under the trade names Ryan Homes, NVHomes and Fox Ridge Homes, and NVR Mortgage primarily focuses on serving NVR homebuyers.
NVR�� is older than most of the other companies on the over-$500 share-price list, having gone public in 1993. Since then its stock price has increased 7,219% to $741 per share on Monday. It has never split its stock.
Seaboard Corp. (SEB)
Seaboard is also an older company founded more than 90 years ago and has focused on grain and agriculturally derived products. In the last 10 years its stock has appreciated 543%, and on Monday one share costs $1,955. It has never split its stock.
Seaboard is still a growing company. In the last ten years it increased revenue per share at an average rate of 12.5%, EBITDA at 9.8%, and book value at 18.2%. It also has a low P/E of 6.8, its lowest since about 2007.
Berkshire Hathaway-A (BRK.A)
Berkshire Hathaway is the multinational conglomerate founded by Warren Buffett and is the eighth largest company in the world. They are the highest priced shares on the New York Stock Exchange, partially due to never splitting their stock or paying a dividend. Rather, they reinvest corporate earnings to continue growth.
In the last 10 years, Berkshire Hathaway stock has increased 67%. On Monday, one share of BRK.A cost $122,115.
Berkshire management has grown book value at an annual rate of 20.3% for the last 44 years. Growth has been continuing in recent history. In the last 10 years, revenue per share increased at a rate of 11.4%, EBITDA at 7.5% and free cash flow at 3.3%. Its P/E is 17.1.
These stocks are not necessarily expensive or not expensive based on how much one share costs but are subject to the same va - [By Jim Lowell]
Intuitive Surgical (ISRG: 329.49 0.00%) is an expensive stock and their stock price is currently well below the $400 level that it flirted with in April. However, the stock is a compelling growth story with revenues and earnings expected to climb 19% in 2011. The company faces little competitive pressure and 2011 is likely the year that consumers opt for procedures that they delayed in 2009-10. That could produce some blowout earnings results for ISRG in 2011.
Top 10 Growth Companies For 2014: CNO Financial Group Inc. (CNO)
CNO Financial Group, Inc., through its subsidiaries, engages in the development, marketing, and administration of health insurance, annuity, individual life insurance, and other insurance products for senior and middle-income markets in the United States. The company markets and distributes Medicare supplement insurance, interest-sensitive and traditional life insurance, fixed annuities, and long-term care insurance products; Medicare advantage plans through a distribution arrangement with Humana Inc.; and Medicare Part D prescription drug plans through a distribution and reinsurance arrangement with Coventry Health Care. It also markets and distributes supplemental health, including specified disease, accident, and hospital indemnity insurance products; and life insurance to middle-income consumers at home and the worksite through independent marketing organizations and insurance agencies. In addition, the company markets primarily graded benefit and simplified issue life insurance products directly to customers through television advertising, direct mail, Internet, and telemarketing. It sells its products through career agents, independent producers, direct marketing, and sales managers. CNO Financial Group, Inc. has strategic alliances with Coventry and Humana. The company was formerly known as Conseco, Inc. and changed its name to CNO Financial Group, Inc. in May 2010. CNO Financial Group, Inc. was founded in 1979 and is headquartered in Carmel, Indiana.
Top 10 Growth Companies For 2014: Buffalo Wild Wings Inc.(BWLD)
Buffalo Wild Wings, Inc. engages in the ownership, operation, and franchise of restaurants in the United States. The company provides quick casual and casual dining services, as well as serves bottled beers, wines, and liquor. As of July 26, 2011, it had 773 Buffalo Wild Wings locations in 45 states in the United States, as well as in Canada. The company was founded in 1982 and is headquartered in Minneapolis, Minnesota.
Advisors' Opinion:- [By Roberto Pedone]
Buffalo Wild Wings (BWLD) is an owner, operator and franchiser of restaurants featuring a variety of boldly-flavored, craveable menu items. This stock closed up 6% to $103.58 in Wednesday's trading session.
Wednesday's Volume: 1.55 million
Three-Month Average Volume: 402,120
Volume % Change: 319%From a technical perspective, BWLD ripped higher here back above its 50-day moving average of $98.38 with heavy upside volume. This move is quickly pushing shares of BWLD within range of triggering major breakout trade. That trade will hit if BWLD manages to take out its intraday high on Wednesday of $105.32 and then once it clears is 52-week high at $106.03 with high volume.
Traders should now look for long-biased trades in BWLD as long as it's trending above its 50-day at $98.38 and then once it sustains a move or close above those breakout levels with volume that hits near or above 402,120 shares. If that breakout triggers soon, then BWLD will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $110 to $120.
- [By Fabian]
While Chipotle has captured most of the attention among the restaurant stocks, Buffalo Wild Wings (BWLD: 56.62 0.00%) could be 2011’s big winner. Wall Street is expecting 19% earnings growth from Buffalo Wild Wings in 2011 which is only slightly lower than Chipotle’s 20% growth rate. However, BWLD trades at only 18x consensus 2011 estimates while CMG trades at a pricey 40x. On an EBITDA basis, Chipotle trades at over 20x, while Buffalo Wild Wings trades at less than 9x.
Top 10 Growth Companies For 2014: Checkpoint Systms Inc.(CKP)
Checkpoint Systems, Inc. manufactures and markets identification, tracking, security, and merchandising solutions for the retail and apparel industry worldwide. The company operates in three segments: Shrink Management Solutions, Apparel Labeling Solutions, and Retail Merchandising Solutions. The Shrink Management Solutions segment provides shrink management and merchandise visibility solutions. It offers electronic article surveillance systems, such as EVOLVE, a suite of RF and RFID-enabled products that act as a deterrent to prevent merchandise theft in retail stores; and electronic article surveillance consumables, including EAS-RF and EAS-EM labels that work in combination with EAS systems to reduce merchandise theft in retail stores. This segment also provides keepers, spider wraps, bottle security, and hard tags, as well as Showsafe, a line alarm system for protecting display merchandise. In addition, it offers physical and electronic store monitoring solutions, incl uding fire alarms, intrusion alarms, and digital video recording systems for retail environments; and RFID tags and labels. The Apparel Labeling Solutions segment provides apparel labeling solutions to apparel retailers, brand owners, and manufacturers. It has Web-enabled apparel labeling solutions platform and network of 28 service bureaus located in 22 countries that supplies customers with customized apparel tags and labels. The Retail Merchandising Solutions segment offers hand-held label applicators and tags, promotional displays, and queuing systems. The company serves retailers in the supermarket, drug store, hypermarket, and mass merchandiser markets through direct distribution and reseller channels. Checkpoint Systems was founded in 1969 and is based in Thorofare, New Jersey.
Advisors' Opinion:- [By Michael]
OK, so Checkpoint (CKP: 13.80 0.00%) probably isn’t going to see its stock price double in 2011. However, the stock gained 35% in 2010 with earnings expected to climb 13%. Next year, Wall Street sees earnings growth accelerating to 25%. Despite the impressive growth rate, the stock trades at only 16x next year’s earnings estimates and analysts have a $25 price target for CKP.
Top 10 Growth Companies For 2014: TrueBlue Inc.(TBI)
TrueBlue, Inc. provides temporary blue-collar staffing services in the United States. It supplies on demand general labor to various industries under the Labor Ready brand; skilled labor to manufacturing and logistics industries under the Spartan Staffing brand; and trades people for commercial, industrial, and residential construction, and building and plant maintenance industries under the CLP Resources brand. The company also provides mechanics and technicians to the aviation maintenance, repair and overhaul, aerospace manufacturing, and assembly industries, as well as to other transportation industries under the Plane Techs brand; and temporary drivers to the transportation and distribution industries under the Centerline brand. It primarily serves small and medium-size businesses. The company was formerly known as Labor Ready, Inc. and changed its name to TrueBlue, Inc. in December 2007. TrueBlue, Inc. was founded in 1985 and is headquartered in Tacoma, Washington.
Advisors' Opinion:- [By McWillams]
TrueBlue, Inc. is a provider of temporary blue-collar staffing. Its EPS forecast for the current year is 0.69 and next year is 1.1. According to consensus estimates, its topline is expected to grow 8.96% current year and 10.03% next year. It is trading at a forward P/E of 15.76. Out of 10 analysts covering the company, six are positive and have buy recommendations and four have hold ratings.
Saturday, August 24, 2013
DOL 408(b)2 Fee Disclosure ‘Guide’ Lands at OMB
The Office of Management and Budget (OMB) has received a proposed regulation from the Department of Labor regarding the development of a “Guide or Similar Requirement for Section 408(b)(2) Disclosures,” which could spell additional expense for retirement plan service providers, says ERISA guru Fred Reish.
While the retirement planning community won’t know what the proposed regulation says for about three months—when the OMB approves and releases the proposed regulation—Reish says, DOL “has previously given us an idea about their thinking.”
When the DOL issued the final 408(b)(2) regulation last February, it included a “Sample Guide to Initial Disclosures,” Reish says, which was not mandated, “but instead was offered as an aide.”
The DOL explained in the preamble to the final regulation that “Although the Department is not adopting such a requirement [for a guide] at this time, the Sample Guide published today may be useful, on a voluntary basis, to covered service providers as a format to assist responsible plan fiduciaries with the required disclosures.”
Reish says that he and his colleagues at Drinker Biddle have heard that, “based on the DOL’s review of 408(b)(2) disclosures, the Department has concluded that plan fiduciaries may, in some cases, have difficulty understanding the required disclosures because of the lengthy, technical and/or multiple disclosure documents that are being distributed.”
As a result, he says, “we believe that the proposed regulation may require a guide (or table of contents) for the 408(b)(2) disclosures.”
The Sample Guide provided for the disclosure of information at a detailed level. For example, Reish explains, “the Guide had references to page and section numbers in specific documents, and under indirect compensation, the Guide provided a number of categories, including one entitled ‘Compensation ABC will receive from other parties that are not related to ABC’ (‘indirect compensation’).”
If the DOL’s proposed regulation is similar to the Guide, Reish continiues, and “if, for example, a broker-dealer makes disclosures by delivery of prospectuses, that would require references to each of the mutual fund prospectuses, together with the section and page numbers where the description of 12b-1 fees and other compensation appear.”
Most covered service providers, Reish says, “are not providing disclosures that are that detailed or specific,” which means that “this could be a big change, which could result in additional administrative work and expense.”
Sunday, August 18, 2013
Top Cheap Stocks To Invest In Right Now
AMSTERDAM (AP) -- European Central Bank head Mario Draghi said Monday that while the bank had averted financial "panic" in the euro union, it was still up to politicians to solve the region's core problems of strengthening the banking system and improving long-term growth.
The head of Europe's monetary authority said in a speech delivered in Amsterdam that the central bank had already warded off "fire sales" by investors through emergency measures. Those included launching �� trillion ($1.3 trillion) in cheap, three-year loans to banks to steady their finances and helping lower the borrowing costs of indebted countries by offering to buy government bonds on the open market.
Nonetheless, the economy of the 17 European Union countries that use the euro is mired in recession and is suffering from record unemployment. Meanwhile, borrowing conditions across the eurozone are fragmented: Companies in the indebted countries are paying more to borrow due to troubled government and bank finances than their more financially stable neighbors.
Top Cheap Stocks To Invest In Right Now: Cowen Group Inc.(COWN)
Cowen Group, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides alternative investment management, investment banking, research, and sales and trading services for its clients. It manages separate client focused portfolio through its subsidiaries. Through its subsidiaries, the firm invests in equity and fixed income markets. It also invests in alternative investments markets through its subsidiaries. Cowen Group, Inc. was founded in 1994 and is based in New York, New York with additional offices in Boston, Massachusetts, Chicago, Illinois, Cleveland, Ohio, Dallas, Texas, and San Francisco, California.
Advisors' Opinion:- [By Michael Brush]
The name isn't as common as others here, but you might remember the boutique investment banking and stock research shop Cowen Group (COWN). It helped hatch many of the midsize, high-growth tech and health-care companies during the late 1990s boom. Cowen itself went public in 2006, just in time to get trounced by an economic meltdown.
Since the economy's upward turn, Cowen's stock hasn't rebounded as well as bigger rivals like Goldman Sachs, GS. But its time will come, insists Anton Schutz, the manager of the Burnham Financial Industries Fund (BMFIX), which owns the stock. "In a true bull market, Cowen is capable of earning over $1 a share," says Schutz. Since boutique investment banks carry price-to-earnings ratios at least in the low teens in good times, this stock could double or even triple from recent levels of $4 a share, Schutz reasons.
Cowen recently purchased the brokerage LaBranche (LAB), whose presence on the Hong Kong stock exchange should help Cowen increase its investment banking business in China. "I expect this area to be of vital importance in growth for us," Cowen CEO and Wall Street veteran Peter Cohen said in the company's most recent conference call. LaBranche also gives Cowen much-needed electronic platforms supporting options and high frequency trading, says Sandler O'Neill analyst Devin Ryan, who has a $7 price target on the stock.
Asset management arm Ramius, which offers hedge funds and mutual funds, should continue to perform well as the stock market and economy rebound. These trends will also support Cowen's U.S. brokerage and investment banking businesses. "The smaller brokers don't need that many crumbs to fall off the table to make some really good money," Ryan says.
Meanwhile, Cowen's stock looks cheap, trading at about 70% of book value, compared with a 24% premium to book value at bigger rivals like Goldman Sachs (GS). That protects investors against downside, and also makes Cowen a possible buyout target.
Top Cheap Stocks To Invest In Right Now: UnitedHealth Group Incorporated(UNH)
UnitedHealth Group Incorporated provides healthcare services in the United States. Its Health Benefits segment offers consumer-oriented health benefit plans and services to national employers, public sector employers, mid-sized employers, small businesses, and individuals; and non-employer based insurance options for purchase by individuals. It also provides health and well-being services for individuals aged 50 and older; and for services dealing with chronic disease and other specialized issues for older individuals, as well as health plans for the beneficiaries of acute and long-term care Medicaid plans. This segment offers its services through a network of 730,000 physicians and other health care professionals, and 5,300 hospitals. Its OptumHealth segment provides health, financial, and ancillary services and products that assist consumers through personalized health management solutions; benefit administration, and clinical and network management; health-based financi al services; behavioral solutions; and specialty benefits, such as dental, vision, life, critical illness, short-term disability, and stop-loss product offerings. The company?s Ingenix segment offers database and data management services, software products, publications, consulting and actuarial services, business process outsourcing services, and pharmaceutical data consulting and research services. Its Prescription Solutions segment provides integrated pharmacy benefit management services comprising retail network pharmacy contracting and management, claims processing, mail order pharmacy services, specialty pharmacy, benefit design consultation, rebate contracting and management, drug utilization review, formulary management programs, disease therapy management, and adherence programs to employer groups, union trusts, managed care organizations, Medicare-contracted plans, Medicaid plans, and third party administrators. The company was founded in 1974 and is based in Minne tonka, Minnesota.
Advisors' Opinion:- [By Victor Mora]
UnitedHealth Group is a health and well-being company that provides essential healthcare services during a critical time in the United States. The stock has witnessed a promising move higher that has taken it to all-time high prices, where it may consolidate before coasting higher. Over the last four quarters, earnings and revenue numbers have been on the rise, but investors have not been too pleased with the company’s reports. Relative to its peers and sector, UnitedHealth Group has been a year-to-date performance leader. Look for UnitedHealth Group to OUTPERFORM.
- [By Jon C. Ogg]
UnitedHealth Group Inc. (NYSE: UNH) is the newest of the DJIA components, now that Kraft Foods has split itself up. The health insurance giant closed out 2013 at $54.24, and that was well off the 52-week high, as its range in the past year was $49.82 to $60.75. Analysts believe that the stock will rise some 23.4% to $66.97 by the end of 2013. The insurer has a lower dividend than most DJIA stocks, at only about 1.6%, and its market value is close to $55 billion. UnitedHealth so far has recovered only about half of its losses from last summer.
- [By Ken Sweet]
Shareholders of UnitedHealth (UNH) reaped the rewards this year from the managed care company's strong profits and upbeat guidance.
UnitedHealth raised its full-year guidance in late April to $3.95 to $4.05 a share, well ahead of analysts' forecasts. The company also increased its quarterly dividend last month to 16.25 cents a share, from 12.5 cents a share.
UnitedHealth's performance is also tied to what has been broad investor interest in healthcare stocks this year as a defensive play against what has been a recently downward-trending market.
- [By Victor Mora]
UnitedHealth Group is a diversified healthcare company that is seeing increased attention as healthcare concerns take center stage. The stock has been steadily trending higher, and is now trading near all-time high prices. Over the last four quarters, earnings and revenue figures have been on the rise, but investors in the company expected a little more. Relative to its strong peers and sector, UnitedHealth Group has had an average year-to-date performance. Look for UnitedHealth Group to continue to OUTPERFORM.
Top 5 Clean Energy Stocks To Invest In 2014: CVS Corporation(CVS)
CVS Caremark Corporation operates as a pharmacy services company in the United States. The company?s Pharmacy Services segment provides a range of pharmacy benefit management services, including mail order pharmacy services, specialty pharmacy services, plan design and administration, formulary management, and claims processing; and drug benefits to eligible beneficiaries under the Federal Government?s Medicare Part D program. This segment primarily serves employers, insurance companies, unions, government employee groups, managed care organizations and other sponsors of health benefit plans, and individuals. As of December 31, 2010, it operated 44 retail specialty pharmacy stores, 18 specialty mail order pharmacies, and 4 mail service pharmacies located in 25 states, Puerto Rico, and the District of Columbia. This segment operates business under the CVS Caremark Pharmacy Services, Caremark, CVS Caremark, CarePlus CVS/pharmacy, CarePlus, RxAmerica, Accordant, and TheraCom names. The company?s Retail Pharmacy segment sells prescription drugs, over-the-counter drugs, beauty products and cosmetics, seasonal merchandise, greeting cards, and convenience foods through its pharmacy retail stores and online, as well as offers film and photo finishing, and health care services. This segment operated 7,182 retail drugstores located in 41 states, Puerto Rico, and the District of Columbia; and 560 retail health care clinics in 26 states and the District of Columbia under the MinuteClinic name. It has a strategic alliance with Alere, L.L.C. for the management of disease management program offerings that cover chronic diseases, such as asthma, diabetes, congestive heart failure, and coronary artery disease. CVS Caremark Corporation was founded in 1892 and is based in Woonsocket, Rhode Island.
Advisors' Opinion:- [By Holly LaFon] CVS/Caremark is the nation's premier integrated pharmacy services provider, combining one of the nation's leading pharmaceutical services companies with the country's largest pharmacy chain.
Owens had a relatively small holding of 200,000 shares which he purchased in the third quarter of 2011 at about $36 per share. In the fourth quarter, he increased his holding by 50%, adding 100,000 shares at about $37 per share. CVS�� share price has actually increased more than 20% in the last year, and more than 21% in the fourth quarter alone.
Record-setting third-quarter earnings results, announced Nov. 3, 2011, contributed to the rise. Net revenues increased 12.5% to a record $26.7 billion. Revenues in its Pharmacy Services segment rose 25.8% to $14.8 billion, due primarily with the addition of a previously unannounced, long-term contract with Aetna Inc., and its acquisition of the Medicare prescription drug business of Universal American Corp. in the second quarter of 2011.
In the first nine months of 2011, the company also returned over $3 billion to shareholders in the form of dividends and share repurchases.
CVS has been growing over the long term as well. Its revenue per share increased at a 10-year annual rate of 11.5%, and its free cash flow per share increased at a 10-year annual rate of 21.4%. GuruFocus rated CVS Caremark the business predictability rank of 4.5-star. Steven Romick did an extensive analysis of CVS here.
Boston Scientific Corp. (BSX)
Boston Scientific Corporation is a worldwide developer, manufacturer and marketer of minimally invasive medical devices.
Owens bought 9,200,000 shares of Boston Scientific Corp. at about $8.70 per share. In the next three quarters, he bought a total of 12,900,000 more shares at $8, $6.50 and $5.75 per share, respectively. He sold a total of 800,000 shares in the fourth quarter of 2010 and the first quarter of 2011 at about $7 per share. He then bought 3,300,000 shares at about $7 per share in the second q! uarter of 2011, 1,800,000 shares at about $6.50 in the third quarter, and 9,900,000 shares at about $5.50 in the fourth quarter.
Boston Scientific�� revenue over the past decade has gone up and down, most recently decreasing to $7.8 billion in 2010, - [By Victor Mora]
CVS Caremark provides valuable health care and pharmacy products and services to many consumers in the United States. The stock has been on a powerful move higher but is now digesting gains from a recent run. Over the last four quarters, earnings and revenue figures have increased for the company, but investors seem to have had mixed feelings about the reports. Relative to its peers and sector, CVS Caremark has been an average performer year-to-date. Look for CVS Caremark to OUTPERFORM.
Top Cheap Stocks To Invest In Right Now: TranSwitch Corporation(TXCC)
Transwitch Corporation designs, develops, and supplies semiconductor and intellectual property solutions for voice, data, and video communications equipment. The company provides integrated multi-core network processor system-on-a-chip (SoC) and software solutions for fixed, 3G and 4G mobile, VoIP, and multimedia infrastructures. It offers converged network infrastructure products, including infrastructure VoIP processors comprising Entropia series of processors for wire-line and wireless carrier equipment; EoS/EoPDH mappers and framers for formats and data speeds in the access portion of the network; tributary switches that enable traffic to be switched or re-arranged; and carrier Ethernet solutions consisting of Ethernet controllers and switches, as well as circuit emulation and clock recovery devices. The company also provides FTTx protocol processors, such as mustang, a system-on-chip solution for EPON optical network unit equipment; COLT processor, a system-on-chip so lution for the optical line terminator equipment; and Diplomat-ONT product, an integrated SoC solution for GPON ONU applications, as well as access VoIP processors and access controllers. In addition, it offers broadband customer premises equipment, including multi-service communications processors comprising Atlanta processor, a multi-service SoC for customer premises equipment that supports toll-quality telephone voice, fax, and routing functionality; and HDMI, displayport, HDP, and Ethernet IP cores for consumer electronics, home network equipment, and industrial and automotive applications. The company serves public network systems OEMs, WAN and LAN equipment OEMs, Internet-oriented OEMs, and communications test and performance measurement equipment OEMs, as well as government, university, and private laboratories. It sells its products through direct sales force, independent distributors, and sales representatives. The company was founded in 1988 and is headquartered in Shelton, Connecticut.
Advisors' Opinion:- [By Michael Brush]
If you find yourself craving more high-definition video on your smartphone or tablet computer or if you've been checking out 3D televisions -- the next big trend -- you already know why TranSwitch (TXCC) stock should be a winner over the next few years.
Once a techmania darling, trading at more than $500 a share, TranSwitch crashed and burned along with so many other Internet stocks. It has been all but left for dead since. Wall Street analysts are predicting the stock will actually have fallen to $2 a year from now, from recent levels of around $2.60, according to Thomson Reuters.
What they're missing is that TranSwitch has revamped its chip offerings so they support high-definition video connections in TVs, PC and game monitors, smartphones, tablets and video cameras. This exposes the company to some big consumer trends. Another new product line supports gear that connects homes, offices and smartphones to the Internet.
Those analysts and other investors don't put much faith in these new products. So why should you? Because the right kinds of insiders have been accumulating stock. Many of the new products are scheduled to hit the market over the next three months and generate meaningful sales by the fourth quarter. So now is the time to buy.
Of course, we don't know for sure that TranSwitch's new products will catch on. But behind the scenes, they've been licensed by the likes of Intel (INTC), International Business Machines (IBM), Texas Instruments (TXN) and Analog Devices (ADI), Ted Chung, the TranSwitch vice president of global business development, tells me. That suggests TranSwitch may work its way into the Apple (AAPL) iGadget ecosystem, says Northland Capital Markets analyst Richard Shannon. That would be a game-changer for tiny TranSwitch, but the markets for its new products are so big that it probably can win even without such an advantage
Top Cheap Stocks To Invest In Right Now: Majesco Entertainment Company(COOL)
Majesco Entertainment Company develops and markets video game products primarily for family oriented mass-market consumers. The company publishes video games for various interactive entertainment hardware platforms, including Nintendo?s DS, DSi, and Wii; Sony?s PlayStation 3 and PlayStation Portable; Microsoft?s Xbox 360; and personal computers. It also publishes games for various digital platforms consisting of mobile platforms comprising iPhone, iPad, and iPod Touch, as well as online platforms, including Facebook. The company sells its products primarily to retail chains, specialty retail stores, video game rental outlets, and distributors. The company was founded in 1998 and is based in Edison, New Jersey.
Advisors' Opinion:- [By Louis]
Majesco Entertainment (NASDAQ: COOL) is an innovative provider of video games for the mass market, developing a wide range of titles for Sony’s PlayStation, Microsoft’s Xbox and Nintendo’s WII systems. On June 7, COOL announced that it had signed a contract with the NBA to begin development of an original video-game basketball franchise. The stock rose an impressive 32% over the next five trading days while the broader market sold off.
However, the stock is down today after reporting weaker-than-expected second-quarter earnings last night, missing consensus earnings estimates by 2 cents. Majesco reported net revenues of $32.1 million for the second quarter ended April 30, 2011, compared with $10.9 million reported for the same period in the previous year. The company’s operating income for the second quarter was $5.3 million, compared with an operating loss of $1.6 million reported for the same period in the previous year. So treat this sell-off as a buying opportunity.
Saturday, August 17, 2013
Google Building For A Bigger Future
Top 5 Insurance Stocks To Buy For 2014
My first boss on Wall Street (and a long-time friend ever since), Archie Smith, used to say "What do you want, egg in your beer?" when faced with situations where people just didn't seem to be appreciating what they were getting. The expression made no sense to me then, nor does it now, but I do understand the frustration that fueled it. Google (Nasdaq:GOOG) is an enormous company ($14 billion in quarterly gross revenue) still growing at a 20% clip, but investors and analysts hen-peck the company for its ongoing investments into future sources of growth and the prospects for declining margins in the future. While the shares don't seem terribly cheap today, this is not a company that I'd underestimate today.
Ongoing Growth, But At An Increasing Cost
Google reported 19% growth in consolidated net revenue for the second quarter, with core Google net revenue up about 21% to over $10 billion. Web site revenue was up about 16%, with network revenue down less than 1%. Motorola continues to erode as the legacy handsets fade away, and revenue was down 65% for the quarter.
As the core search business declines as a percentage of revenue and the company continues to build up new businesses that are thus far under-scale, the margins are going down. Gross margin declined about six points this quarter, and GAAP operating income declined 4% on a five-point decline in operating margin. On an adjusted basis operating income rose about 3%, but that's really not enough to change the tone around the earnings report.
SEE: A Primer On Investing In The Tech Industry
Investments Cost Money
While I do believe companies, analysts, and investors too often use the word "investment" when they mean "expense", that's neither here nor there in the case of Google. Like Yahoo! (Nasdaq:YHOO) and eBay (Nasdaq:EBAY), Google management is spending money to build up businesses that could generate substantial future revenue. The problem is that there's no immediate cash-on-cash return for that spending and adding a bunch of sub-scale business weighs on the reported margins.
There are also other, far more speculative, opportunities underway. I'm not ready to say that Google Glass is going to displace high-end smartphones from Apple (Nasdaq: AAPL) or Samsung right away, but I think the potential is there a few years down the road, particularly if the company can strike deals with frame and lens designers to create a more stylish look and one that works with those who need prescription lenses. Likewise, I think we're a long way from self-driving cars, but the potential is so large that even only a 1% or 2% chance of success still makes it an opportunity worthy of serious consideration.
The Bottom Line
As it is today, Google is the dominant search engine and internet ad company. I don't think its far-fetched to think that Google could also be the developer of the dominant consumer OS by the end of the decade. Add in the opportunities from e-commerce and payments, and management's willingness to think big (Google Glass and the cars), and I think Google is an attractive mix of strong revenue and bold self-funded R&D.
The trick with valuing Google is considering the scale of what the company has to achieve. A long-term revenue growth forecast of 11% doesn't seem crazy (nor a free cash flow growth forecast of about 10%), but step back and appreciate that that means adding over $75 billion in revenue, or the GDP of Slovenia plus Bahrain. That's a lot of incremental revenue, even if the internet ad/search, device OS, and other markets are likely to continue growing at double-digit rates.
In any case, I believe $1,000 is a pretty good fair value target for Google, though about 15% of that is from net cash/investments on the balance sheet. While I do think investor/analyst worries about incremental margins and investment decisions could lead to more volatility, on balance I still believe these are shares worth owning.
Friday, August 16, 2013
United Posts Low June Traffic - Analyst Blog
United Continental Holdings Inc.'s (UAL) Jun 2013 airline traffic – measured in revenue passenger miles or RPMs, which implies revenue generated per mile per passenger – dropped 0.6% year over year to 19.12 billion. Consolidated capacity (or available seat miles/ASMs) for the month was 21.79 billion, down 2.0% from Jun 2012.
The load factor (percentage of seats filled by passengers) improved to 87.7% from 86.5% in the same month, last year. Passenger revenue per available seat mile (PRASM) is estimated to have increased 3.5% to 4.5% year over year. The company registered a completion factor of 98.8%, with nearly 71.1% of the flights on schedule.
For the first half of 2013, United Continental generated RPMs of 100.12 billion (down 1.4% year over year) and ASMs of 120.62 billion (down 3.5% year over year). Load factor was 83.0%, reflecting growth of 170 basis points.
Despite these headwinds, United is concentrating on improving its business prospects through a number of initiatives. Recently, the company launched a new advertising campaign to endorse the airline's transcontinental Premium Service flights that take off from New York's John F. Kennedy International Airport and fly to Los Angeles and San Francisco. With this promotional activity, the carrier aims to create awareness about its services, hoping to woo additional flyers in the coming days.
United also brought in advanced applications and features on Apple Inc.'s (AAPL) iPhone, Google Inc.'s (GOOG) Android-based smartphones and BlackBerry 10 that will help passengers manage their travel plans in case of flight irregularities.
United Continental – that has agreed to buy 30 Embraer SA's (ERJ) 175 regional jets! – currently retains a Zacks Rank #3 (Hold).
Thursday, August 15, 2013
Murray Stahl Includes Some Risk with His Top Three New Stocks
Murray Stahl founded Horizon Kinetics in 1994 and has held the same philosophy for picking stocks since inception to today. Stahl theorizes that the glut of investors seeking short-term gains in the markets create inefficiencies which long-term investors, like himself, can capitalize on. Both quantitative and qualitative factors of investing matter to him, as he believes investing is at its best when data is combined with historical perspective, social context and fundamental analysis.
Stahl has trailed the markets in the last five years, returning 4.4% cumulatively compared to 12.2% for the S&P 500. His long-term record is better, with a 10-year cumulative return of 81.5% compared to the S&P 500's 16.4%.
Though his fund was down 11% for 2011, Stahl explained in his year-end letter that the companies in his portfolio are unpopular as he believes the market is in a bubble phase. The loss had more to do with the share price of the companies in his portfolio than simply having low intrinsic value or being purchased at an insufficient discount.
"As a group, these companies are quite profitable, maintain liquid balance sheets and are managed by owner-operators. These are highly successful individuals who are typically their companies' largest shareholders and their equity typically represents a large or dominant portion of their personal wealth, such that they have the greatest self-interest in the appreciation of those shares," he writes.
In the fourth quarter, he bought 32 new stocks. The largest new buys are: Air Lease (AL), Colfax (CFX) and Republic Bancorp Inc. (RBCAA).
Air Lease (AL)
Air Lease Corporation is an aircraft leasing company principally engaged in purchasing commercial aircraft and leasing to airlines around the world. Air Lease has a market cap of $2.49 billion; its shares were traded at around $25.22.
Air Lease Corporation went public in April 2011 and traded as high as $29.94 per share, but soon fell to as low as $17.24 per share! in the fourth quarter. Stahl was able to buy 2,242,516 shares at an average price of $22 in the fourth quarter.
Stahl gave a lengthy analysis of Air Lease in his fourth quarter letter:
Air Lease is the second coming of Steven Udvar-Hazy. In 1973, Mr. Udvar-Hazy co-founded what became International Lease Finance Corp. ("ILFC"), and in doing so established a new industry: leasing commercial aircraft to airline companies. He was successful both in concept and execution. ILFC, which is the world's largest aircraft lessor, was sold to American International Group ("AIG") in 1990 for $1.3 billion. Mr. Udvar-Hazy remained CEO of ILFC until 2009, and retired from AIG in February 2010. By April 2011, he had engineered the IPO of a new aircraft lessor, Air Lease, bringing with him ILFC's senior officers, who had worked for him there since 2002.
The basis for this new venture appears to be the reluctance of AIG to invest in the business. The two largest aircraft lessors are owned by diversified financial companies, the 2nd being GE Capital, which, like other major finance companies, is shrinking its balance sheets. Yet, this is occurring at what seems to be an opportune moment to allocate additional capital to the business:
− On a secular basis, airlines continue to increase their use of leasing. The proportion of aircraft fleets leased was about 0% in 1973, about 20% 25 years later in 1998, and 35% 12 years later in 2010. Leasing permits airlines to deploy their insufficient capital elsewhere, to more readily expand and diversify their fleets, and is a particularly helpful mechanism for new, rapidly expanding low-cost airlines such as abound in emerging economies.
− The airline industry is expanding. Historically, passenger traffic has increased on a 1:1 basis with world GDP growth, but most of that growth has been coming from emerging economies. Asia/Pacific traffic, for instance, which was 17% of world traffic in 1990, was 29% in 2010. Therefore, market size exp! ansion in! the next decade should be greater than in the decade prior.
− As mentioned, some of the largest aircraft lessors, like ILFC, are policy constrained with regard to expanding their capital base.
− The cost of capital, which is to say interest rates, has never been as low.
Accordingly, Mr. Udvar-Hazy is entering a market that is growing in overall size, for which penetration of this particular service is also expanding, in which major competitors are constrained, and for which expansion capital is cheap. Certainly, he knows how to build such a business.
The worldwide commercial aircraft inventory is a far more stable figure than one might infer, given the cyclicality in passenger traffic. Inventory has trended up even during downturns, as orders placed during a preceding cyclical upturn in traffic are ultimately delivered. Borrowing from ILFC's financial statements for reference, revenues and earnings of that company increased sequentially between 2005 and 2009, even through the financial crisis and the decline in passenger traffic during 2008 and 2009. Neither, compared with most finance companies, do aircraft lessors use a great deal of leverage; ILFC's debt to equity ratio in 2009 was 3.5x, and its interest coverage ratio was also 3.5x.
Leases are typically net leases, under terms that require the lessee to pay all operating expenses, including insurance and maintenance, and to return the aircraft in a condition that conforms to a detailed set of qualitative criteria.
With $2.2 billion of equity capital raised in the IPO and a prior private placement, and $1.8 billion of borrowings, Air Lease has so far acquired $3.4 billion of planes, which numbered 79 as of September 30th. It has contracted to purchase another 126 aircraft between year-end 2011 and 2015, plus another 95 thereafter. It is in an early expansion phase.
As to valuation, current earnings cannot be used; they are not yet at normalized levels, since the current balance sheet can support a gre! ater amou! nt of operating assets than are yet in place. However, our position was established at only about 5% to 10% above book value and about 20% below the stock's closing price on the day of its IPO last April.
Colfax (CFX)
Colfax Corporation is a global supplier of fluid handling products, including pumps, fluid handling systems and specialty valves. Colfax has a market cap of $1.38 billion; its shares were traded at around $31.66 with a P/E ratio of 24.2 and P/S ratio of 2.6.
Colfax shares actually got pricier in the fourth quarter than they were during the rest of the year. In the last six months, the stock price has advanced 22%. Stahl bought 428,247 shares at an average price of $26 per share in the fourth quarter.
The company is now trading at record high P/B and P/S ratios, and a P/E ratio of 2012.
CFX pe,ps,pb Interactive Chart
After three years of choppy revenue and earnings growth, Colfax's shares went up in the fourth quarter due to its third-quarter results announced on October 27. The company reported a 71.6% year-over-year increase in earnings, a 28% increase in sales and a 53.2% increase in operating income.
The negative effects of the global economic downturn on the company's business began to lessen in mid-2010, when both sales and orders began to improve. The company still expects challenges, though. For instance, one of the company's clients is the U.S. Navy, which is slowing down its spending. It is expecting increased business from countries outside the U.S. as they expand their fleets.
Colfax derived approximately 66% of its sales from operations outside of the U.S. in the year ended Dec. 31, 2010, and it has manufacturing facilities in eight countries. It is aiming to grow its market share in emerging countries. However, the company is subject to fines for selling to countries that are subject to U.S. sanctions or embargoes. For instance, it made sales of $60,000 from 2003 to 2007 to Cuba, for which it is under review b! y the US ! State Department and could face fines or other sanctions. Most of its growth strategy is based on making acquisitions to expand into new markets, and it also plans to enhance its product offerings.
Republic Bancorp Inc. (RBCAA)
Republic Bancorp Inc. has 43 banking centers and is the holding company for Republic Bank & Trust Company and Republic Bank. Almost 50% of its loan portfolio is originating mortgage loans, and 30% is originating commercial real estate loans. The bank is 55% owned by Bernard, Scott and Steven Trager (the chairman, vice chairman and CEO).
Republic Bancorp Inc. has a market cap of $541.3 million; its shares were traded at around $25.83 with a P/E ratio of 5.8 and P/S ratio of 1.7. The dividend yield of Republic Bancorp Inc. stocks is 2.4%. Republic Bancorp Inc. had an annual average earnings growth of 11% over the past 10 years. GuruFocus rated Republic Bancorp Inc. the business predictability rank of 5-star.
Republic Bancorp shares took a distinct turn upward in the fourth quarter. Stahl bought 79,430 shares in the fourth quarter at an average price of $20.59, meaning he got it for under book value, which was $21.59. For much of the rest of the year they sold for under $20. Today the stock closed at $26 per share.
This is only financial company appearing on GuruFocus' Buffett-Munger screener, and it is trading at relatively low valuations.
RBCAA pe,ps,pb Interactive Chart
Many of its financial results are also quite positive. Its revenue has grown at an annual rate of 10% over the last 10 years, and cash flow has grown for each of the last four years. Return on equity is at a record 20.8%, and return on assets is at a record 2.8% for 2011. Earnings also grew each of the last four years.
Republic increased its dividend by 8% in the second quarter of 2011, representing the 12th consecutive year that it has increased its dividend.
A risk involved with the company is that its Republic Bank & Trust business derives 7! 8% of its! net income from TRS, which offers bank products that help get customers who electronically file their tax returns their payments. RB&T is only of the few financial institutions in the U.S. that provide the service. Under the program, the taxpayer may receive a Refund Anticipation Loan (RAL), which has been questioned by various governmental and consumer groups. In May 2011, RB&T received an order to cease and desist which could result in an order by the FDIC to terminate its RAL program. It has a hearing on Feb. 12, 2012 in Kentucky regarding the matter.
From the above holdings, it appears that Stahl is willing to take a small amount of risk into his portfolio. But if the negative events don't come to pass, he could make substantial gains from the stocks. See the rest of Murray Stahl's buys and sells here. Also check out the Undervalued Stocks, Top Growth Companies, and High Yield stocks of Murray Stahl.
Stahl has trailed the markets in the last five years, returning 4.4% cumulatively compared to 12.2% for the S&P 500. His long-term record is better, with a 10-year cumulative return of 81.5% compared to the S&P 500's 16.4%.
Though his fund was down 11% for 2011, Stahl explained in his year-end letter that the companies in his portfolio are unpopular as he believes the market is in a bubble phase. The loss had more to do with the share price of the companies in his portfolio than simply having low intrinsic value or being purchased at an insufficient discount.
"As a group, these companies are quite profitable, maintain liquid balance sheets and are managed by owner-operators. These are highly successful individuals who are typically their companies' largest shareholders and their equity typically represents a large or dominant portion of their personal wealth, such that they have the greatest self-interest in the appreciation of those shares," he writes.
In the fourth quarter, he bought 32 new stocks. The largest new buys are: Air Lease (AL), Colfax (CFX) and Republic Bancorp Inc. (RBCAA).
Air Lease (AL)
Air Lease Corporation is an aircraft leasing company principally engaged in purchasing commercial aircraft and leasing to airlines around the world. Air Lease has a market cap of $2.49 billion; its shares were traded at around $25.22.
Air Lease Corporation went public in April 2011 and traded as high as $29.94 per share, but soon fell to as low as $17.24 per share! in the fourth quarter. Stahl was able to buy 2,242,516 shares at an average price of $22 in the fourth quarter.
Stahl gave a lengthy analysis of Air Lease in his fourth quarter letter:
Air Lease is the second coming of Steven Udvar-Hazy. In 1973, Mr. Udvar-Hazy co-founded what became International Lease Finance Corp. ("ILFC"), and in doing so established a new industry: leasing commercial aircraft to airline companies. He was successful both in concept and execution. ILFC, which is the world's largest aircraft lessor, was sold to American International Group ("AIG") in 1990 for $1.3 billion. Mr. Udvar-Hazy remained CEO of ILFC until 2009, and retired from AIG in February 2010. By April 2011, he had engineered the IPO of a new aircraft lessor, Air Lease, bringing with him ILFC's senior officers, who had worked for him there since 2002.
The basis for this new venture appears to be the reluctance of AIG to invest in the business. The two largest aircraft lessors are owned by diversified financial companies, the 2nd being GE Capital, which, like other major finance companies, is shrinking its balance sheets. Yet, this is occurring at what seems to be an opportune moment to allocate additional capital to the business:
− On a secular basis, airlines continue to increase their use of leasing. The proportion of aircraft fleets leased was about 0% in 1973, about 20% 25 years later in 1998, and 35% 12 years later in 2010. Leasing permits airlines to deploy their insufficient capital elsewhere, to more readily expand and diversify their fleets, and is a particularly helpful mechanism for new, rapidly expanding low-cost airlines such as abound in emerging economies.
− The airline industry is expanding. Historically, passenger traffic has increased on a 1:1 basis with world GDP growth, but most of that growth has been coming from emerging economies. Asia/Pacific traffic, for instance, which was 17% of world traffic in 1990, was 29% in 2010. Therefore, market size exp! ansion in! the next decade should be greater than in the decade prior.
− As mentioned, some of the largest aircraft lessors, like ILFC, are policy constrained with regard to expanding their capital base.
− The cost of capital, which is to say interest rates, has never been as low.
Accordingly, Mr. Udvar-Hazy is entering a market that is growing in overall size, for which penetration of this particular service is also expanding, in which major competitors are constrained, and for which expansion capital is cheap. Certainly, he knows how to build such a business.
The worldwide commercial aircraft inventory is a far more stable figure than one might infer, given the cyclicality in passenger traffic. Inventory has trended up even during downturns, as orders placed during a preceding cyclical upturn in traffic are ultimately delivered. Borrowing from ILFC's financial statements for reference, revenues and earnings of that company increased sequentially between 2005 and 2009, even through the financial crisis and the decline in passenger traffic during 2008 and 2009. Neither, compared with most finance companies, do aircraft lessors use a great deal of leverage; ILFC's debt to equity ratio in 2009 was 3.5x, and its interest coverage ratio was also 3.5x.
Leases are typically net leases, under terms that require the lessee to pay all operating expenses, including insurance and maintenance, and to return the aircraft in a condition that conforms to a detailed set of qualitative criteria.
With $2.2 billion of equity capital raised in the IPO and a prior private placement, and $1.8 billion of borrowings, Air Lease has so far acquired $3.4 billion of planes, which numbered 79 as of September 30th. It has contracted to purchase another 126 aircraft between year-end 2011 and 2015, plus another 95 thereafter. It is in an early expansion phase.
As to valuation, current earnings cannot be used; they are not yet at normalized levels, since the current balance sheet can support a gre! ater amou! nt of operating assets than are yet in place. However, our position was established at only about 5% to 10% above book value and about 20% below the stock's closing price on the day of its IPO last April.
Colfax (CFX)
Colfax Corporation is a global supplier of fluid handling products, including pumps, fluid handling systems and specialty valves. Colfax has a market cap of $1.38 billion; its shares were traded at around $31.66 with a P/E ratio of 24.2 and P/S ratio of 2.6.
Colfax shares actually got pricier in the fourth quarter than they were during the rest of the year. In the last six months, the stock price has advanced 22%. Stahl bought 428,247 shares at an average price of $26 per share in the fourth quarter.
The company is now trading at record high P/B and P/S ratios, and a P/E ratio of 2012.
CFX pe,ps,pb Interactive Chart
After three years of choppy revenue and earnings growth, Colfax's shares went up in the fourth quarter due to its third-quarter results announced on October 27. The company reported a 71.6% year-over-year increase in earnings, a 28% increase in sales and a 53.2% increase in operating income.
The negative effects of the global economic downturn on the company's business began to lessen in mid-2010, when both sales and orders began to improve. The company still expects challenges, though. For instance, one of the company's clients is the U.S. Navy, which is slowing down its spending. It is expecting increased business from countries outside the U.S. as they expand their fleets.
Colfax derived approximately 66% of its sales from operations outside of the U.S. in the year ended Dec. 31, 2010, and it has manufacturing facilities in eight countries. It is aiming to grow its market share in emerging countries. However, the company is subject to fines for selling to countries that are subject to U.S. sanctions or embargoes. For instance, it made sales of $60,000 from 2003 to 2007 to Cuba, for which it is under review b! y the US ! State Department and could face fines or other sanctions. Most of its growth strategy is based on making acquisitions to expand into new markets, and it also plans to enhance its product offerings.
Republic Bancorp Inc. (RBCAA)
Republic Bancorp Inc. has 43 banking centers and is the holding company for Republic Bank & Trust Company and Republic Bank. Almost 50% of its loan portfolio is originating mortgage loans, and 30% is originating commercial real estate loans. The bank is 55% owned by Bernard, Scott and Steven Trager (the chairman, vice chairman and CEO).
Republic Bancorp Inc. has a market cap of $541.3 million; its shares were traded at around $25.83 with a P/E ratio of 5.8 and P/S ratio of 1.7. The dividend yield of Republic Bancorp Inc. stocks is 2.4%. Republic Bancorp Inc. had an annual average earnings growth of 11% over the past 10 years. GuruFocus rated Republic Bancorp Inc. the business predictability rank of 5-star.
Republic Bancorp shares took a distinct turn upward in the fourth quarter. Stahl bought 79,430 shares in the fourth quarter at an average price of $20.59, meaning he got it for under book value, which was $21.59. For much of the rest of the year they sold for under $20. Today the stock closed at $26 per share.
This is only financial company appearing on GuruFocus' Buffett-Munger screener, and it is trading at relatively low valuations.
RBCAA pe,ps,pb Interactive Chart
Many of its financial results are also quite positive. Its revenue has grown at an annual rate of 10% over the last 10 years, and cash flow has grown for each of the last four years. Return on equity is at a record 20.8%, and return on assets is at a record 2.8% for 2011. Earnings also grew each of the last four years.
Republic increased its dividend by 8% in the second quarter of 2011, representing the 12th consecutive year that it has increased its dividend.
A risk involved with the company is that its Republic Bank & Trust business derives 7! 8% of its! net income from TRS, which offers bank products that help get customers who electronically file their tax returns their payments. RB&T is only of the few financial institutions in the U.S. that provide the service. Under the program, the taxpayer may receive a Refund Anticipation Loan (RAL), which has been questioned by various governmental and consumer groups. In May 2011, RB&T received an order to cease and desist which could result in an order by the FDIC to terminate its RAL program. It has a hearing on Feb. 12, 2012 in Kentucky regarding the matter.
From the above holdings, it appears that Stahl is willing to take a small amount of risk into his portfolio. But if the negative events don't come to pass, he could make substantial gains from the stocks. See the rest of Murray Stahl's buys and sells here. Also check out the Undervalued Stocks, Top Growth Companies, and High Yield stocks of Murray Stahl.
Tuesday, August 13, 2013
Will Akamai Continue to Grow?
With shares of Akamai Technologies (NASDAQ:AKAM) trading at around $46.70, is AKAM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock's Movement
Akamai is a leader in web acceleration and content delivery. As CEO Tom Leighton likes to say, "We help the web be faster, and we help it be more secure."
Tom Leighton has done a tremendous job with Akamai over the years. He has seen many ups and downs, but he has weathered the storms well. Currently, Akamai is seeing revenue growth. It also has no long-term debt. Its customers also include AT&T (NYSE:T), Apple Inc. (NASDAQ:AAPL), and News Corp. (NASDAQ:NWS). Companies of this size and stature will only choose the best of the best when it comes to necessary products and services. This is a testament to Akamai's quality. It should also be noted that Akamai's company culture is strong. According to Glassdoor.com, employees have rated their employer a 4 of 5. In addition to that, 87 percent of employees would recommend the company to a friend, and 100 percent of employees approve of CEO Tom Leighton.
In regards to the question in the title, as long as the Internet keeps growing, Akamai should keep growing. The biggest growth area for Akamai at the moment is in security. With hackers targeting large commercial websites, including major U.S. banks, Akamai's services are in high demand. While the growth might not be as fast, there is also growth in content delivery speed, especially due to the increased popularity of mobile. Then there's China. Akamai has a good relationship with the Chinese government. This is a good sign considering the amount of consumers in China.
Akamai recently impressed with earnings. Revenue increased 15.20 percent year-over-year, and earnings increased 41.7 percent year-over-year. North American revenue increased 12 percent year-over-year, and international revenue increased 26.0 percent year-over-year. While there might be headwinds for the company, including increased competition and increased investment in R&D, it would be difficult to make a solid argument to be bearish on Akamai.
Akamai was given an OUTPERFORM rating in the column on March, 6, 2013 at $37.50, but should Akamai still receive the highest rating possible after its recent run? We'll get to that soon.
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The chart below compares fundamentals for Akamai, Level 3 Communications (NASDAQ:LVLT), and Limelight Networks (NASDAQ:LLNW).
| AKAM | LVLT | LLNW | |
| Trailing P/E | 36.77 | N/A | N/A |
| Forward P/E | 21.52 | 40.34 | N/A |
| Profit Margin | 16.33% | -5.69% | -17.07% |
| ROE | 10.13% | -29.95% | -10.20% |
| Operating Cash Flow | 540.94M | 660.00M | 16.96M |
| Dividend Yield | N/A | N/A | N/A |
| Short Position | 12.00% | 9.50% | 6.70% |
Let's take a look at some more important numbers prior to forming an opinion on this stock.
T = Technicals Are Strong
Akamai has performed exceptionally well over the past year.
| 1 Month | Year-To-Date | 1 Year | 3 Year | |
| AKAM | 31.88% | 14.15% | 49.82% | 18.47% |
| LVLT | 10.34% | 2.99% | -1.98% | 18.41% |
| LLNW | 3.59% | -9.01% | -21.09% | -52.69% |
At $46.70, Akamai is trading above its averages.
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| 50-Day SMA | 38.10 |
| 200-Day SMA | 38.11 |
E = Equity to Debt Ratio Is Strong
The debt-to-equity ratio for Akamai is stronger than the industry average of 0.30. Akamai has superb debt management.
| Debt-To-Equity | Cash | Long-Term Debt | |
| AKAM | 0.00 | 513.23M | 0.00 |
| LVLT | 7.75 | 610.00M | 8.59B |
| LLNW | 0.01 | 120.20M | 1.70M |
E = Earnings Are Steady
Akamai has shown increased revenue and earnings for several consecutive years. This is simply a well-managed company that knows how to maintain growth and deliver profits.
| Fiscal Year | 2008 | 2009 | 2010 | 2011 | 2012 |
| Revenue ($) in billions | 0.791 | 0.860 | 1.02 | 1.16 | 1.37 |
| Diluted EPS ($) | 0.79 | 0.78 | 0.90 | 1.07 | 1.12 |
When we look at the last quarter on a year-over-year basis, we see improvements in revenue and earnings.
| Quarter | Mar. 31, 2012 | Jun. 30, 2012 | Sep. 30, 2012 | Dec. 31, 2012 | Mar. 31, 2013 |
| Revenue ($) in billions | 0.319 | 0.331 | 0.345 | 0.378 | 0.368 |
| Diluted EPS ($) | 0.24 | 0.24 | 0.27 | 0.3757 | 0.39 |
Now let's take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?
T = Trends Support the Industry
The following are a few reasons why trends support the industry: cloud, security, mobile, streaming video.
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Conclusion
Akamai expects strong growth over the next four years. Thanks to its high quality services, it's an industry leader. There will likely be increased investments, which could impact the bottom line. Macroeconomic conditions and stock market manipulation also pose risks. However, potential rewards still outweigh risks for Akamai.
Saturday, August 10, 2013
Can Dish Network Continue This Bullish Run?
With shares of Dish Network (NASDAQ:DISH) trading around $39, is DISH an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s Movement
Dish Network is a pay-television provider that offers a range of local and national programming, featuring more national and local high definition channels than most pay-TV providers. A rising number of consumers are opting for satellite services due to the reduced costs and increased coverage offered. Dish Network is poised to capitalize on this rise in consumer interest as entertainment takes the center stage for consumers in the United States. As a television giant, look for Dish Network to provide the services that consumers and companies love.
T = Technicals on the Stock Chart are Strong
Dish Network stock has shot higher over the last several years and is now trading at prices not seen since the early-to-mid 2000s. The stock looks ready to continue higher but it may need some time to digest current prices. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Dish Network is trading near its rising key averages, which signal neutral to bullish price action in the near-term.
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(Source: Thinkorswim)
Taking a look at the implied volatility (red) and implied volatility skew levels of Dish Network options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| Dish Network Options | 42.89% | 86% | 84% |
What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| July Options | Steep | Average |
| August Options | Steep | Average |
As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bearish over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.
E = Earnings Are Decreasing Quarter-Over-Quarter
Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Dish Network’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Dish Network look like and more importantly, how did the markets like these numbers?
| 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | |
| Earnings Growth (Y-O-Y) | -41.25% | -34.09% | -149.30% | -33.33% |
| Revenue Growth (Y-O-Y) | -0.74% | -1.15% | -2.20% | -0.51% |
| Earnings Reaction | -2.04% | -0.16% | 3.35% | -0.22% |
Dish Network has seen decreasing earnings and revenue figures over the last four quarters. From these numbers, the markets have not been too excited about Dish Network’s recent earnings announcements.
P = Average Relative Performance Versus Peers and Sector
How has Dish Network stock done relative to its peers, Directv (NYSE:DTV), Comcast (NASDAQ:CMCSA), Time Warner Cable (NYSE:TWC), and sector?
| Dish Network | Directv | Comcast | Time Warner Cable | Sector | |
| Year-to-Date Return | 7.66% | 26.83% | 8.73% | 6.62% | 8.15% |
Dish Network has been an average performer, year-to-date, with greater or relatively equal return in comparison to its competitors.
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Conclusion
Dish Network is a provider of local and national television programming offering more channel options than many other providers. The stock is on a bullish run and is trading at prices not seen since the mid-2000s. Over the last four quarters, investors have not been to excited with the company as earnings and revenue figures have been decreasing. Relative to its peers and sector, Dish Network has been an average performer, year-to-date. WAIT AND SEE what Dish Network does in coming quarters.
Thursday, August 8, 2013
Hot Financial Companies To Own For 2014
The market was moving higher this morning, but several financial stocks were lagging.�
In addition to a U.S. regional bank and international insurer ticking lower, Zillow (NASDAQ: Z ) was down roughly 10% in the early hours of trading despite posting record numbers. Despite the pullback, the shares of the provider of the popular mortgage marketplace are still up over 100% in 2013.
In this video, Motley Fool financial analysts Matt Koppenheffer and David Hanson highlight these stocks and why there may be�opportunity.�
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Hot Financial Companies To Own For 2014: Land Securities(LAND.L)
Land Securities Group PLC, a real estate investment trust, engages in the ownership, development, and management of commercial properties primarily in the United Kingdom. It provides customers with access to retail units in shopping centers, retail warehouses, shops, and other regional properties. The company also offers customers with access to offices and creates office developments supporting complementary uses, such as retail, public space, and residential. In addition, Land Securities Group enables customers to outsource the construction and maintenance of buildings, as well as leasing, developing, managing, refurbishing, repairing, and maintaining properties, facilities, and land in the area of public private partnership in sectors, such as education, waste defense training, and local government infrastructure. The company also involves in urban community development operations through its multi-billion pound development program, transforming regional city centers an d key sites in Central London. As of December 31, 2007, its property portfolio comprised 1.7 million square meters of retail accommodation; 1.1 million square meters of office and retail accommodation; and 3.1 million square meters properties in property outsourcing partnerships. The company was founded in 1944 and is based in London, the United Kingdom.
Hot Financial Companies To Own For 2014: Putnam Managed Municipal Income Trust(PMM)
Putnam Managed Municipal Income Trust is a close-ended fixed income mutual fund launched and managed by Putnam Investment Management LLC. It is co-managed by Putnam Investments Limited (U.K.). The fund invests in fixed income markets of United States. It invests in a diversified portfolio of tax-exempt municipal securities which typically includes high-yield securities that are below investment grade and involve special risk considerations. The fund benchmarks the performance of its portfolio against Barclays Capital Municipal Bond Index. Putnam Managed Municipal Income Trust was formed on February 24, 1989 and is domiciled in United States.
Top Small Cap Stocks To Invest In 2014: Nationstar Mortgage Holdings Inc (NSM)
Nationstar Mortgage Holdings Inc. is a non-bank residential mortgage servicer with a range of services across the residential mortgage product spectrum. As of December 31, 2011, the Company serviced over 645,000 residential mortgage loans. The Company�� clients include national and regional banks, government organizations, securitization trusts, private investment funds and other owners of residential mortgage loans and securities. It is a partner of financial organizations, including government-sponsored enterprises (GSEs) and other regulated institutions. The Company is a licensed servicer in all 50 states. In addition to its core servicing business, the Company has a fully integrated loan originations platform and suite of adjacent businesses.
Nationstar offers clients a range of services. The Company combines its mortgage servicing with a fully integrated loan originations platform. Nationstar offers clients a diversified array of residential mortgage services: Servicing, Originations and Other Related Services.
Servicing
The Company offers mortgage investors two primary ways to partner. A portion of its portfolio consists of owned mortgage servicing rights (MSRs). In this arrangement, the Company owns the right to collect the principal and interest due from a mortgage borrower, as well as manage the title and property insurance escrow of the collateral on behalf of mortgage investors in exchange for a monthly fee proportional to the unpaid principle balance (UPB) of the mortgage. The Company acquires MSRs either through its own origination of mortgages or by acquiring these rights from other MSR owners or the mortgage investor. It subservices multiple portfolios for federal agencies, Government Sponsored Enterprises (GSEs) and large banks. For its subservicing clients, the Company is organized to serve its clients with an Investor Collections Professional and Senior Portfolio Manager(s) assigned to each portfolio.
Originations
The! Company offers a fully integrated loan origination platform. It also operates a wholesale origination channel capable of purchasing loans primarily from Financial Institutions operating as a broker.
Other Related Services
The Company offers a full suite of additional residential mortgage services to complement its servicing business and supporting originations platform. These businesses offer a range of ancillary services, including providing services for delinquent loans, managing loans in the foreclosure/real estate owned (REO) process and providing title insurance agency, loan settlement and valuation services on newly originated and re-originated loans. Nationstar is a part owner in NREIS, which is a provider of residential and commercial mortgage and real estate solutions in the United States. Their services include title insurance and property reports; real estate appraisals and alternative valuation products; settlement and closing services; commercial real estate services; default and property preservation services, and flood and tax certifications.
Advisors' Opinion:- [By Alexandra Leigh]
The firm has priced a securitization from its special purpose vehicle Nationstar Agency Advance Funding Trust at approximately $900 million in mortgage servicer advance receivable-backed notes. The Trust’s note issuance is an asset-backed securitization of servicer advance receivables made on-backed residential loans backed by Freddie Mac, and the series notes are backed servicing fee advance receivables.
Hot Financial Companies To Own For 2014: Bayside Land Corporation Ltd (BYSD)
Bayside Land Corporation Ltd. is an Israeli real estate company, a subsidiary of IDB Group,engaged directly and through its subsidiaries in the initiation, planning, establishing and managing of high-technology parks, industrial parks, commerce and office buildings, logistics centers and residential neighborhoods. The Company has been involved in many commercial, industrial and residential properties throughout Israel. The Company's well known projects include Gav-Yam Center Herzliya, a six-building complex, including underground parking lot, Matam Park - Haifa, an international business & Hi-Tech park, Gav-Yam Park - Caesarea, a modern park designed to populate companies from various industries. The Company is also taking part in a variety of other projects throughout Israel.Hot Financial Companies To Own For 2014: Sovran Self Storage Inc.(SSS)
Sovran Self Storage, Inc. operates as a real estate investment trust (REIT). It engages in the acquisition, ownership, and management of self-storage properties in the United States. The company?s self-storage properties offer storage space to residential and commercial users, as well as offer outside storage for automobiles, recreational vehicles, and boats. As of February 15, 2007, it owned and managed 328 properties, consisting of approximately 20.3 million net rentable square feet in 22 states. Sovran Self Storage has elected to be treated as a REIT for federal income tax purposes and would not be subject to income tax to the extent it distributes at least 90% of taxable income to its stockholders. The company was founded in 1982 and is headquartered in Williamsville, New York.
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