Monday, July 28, 2014

Update: United Airlines Q2 '14 Earnings


Summary

  • United Airlines reported Q2 '14 earnings.
  • The earnings confirm original thesis that cost savings would drive earnings higher.
  • The improved earnings were anticipated to eventually drive stock gains.
Read the full article on Seeking Alpha. 


Disclosure: Long AAL. Please review the disclaimer page for more details. 



Wednesday, July 23, 2014

Expanding Margins Will Lead Weatherford International Higher


Recently, Weatherford International (NYSE: WFT  ) sold drilling assets in Russia and Venezuela to further transition away from unprofitable businesses that never achieved the expected margins. Investors can quickly compare the numbers to the solid international margins of Schlumberger Limited (NYSE: SLB  ) and Halliburton (NYSE: HAL  ) to quickly grasp how far off course Weatherford had steered in the process of expanding internationally.

The oilfield services laggard has turned to improving operations after a few years of working out accounting and tax issues. Weatherford has taken several previous steps to improve operations with the hopes of growing margins. Even after the recent gains in the stock, Weatherford continues to trade at low revenue multiples, showing how much of an impact the low-margin drag has had on the stock.

Read the full article here.


Disclosure: Long WFT and HAL. Please review the disclaimer page for more details. 




Tuesday, July 22, 2014

The Worrisome Wireless Pricing Wars


A couple of notable trends are making investing in the domestic wireless space a concern. The stocks trade at multiyear highs and a pricing war triggered by T-Mobile  (NYSE: TMUS  ) is causing average revenue per user, or ARPU, to decline -- at least in the case of AT&T (NYSE: T  ) . The combination usually doesn't go hand in hand , especially considering the domestic market is virtually saturated with users, causing Verizon Communications  (NYSE: VZ  ) to struggle with customer additions since it hasn't entered the pricing wars.

Any pricing war should always alert investors to pending stock losses, but with AT&T trading sideways for nearly two years now do investors really have cause for concern?

Read the full article here.


Disclosure: Long T. Please review the disclaimer page for more details. 



Friday, July 18, 2014

Is T-Mobile Worth More?


With once struggling domestic wireless provider T-Mobile US  (NYSE: TMUS  ) now worth over $26 billion, investors should wonder if the stock has any value left. The company is rumored to be a buyout target of Sprint  (NYSE: S  ), yet its quick rise from $7.50 to nearly $33 in a span of two years should raise valuation questions.

On the backs of wireless mergers, including its own consolidation with Metro PCS, T-Mobile is now secure in a strong fourth position of the domestic wireless market. The stock now trades at nearly 1 times revenue estimates, suggesting that all of the easy money has already been made. Further, notable investor firm Omega Advisors exited its position during the first quarter further, questioning if the stock has upside value.

Read the full article here.


Disclosure: Long T. Please review the disclaimer page for more details. 



Thursday, July 17, 2014

Antero Resources Corp: More Growth Than You'd Believe


The amount of long-term growth forecasted by Antero Resources Corporation (NYSE: AR  ) is almost unheard of outside of social media stocks, especially for a company with a greater than $15 billion market cap. The Marcellus and Utica Shale natural gas exploration and production firm is probably mostly unknown by investors after going public last October.

Despite production growth rates of over 100% and heading toward nearly 950 MMcfe/d during 2014, the company continues to forecast growth rates in excess of 50% in both 2015 and 2016. At this point, Antero appears to be overcoming the infrastructure bottlenecks that have disturbed Marcellus production by Cabot Oil & Gas (NYSE: COG  ) and Utica growth at Gulfport Energy Corp (NASDAQ: GPOR  ). The biggest question is whether the growth at Antero can be maintained as guided.

Read the full article here.


Disclosure: No positions mentioned. Please review the disclaimer page for more details. 



Yammering to Invest in Jive Software


The recent collaboration deal with Cisco Systems (NASDAQ: CSCO  ) sparks an interest in investing in Jive Software (NASDAQ: JIVE  ) again. The social business software provider offered an interesting investment concept when it came public back at the end of 2011, yet the company hasn't been able to match the success of the consumer social media stocks.

The software provider is focused on the social business platforms of portals, social intranets, and external communities that allow employees and customers to better collaborate and engage. Unfortunately, Jive Software has yet to hit the tipping point, with revenue growth only clocking in at 21% in the first quarter.

Read the full article here.


Disclosure: No positions mentioned. Please review the disclaimer page for more details. 




Tuesday, July 15, 2014

Keeping an Eye on the Seventy Seven Energy Spin-Off


With the spin-off from Chesapeake Energy (NYSE: CHK  ) finally here, investors can start watching Seventy Seven Energy (NYSE: SSE  ). The oilfield services firm has had limited publicity typical of spin-offs, providing the opportunity for an attractive valuation.

One important thing investors need to understand about spin-offs is that the new companies typically come out in disarray. The parent company wouldn't typically perform the split up if it weren't for a desire to unload an underperforming unit, or at least one viewed as undervalued. In the case of Chesapeake Energy, the natural gas exploration and production firm was originally hoping to sell the company for several billion to help reduce debt at the corporate level. The spin-off was the last option.

Read the full article here.


Disclosure: No positions mentioned. Please review the disclaimer page for more details.