Friday, May 22, 2015

Southwest Airlines - The News That Wasn't


  • Southwest Airlines plunged on fears of capacity additions.
  • The market apparently over reacted to news of a slight capacity increase from previous expectations.
  • The fears of a pricing war provide an opportunity to own one of the best airlines.
The airlines were absolutely crushed during trading on Wednesday. Several events collided to create a panic causing some of the airlines to plunge up to 10%. Whether or not the news of the day was material, the media was full of market pundits referring back to the airline industry of old without justification.

Read the full article at Seeking Alpha.


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



Tuesday, May 19, 2015

Zynga: Stay Focused


Summary

  • Zynga continues making progress towards shifting to a mobile game developer.
  • The downshift in web game revenue is masking the progress made by the previous CEO.
  • The company remains attractive at these valuations based on strong financial assets and game franchises.
With all of the assets of Zynga (NASDAQ:ZNGA), the biggest fear is a lack of focus at the game developer that slowly burns the cash balance. The company has spent the last few years building up new game categories and switching CEOs to only end up back in the same place.

Read the full article on Seeking Alpha.


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



Saturday, May 16, 2015

Amazon: Don't Fight AWS Momentum


  • Amazon's momentum over the surprise AWS operating profit continues to grow with the recent analyst upgrades.
  • Margin improvements and earnings forecasts don't match the excitement over the prospects of the AWS segment.
  • Investors should ride the momentum higher, despite the continued overvaluation of the stock.         
The recent Q1'15 results for Amazon (NASDAQ:AMZN) brought excitement to the market over the positive numbers from the Amazon Web Services segment. The ironic part, though, is that the better than expected numbers for AWS were offset by mixed numbers for the retail business.

Read the full article at Seeking Alpha. 


Disclaimer: No position mentioned. Please review the disclaimer page for more details. 



Friday, May 15, 2015

How The Delta Air Lines Capital Return Plan Stacks Up



  • Delta Air Lines announces an increased capital return plan.
  • The new plan includes a major boost to the dividend and stock buyback plan.
  • The new Delta Air Lines plan still fails to push the yield to the highest in the market unless the airline accelerates the plan.
Prior to the open, Delta Air Lines (NYSE:DAL) announced a major increase to their capital return plan. The airline was already ahead of the industry and especially the legacy airlines in returning capital to shareholders. This new plan greatly expands the previous plan.

Read the full article on Seeking Alpha.


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



Thursday, May 14, 2015

Clean Energy Remains A Margin Story That Isn't Improving


Summary

  • Clean Energy continues struggling to make financial progression.
  • The company runs a low-margin business, but it continues to sell investors on a "concept".
  • The stock remains a momentum story that investors should exit when the recent run ends.
The stock of Clean Energy Fuels (NASDAQ:CLNE) made an incredible run over the last few months on what appears more momentum than reality. The company missed Q1 estimates and again pushed the quarterly loss back to the $0.30 level. Amazingly the stock didn't sell off on this news. In addition, investors appear to have mostly brushed aside the scathing report from The Street Sweeper. The stock is amazingly close to the highs for the year.

Read the full article on Seeking Alpha.


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




Wednesday, May 13, 2015

Verizon: Is AOL Worth The Cash?


Summary

  • Verizon agreed to purchase AOL for $4.4 billion in cash.
  • The deal adds debt to an already large debt load.
  • AOL doesn't appear to add the exciting assets suggested by the press release with the company offering limited growth.
  • At this point, any deal adding debt isn't appealing, but the materiality of the deal doesn't adjust a breakout forecast for Verizon's stock.
The validity of Verizon Communications (NYSE:VZ) purchasing AOL (NYSE:AOL) is very much a debate, but the one part missing from those discussions is the use of cash for the deal. One of the biggest concerns with an investment in Verizon is the debt load created from the transaction with Vodafone (NASDAQ:VOD). The basis of the AOL deal is better sculpted on whether it is worth the cash.

Read the full article at Seeking Alpha.


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




Friday, May 8, 2015

Sprouts Farmers Market Disappointment Leads To Opportunity


Summary

  • Sprouts disappoints with Q1'15 earnings.
  • Sales and margins were hurt by the West Coast port slowdown.
  • The natural grocer is still generating solid comp sales growth and maintains a long-term growth opportunity suggesting buying the stock on a dip.
   Sprouts Farmers Market (NASDAQ:SFM) reported quarterly numbers after the close on Thursday that missed analyst and company forecasts. Probably even worse, the disappointing numbers came after the leading pre-IPO shareholder in Apollo Global Management (NYSE:APO) dumped their final shares in early March at $35.30. The stock is likely to trade weak with concerns that the "insiders" knew of the impending weakness.


 Read the full article on Seeking Alpha.


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