Tuesday, July 7, 2015

Looks Like $55 Is The New Level For Shale Oil

Interesting research from Global Hunter Securities suggesting that a lot of shale producers are willing to increase capital spending when oil sits around the current WTI prices of $55. If so, this is bullish for airlines, consumer stocks, and even oil services firms. The move is bearish for E&P firms needing oil prices above $55.

Disclosure: Long airlines and oil services firms. Please review the disclaimer page for more details.

Top 10 Net Payout Yield Stocks For July 2015

  • The top ten net payout yields underperformed the market in June due to several stocks with larger losses than the S&P 500 index.
  • The top ten net payout yield stocks average yields of 14.0% to start July.
  • Motorola Solutions continues to hold the highest yield now at 27.0%.
This article is a continuation of a monthly series highlighting the top net payout yield (NYSE:NPY) stocks that was started back in June 2012 (see article) and explained in August 2012 (see article). The series highlights the best stocks for the upcoming month utilized in part to make investment decisions for the Covestor model that has beaten the S&P 500 for four consecutive years. Please review the original articles for more information on the NPY concept.

Read the full article on Seeking Alpha.

Disclosure: Long HIG, MSI, NLY, NOC, NTAP, TRV, VIAB. Please review the disclaimer page for more details. 

Sunday, July 5, 2015

Yelp: Not For Sale, But Don't Panic

  • Yelp decides to take itself off the sales block sending the stock down 10%.
  • The consumer review site is no longer expensive after a major collapse in the stock this year.
  • Yelp is still failing to significantly improve user growth based on mobile app downloads, suggesting the stock will struggle in the short term.
In not such a surprising move, Yelp (NYSE:YELP) failed to find a buyer willing to pay up for the consumer review site. Though no details exist on any offers or whether any existed at all, the likelihood all along was that Yelp would fail to find a buyer willing to pay for the potential of the site.

Read the full article on Seeking Alpha.

Disclosure: Long YELP. Please review disclaimer page for more details.

American Airlines: Beaten Down Without Merit

  • Airline stocks were beaten down last week on fears of a DOJ probe.
  • The data suggests the probe is without merit, especially considering the PRSAM drop during Q2 for American Airlines.
  • The airline sector remains incredibly beaten down, with American Airlines trading at a PE multiple of only 5.
After an already weak year, airline stocks were beaten down last week by a probe from the Department of Justice, or DOJ. Anybody who owns an airline stock, and especially American Airlines Group (NASDAQ:AAL), is likely flabbergasted heading into the July 4th holiday weekend. The thought that American Airlines is colluding on capacity appears preposterous based on the big battle going on in Dallas between Southwest Airlines (NYSE:LUV) and Virgin America (NASDAQ:VA).

Read the full article at Seeking Alpha.

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

Wednesday, July 1, 2015

Peabody Energy - Will The Supreme Court Decision On Coal Really Help?

  • The recent Supreme Court ruling gives coal miners some hope of reduced regulations on the industry.
  • The news arrived too late for the coal industry, as investments have already been made to replace coal power plants.
  • Until Peabody Energy turns around the negative EPS trend, investors should avoid the stock.
Coal stocks remain in an absolute crash mode with a limited number trading above $1. The sector rallied on Monday due to a Supreme Court ruling that knocked down a hurtful rule for coal enacted by the Environmental Protection Agency in 2011. Coal stocks rallied on the news, but it isn't clear whether the overturning of the EPA air pollution rule will have any impact on the market considering the late date of the overturning. The power plant market has already shifted toward cheap natural gas, but if any stock has the potential to benefit from a Supreme Court decision, it would be Peabody Energy (NYSE:BTU). Looking at the chart below, one can see the damage of the last three years.

Read the full article on Seeking Alpha.

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

Tuesday, June 30, 2015

InvenSense: Leveraging Up Research Expenses

  • InvenSense continues to produce solid revenue growth while the stock struggles to gain.
  • Lower gross margins from two large mobile customers are wrongfully blamed for the struggling stock.
  • InvenSense is set up to leverage higher spending into solid leverage going forward.
For the last year or so, too much of the focus on InvenSense (NYSE:INVN) surrounds gross margins. The developer of motion sensing solutions has a stock sitting near multi-year lows while the company continues to fire on all cylinders with surging revenues and customer wins.

Read the full article on Seeking Alpha.

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

Monday, June 29, 2015

Apple: Focus On This Trend

  • Apple's stock price has followed the EPS trend over the last five years.
  • The large level of stock buybacks provides a massive tailwind to keep the EPS trend positive.
  • Investors should use the attractive value and earnings trend to buy the stock on any dip caused by Greece.
For most stocks, and specifically Apple (NASDAQ:AAPL), only one trend ultimately matters. Over the last five years, the stock has risen and fallen based on the trend of this one key number, and not based on valuation metrics. Even the Greek tragedy that might unfold this week won't matter to the stock price other than a short-term blip.

Read the full article at Seeking Alpha.

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