Friday, August 31, 2012

Shanghai Composite Keeps Falling To New Lows

Amazingly the China stock market as represented by the Shanghai Composite keeps to new multi-year lows. As seen from the below 3 year chart, the index as virtually fallen every month since the peak back in October 2011 at nearly 3,200. The index is now barely holding onto 2,000 after a very weak summer. Ultimately this should lead to more stimulus eventually.





Investors should keep an eye on a bottom for the coal producers or other mining stocks that have been crushed this year. China has clearly slowed down, but the question still remains whether growth will be 6% or 8% which is a far cry from a recession.


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



Thursday, August 30, 2012

Going Deep With Seadrill

On Monday, Seadrill (SDRL) highlighted on the Q2 earnings call that deepwater drilling remains a very hot sector with limited available rigs for the next couple of years. This was a theme highlighted at the beginning of the year as drilling in the Gulf of Mexico had picked back up.

The company provides offshore drilling services to the oil and gas industry worldwide. Its services include drilling, completion, and maintenance of offshore wells; production drilling and well maintenance; and well services. The company owns a fleet of offshore rigs and has 18 new builds under construction.

While the adjusted earnings slightly missed estimates, Seadrill continues to see huge demand for its rigs and tightness in the market for the next few years. The company has one of the youngest fleets in the industry and continues to benefit from an aggressive new build program.

Read the full article at Seeking Alpha.


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




Is Zipcar As Bad As The Chart Suggests?

Back on August 2nd, Zipcar (ZIP) reported disappointing Q2 results and guided down for 2012 sending the stock down over 30% that day. Looking at the chart, the stock has absolutely collapsed since going public at $30 in April of 2011. Is Zipcar really this bad a company?

According to the company, it is the world's leading car-sharing network, with more than 730,000 members and 11,000 vehicles located in major metropolitan areas and college campuses throughout the United States, Canada, the United Kingdom, Spain, and Austria.

The company has had an absolutely miserable time in the public markets. Though seen as an innovative market leader, it has yet to have a positive run in the stock market. In fact, the stock has been on a steady down slope throughout the whole 16 months as a public company. In fact, the 50ema has rarely been breached while the 200ema has never been approached. Both are signs technicians use to identify a very bearish stock.

Read the full article at Seeking Alpha.


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




Tuesday, August 28, 2012

Kayak's Mobile Monetization Continues To Ramp

After the market closed on Wednesday, Kayak Software (KYAK) reported Q2 2012 earnings that slightly beat estimated results. Importantly this was the first earnings report since going public back on July 20. See article here.

The company proclaims itself as the best place to plan and book travel. The basic focus of the company is to enable people to easily research and compare accurate and relevant information from hundreds of other travel websites in one comprehensive, fast and intuitive display.

While revenue easily beat estimates, the adjusted earnings came in at $0.25 versus the $0.24 analyst estimate. The company only provided the GAAP earnings of $0.19 possibly providing for the stock sliding after hours.

Read the full article at Seeking Alpha.


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



Freeport-McMoRan Gets An Olympic Gift

Last week, BHP Billiton (BHP) officially announced the delay of the major expansion project at Olympic Dam. While not a complete surprise due to falling commodity prices and escalating costs in Australia, a prime beneficiary in Freeport McMoRan Copper & Gold (FCX) hasn't gained much from the announcement.

Freeport-McMoRan is a leading international mining company with geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. The portfolio of assets includes the Grasberg minerals district in Indonesia, the world's largest copper and gold mine in terms of recoverable reserves; significant mining operations in North America and the Cerro Verde and El Abra operations in South America; and the Tenke Fungurume minerals district in the Democratic Republic of the Congo.

Read the full article at Seeking Alpha.


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



Monday, August 27, 2012

Sprint Could Win The Unlimited Data Battle

Sprint (S) continues with an aggressive plan of unlimited data pricing while wireless leaders AT&T (T) and Verizon (VZ) move towards capped data plans. Back in May, Sprint aggresively promoted an unlimited plan for the iPhone 4s to directly attack fed-up Verizon customers.

The company offers a comprehensive range of wireless and wireline communications services serving more than 56M customers. It offers mobile data services under both the Sprint and Nextel brands plus prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless.

The telecom sector has been ripe with pricing pressure for decades now. The question remains whether this move is good for Sprint or incredibly naive for the market leaders.

Read the full article at Seeking Alpha.


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



Thursday, August 23, 2012

Time To Load Up On Peabody Energy

The CEO of Peabody Energy (BTU) is famous for proclaiming the Super Cycle in coal. A funny thing happened on the way to realizing this proclamation.

The company produces and sells thermal and metallurgical coal to customers in more than 25 countries on six continents.

Market data still shows healthy demand for coal in Asian countries that continue to build coal-fired power plants. Unfortunately for coal producers, a chain of events from slowing growth in China to the advances in production of natural gas in the U.S. has slowed down the short-term demand for coal.

Read the full article at Seeking Alpha.



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


Potash: Where Did The Demand Go?

As other fertilizer stocks rocketed towards new all time highs, Potash Corp (POT) remains nearly 50% below the levels back before the crash from the financial crisis. In fact, CF Industries (CF) hit a new all time on Monday.

The company produces and sells fertilizers and related industrial and feed products primarily in the US and Canada. The company is one of the largest producers of potash, nitrogen, and phosphate, all essential nutrients required to help farmers grow healthier, more abundant crops.

With a market cap near $37B, the company is a major global force in the above fertilizer markets with a primary share of profits coming from potash.

Read the full article at Seeking Alpha.


Dislcosure: Long VALE. Please review the disclaimer page for more details. 




Get More From Sears Holdings: Part 1 - Q2 Earnings

The debate continues to rage, usually to the extremes, of whether Sears Holdings (SHLD) has no value or enormous value due to a vast array of undervalued assets. For example, the owned real estate is mostly valued at cost and not current market values leaving a wide debate on the proper valuations. See my past articles on these subjects here.

The company operates as a specialty retailer in the U.S. and Canada. It operates under the Kmart and Sears segments with major brands such as Kenmore, Craftsman, DieHard, Joe Boxer, Lands End, and Jaclyn Smith.

This will be the first part of a series intended at discussing the recent Q2 earnings announcement, followed by the Bruce Berkowitz case study, and finally a review of the pending spin offs.

Read the full article at Seeking Alpha.


Disclosure: Long SHLD, GPS, and KSS. Please review the disclaimer page fore more details. 




Tuesday, August 21, 2012

Jive Software's Social Business Party Delayed

Like so many other social media and technology related IPOs from 2011 and early 2012, Jive Software (JIVE) quickly became very overpriced as the stock soared to $28. The market had huge expectations that far outweighed anything the company could produce. Even beating or meeting all three earnings reports since going public haven't been enough to keep the stock price at those highs.

The company is a leading global social business software company. Recently, the stock sold off 22% after reporting Q2 numbers that were mostly in line, while revenue guidance was at the low end of expectations. A stock trading at nearly 10x revenue has to increase guidance in order to sustain that valuation.

Read the full article at Seeking Alpha.


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




Monday, August 20, 2012

Aetna Is Extremely Cheap With Or Without Coventry Health Merger

If the news from the WSJ late Sunday night is accurate, Aetna (AET) offers an extremely cheap stock. The company is rumored to have finalized a deal to acquire Coventry Health Care (CVH) in a $5.7B deal.

Both companies are leading national managed health care companies. Coventry has a larger focus on government-based health plans that apparently attracted the interests of Aetna.

Considering Aetna has only a $12.7B market cap, this is a sizable deal for the company to undertake, though the company could quickly show how beneficial a mostly cash deal can be in this ultra low interest rate environment.

Read the full article at Seeking Alpha.


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



Sunday, August 19, 2012

Velti: Secular Growth Overwhelms Cyclical Macro Issues

fter reporting earnings on Tuesday morning, Velti (VELT) jumped nearly 12% after beating analyst revenue estimates. Combined with a big gain on Monday, the stock had a nearly 20% two day gain. Amazingly though, it still trades at extremely low valuations.

The company engages in the provision of mobile marketing and advertising technology and solutions for brands, advertising agencies, mobile operators, and media companies around the world.

Read the full article at Seeking Alpha.


Disclosure: Long VELT, CJES, and SODA. Please review the disclaimer page for more details. 




Friday, August 17, 2012

Investment Report - August 2012: Opportunistic Levered


This model lost a disappointing 6.6% in July versus a 1.3% gain for the benchmark S&P 500. This model typical outpaces the major indices by a large margin in up periods so the last month was a major exception.

Since the end of 2011, this model has been running on the theme that the majority of stocks would retrace the losses experienced since the July 2011 levels. In essence, our theory all along has been any losses since that time period were from irrational fear of a second financial collapse that the Europeans were unlikely to allow. Naturally this fluctuates on a case by case basis where any individual stock could move a lot higher or lower depending on circumstances since then.

Unfortunately this theory took a major hit as investors piled into dividend paying stocks sending most major indices back close to 2012 highs while at the same time selling the higher risk, global growth stocks. In some cases, stocks actually hit new 52 week lows recently.

Trades
Trading for the month was mostly limited to minor adjustments with the key being adding to the position in mobile advertising firm Velti (VELT). As of writing this report, this stock has actually become the largest position thanks to solid gains following a good Q2 earnings report.

Positions
The model is positioned with numerous very undervalued stocks such as SodaStream (SODA), OCZ Technology (OCZ), and C&J Energy Services (CJES). Along with Velti, all of these stocks have growth rates significantly higher than the earnings multiples.

Most of the stocks that benefit from strong growth in China have hit multi year lows. In some cases, these stocks are lower than back in 2009. The model will slowly inch back into coal stocks like Alpha Natural Resources (ANR) that will benefit from global growth.

The model still remains a big fan of some financial stocks trading below book value such as Aercap Holdings (AER), Hartford Financial (HIG), and Lincoln Financial (LNC). All of these companies are very profitable so it seems almost inevitable that these stocks will eventually be worth more than book value.

Conclusion
The model has struggled as investors have dumped global growth stocks. In some cases, the selloff was somewhat justified due to macro issues, but other stocks have bucked the cyclical macro issues warranting much higher valuations.

August is off to a great start suggesting that the pressure on global growth stocks has started to fad, but no guarantee can exist that another selloff won’t occur in September or October. Europe has started fading from the investment thesis, but a blowup in Spain could cause a crash in the markets. 


Disclosure: Long all positions mentioned. Please review the disclaimer page for more details. 



Thursday, August 16, 2012

Is The AT&T Dividend Safe?

Bloomberg West had a great interview with the Oracle Investment Research Chief Market Strategist Laurence Balter discussing the huge debt loads at AT&T (T). The company now has $61B in debt and the lowest cash balances in years. See the video below:




This blog has pointed out similar concerns with the balance sheets and dividend payouts of AT&T and Verizon (VZ) numerous times. These companies should be paying down debt instead of paying out cash to shareholders.


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



 

Wednesday, August 15, 2012

OCZ Technology: Now What?

Anybody following the stock or the solid-state drives (SSDs) industry has probably seen the drama with OCZ Technology (OCZ) over the last few weeks. Several influential journalists reported that a deal was done with Seagate Technology (STX) for over $1B, valuing the stock at close to $15.

Unfortunately weeks have passed without a deal announcement and the stock that shot up to over $8 in after market trading on July 27th now trades under $5. On top of that news, the CFO announced his retirement last week adding more fuel to the speculation fire. Not to mention the annual shareholders meeting took place on Monday eliciting investor hopes of noteworthy news.

At times like this, investors need to understand what they own with a clear defined plan for exciting the position. A smart investor either took advantage of the price spike or is now loading up shares as the rumors fade.

Read the full article at Seeking Alpha.


Dsiclosure: Long OCZ. Please review the disclaimer page for more details. 



Buy Continental Resources As It Ups Capex Again

After reporting earnings on Wednesday night, Continental Resources (CLR) moved up slightly as investors battled over the huge production gains and the spending increases. For some reason the market was disappointed with a forecast increase in capital spending while oil approaches $94 (not to mention that Brent crude exceeds $112).

The company is an oil and natural gas exploration and production company focused on the Bakken and Anadarko areas.

The market remains very focused on reduced spending in the domestic energy production sector that any added spending is seen as negative. SandRidge Energy (SD) encountered this very problem the previous week. Though natural gas still struggles around $3, the market is missing that oil prices remain strong. Why wouldn't an oil exploration company attempt to produce more oil at these prices?

Read the full article at Seeking Alpha.


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




Tuesday, August 14, 2012

The Extrme Relative Value Of C&J Energy Services

After reporting earnings on Thursday morning, C&J Energy Services (CJES) fell sharply after initially jumping more than 5%. For some reason the market was disappointed with earnings that easily beat estimates and guidance of a significantly accretive acquisition.

The company is an oil services firm that focuses on hydraulic fracturing, coil tubing, and wireline services primarily in the Eagle Ford Shale and Permian basin.

As mentioned with the article on SodaStream (SODA) last week, the market appears fixated on certain stocks while allowing others to slide. C&J not only has the lowest multiple in the sector, but it also appears to have better operating results. Not only did the company mostly sidestep the natural gas issue by focusing on oily plays, it also has made attractive acquisitions. On top of that, it has mostly avoided the guar and sand issues that have plagued the other oil service companies.


Read the full article on Seeking Alpha.


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




Monday, August 13, 2012

Top 10 Net Payout Yields For August

This article is a continuation of a series highlighting the top net payout yield stocks that was started in June (see article) and repeated in July (see article). The series is meant to highlight the best stocks for the upcoming month so this report is clearly late. Though with the majority of the month left, it is still worth reviewing last month's results and the updated list as of data from August 10th.

Read the full article on Seeking Alpha.


Disclosure: Long all positions mentioned. Please review the disclaimer page for more details. 




Investment Report - August 2012: Net Payout Yields


This model was down 0.5% in July versus a 1.3% gain for the benchmark S&P 500. Oddly the model has fluctuated a lot in recent months with large cap stocks in the model moving up or down 10% on earnings reports. While typical of smaller companies this usually doesn’t happen in companies with market caps exceeding $10B.

Trades
As mentioned previously, one goal of this model is to slowly trim the amount of positions back closer to 20 after reaching 26  due to mergers and partial positions. Hence, the model sold the remaining holdings in Home Depot (HD) and added to existing small positions in Hartford Financial (HIG) and WellPoint (WLP).

Home Depot was unloaded as the stock finished a long run from October last year where the stock went from just over $30 to the selling price over $51. This considerable gain pushed the Net Payout Yield (NPY) down as the company dropped buybacks. Not to mention that competitor Lowes (LOW) remains a Top 5 holding.

The two purchases were of stocks with small positions in the model that needed to be added to or sold to reach the goal of reduced amount of holdings.

WellPoint consistently ranks in the top of any NPY reports with yields typically exceeding 15% and sometimes approaching 20%. Though the stock was added to in the low $60s after it plunged based on the Obamacare ruling, the timing was still off as it plunged even further to the lower $50s following a weak earnings report.

Hartford has been equally weak as well. The property and life insurance provider trades at roughly 35% of book value providing a unique opportunity as every buyback adds to book value.

These trades further highlight the benefits of a model that sells stocks after big runs and buys stocks after significant declines.

Bottom Performers
With a decent market in July, this model underperformed for two primary reasons: Lowes and WellPoint. Both companies had disappointing earnings outlooks that sent the stocks down considerably.  Odd for large cap stocks with market caps both over $18B, but conversely each company has a buyback and strong balance sheets that will benefit from the stock price drops.

As mentioned above, WellPoint was particularly weak again following a disappointing earnings report for Q2 2012.  This occurred after the weak June following the Supreme Court ruling upholding Obamacare. The stock fell over $10 during the month to end at $53.29. On top of that the stock was near $73 in the middle of June. Per the earnings report, the company expects to utilize $1.5B in the 2H of the year on repurchases and dividends. An incredible 8% return of capital to shareholders for a 6 month period.

Lowes dropped more than 10% in August as analysts continue to reduce analyst estimates for 2012 and 2013. The company is the 2nd largest home retailer behind Home Depot. It currently has an 11% NPY focused primarily on buybacks.

Top Performers
Several stocks in the model had a good month with retailers Gap (GPS) and Kohls (KSS) having the best months. In fact, the majority of stocks had positive returns for July, but with no stocks having outsized gains the losses from WellPoint and Lowes swamped the gains.

Dividends versus Buybacks
With a market hungry for yield, it has become increasing popular to own dividend paying stocks. Even to the point where dividend yields for certain sectors have been pushed down to multi year lows. With Treasury yields at all time lows, dividend stocks might not be in bubble territory yet though investors need to be careful.

This is where the concept of the NPY pays dividends (no pun intended). An investor isn’t restricted to either the dividend or buyback discipline like most funds that focus on these concepts. As dividends become more popular, those stocks gain and push yields down automatically forcing this model into more buyback stocks. In essence, the cheap and ignored stocks rise to the top of the list.

So while investors are busy chasing the 4.5% dividend yields on AT&T (T) and Verizon (VZ), this model is chasing the 20% yields on ConocoPhillips (COP), Kohls, and Goldman Sachs (GS).  Or grabbing similar dividends on Lorillard (LO) and Lockheed Martin (LMT) while also obtaining 8-10% buybacks. Signs that the latter stocks are much cheaper than the wireless giants loved by the markets. See our article on the subject here.

Conclusion
As speculated in the last couple of reports, as each day passes the market gets more and more comfortable with the ability to avoid a major financial collapse in Europe. As the market tires of the relentless headline risk that never comes to fruition, investors have been slowly moving out of cash into dividend stocks.

The main risk for domestic markets and stocks remains the fiscal cliff and pending election. Any inability to keep the markets calm regarding fiscal and tax issues in the US could lead to healthy losses. The most at risk stocks could be those of high dividend payers that have had an exceptional 19 month run. These stocks might face the headwinds of higher tax rates that pushed them down at the end of 2010.

Regardless of the markets, the average stock in this model yields greater than 10% with the majority of yields coming from buybacks. This provides huge support if the market turns weak again.


Disclosure: Long all positions mentioned. Please review the disclaimer page for more details. 




Saturday, August 11, 2012

A Cheap Nuance

Nuance Communications (NUAN) has long been known as the technology that powers the Siri voice recognition for the Apple (AAPL) iPhone. Now the company is moving into the mobile virtual assistant area with the new Nina app technology. With a flat stock performance, Siri has done very little for the stock price. Will Nina make shareholders happier?

The company is a leading provider of voice and language solutions for businesses and consumers around the world. Its technologies, applications, and services make the user experience more compelling by transforming the way people interact with devices and systems.

The company reported strong Q3 2012 results that handily beat estimates with earnings coming in ahead of the $0.40 analyst estimates by $0.05.

Read the full article at Seeking Alpha.


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



SodaStream Offers Favorable Relative Value

Prior to the open on Wednesday, SodaStream (SODA) posted earnings that handily beat analyst estimates and initially sent the stock soaring nearly 10% in pre market trading. Revenues soared 49% year-over-year and net income soared 43% from last year.

The company is a leading manufacturer of home beverage carbonation systems.

Even though the company also raised guidance, the stock ended the trading day in negative territory.

Read the full article at Seeking Alpha.


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




Thursday, August 9, 2012

Net Payout Yields Model Stats

Below are some of the stats provided by Covestor on our Net Payout Yields model. The performance of the model is 4.3% or 430 basis points above the S&P 500 over the last 21 months. Also note all of the risk metrics that are so crucial for investors to review. With the Beta below 1.0, this model is achieving a higher return while taking less risk.





The below chart shows the model's performance since January 1st, 2011. This removes the startup hiccups especially as the model quickly underperformed by 2% when it wasn't fully invested mainly caused by a timing issue. Potential investors can easily review the full data at Covestor, but you need to understand that the startup situation will not repeat with anybody investing directly via Stone Fox Capital or Covestor. Any funds directed towards this model will immediately be invested at the prevailing stock prices.




Please contact Covestor or us at info@stonefoxcapital.com for more information on investing.


Disclosure: Future performance is not guaranteed. Please review the disclaimer page for more details. 





What Mobile Monetization Problem?

After repeatedly hearing so many issues with monetizing mobile traffic from the likes of Facebook (FB), Millennial Media (MM) continues to report massive growth.

The company reported 75% revenue growth in Q2 2012. This number bodes well for Velti (VELT) owned in our models.

The CEO of MM went on CNBC this morning. Its worth a watch for anybody interested in the sector.




One of the most important take aways from this industry is that companies moving from a reliance on desktop supported ads for revenue to mobile is having a hard time matching those numbers. In cases such as Facebook, the company wasn't even ready for the transition to mobile by customers.

Another important distinction is that a major difference exists between a retailer advertising on mobile versus Facebook attempting to place ads on mobile devices. 

Companies such as MM and VELT sees gains from all the new traffic migrating to mobile. Anything is a net positive to them no matter whether it matches the old revenue ad levels or not. The market will soon figure out the difference between replacing legacy revenue with mobile and a business model focused completely on serving the mobile advertising sector.


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



Rackspace Hosting: Q2 Growth Not Fast Enough For Valuation

After the close on Tuesday, Rackspace Hosting (RAX) posted earnings that beat analyst estimates and sent the stock soaring over 11% in after hours trading. Revenues jumped 29% year-over-year and net income soared 43% from last year.

The company is a leading provider of public and private cloud and hybrid and dedicated hosting services. It delivers open technologies and powers more than 190,000 customers worldwide

Unfortunately though for a company with a market cap of $6.6B, it continues to report relatively low free cash flows. This quarter the total free cash flow was only $28.7M or just over $100M on a annualized basis.

Read the full article on Seeking Alpha.


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




Stratasys: Don't Ignore The Risks

The 3D printing market continues to remain hot as top competitors 3D Systems (DDD) and Stratasys (SSYS) again surged to new all time highs last week. The sector has been hot amid advancing capabilities of additive manufacturing via localized 3D printing even now affordable at home. On top of that, Stratasys reported results last week that helped boost the stock and the sector even more.

Stratasys is a leading manufacturer of 3D printers and production systems for prototyping and manufacturing applications. The company is set to complete the merger with Objet in Q3.

Previously a preview was completed of the earnings report for Stratasys. The research suggested that the company had a history of predictable earnings reports and that investors should expect a beat on earnings on August 1st.

Read the full article at Seeking Alpha.


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



Tuesday, August 7, 2012

Yelp Turns To Mobile, Though Monetization Questions Remain

After reporting earnings on Wednesday night, Yelp (YELP) soared nearly 20% over the next two trading days. Why did this social media play jump while so many others have been falling to lows?

The company connects people with great local businesses via more than 30M local reviews and approximately 78M unique visitors during Q2 2012.

The main reason for the surge is that Yelp reported stronger revenue numbers that led to a solid EBITDA beat. The company also successively talked about the potential of mobile monetization though the actual results were immaterial. In reality, the company appears to have the same issues as Facebook (FB) so far.

Read the full article at Seeking Alpha.


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



Market Approaching 4 Years Highs

Quick, how many people expected the stock market to surge towards multi year highs at the start of August? The very time period where the market nearly fell off the cliff last summer.

Even as the European issues continue to mount, it finally appears that the market has gotten past the never ending financial crisis. Not to mention that earnings report after earnings report provided solid numbers. Is the market finally able to focus on company specific events or will it be right back to the nuances in Europe as the Olympics end?

In fact, maybe the Olympics have only hidden the issues as the world focuses on sporting events instead of financial issues. Don't be surprised to see next week bring out some fear mongering stories.

For now, if your in the stock market just sit back and enjoy the gains while the average person is sitting on the sidelines watching stocks soar.

3 Year Chart - S&P 500






















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



Monday, August 6, 2012

SandRidge Energy Slammed By Higher Spending For No Good Reason

After reporting earnings on Thursday night, SandRidge Energy (SD) dropped 3% even as the market soared on Friday thanks to the bullish jobs report. For some reason the market was disappointed with a forecasted increase in capital spending while oil approaches $91.

The company is an oil and natural gas exploration and production company focused on the Mississippian, Permian Basin, and now Gulf of Mexico.

The market is very focused on reduced spending in the domestic natural gas sector that any added spending is seen as negative. Though natural gas still struggles around $3, the market is missing that oil remains strong. Why wouldn't an oil exploration company attempt to produce more oil at these prices?

Read the full article at Seeking Alpha.


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



Friday, August 3, 2012

Walter Energy: Down, But Not Out

After the market close on Wednesday, Walter Energy (WLT) reported earnings that beat estimates. The earnings this quarter were important considering the rapid decline of the stock over the last couple of months.

The company is a leading "pure-play" producer of metallurgical coal for the global steel industry with operations primarily in the U.S. and Canada.

The company reported a solid $0.43 from continuing operations compared to the $0.36 expected by analysts. Although production was up year-over-year, lower prices hurt earnings causing them to drop from last years $1.83.

Read the full article at Seeking Alpha.


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




Thursday, August 2, 2012

Phillips 66 Reports Solid Earnings, Limited Non-Refining Profits

Prior to the market open on Wednesday, Phillips 66 (PSX) reported earnings that smashed estimates. The earnings this quarter were more interesting than normal, as this was the first independent report for the company since splitting from ConocoPhillips (COP).

Following completion of this transaction, ConocoPhillips is now a leading refining and marketing (R&M), midstream, and chemicals company. Phillips 66's R&M operations include 15 refineries with a net crude oil capacity of 2.2 million barrels per day, 10,000 branded marketing outlets, and 15,000 miles of pipeline systems.

Read the full article at Seeking Alpha.


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



Surprising Free Cash Flow At Frontier Communications

With investors hungry for yield, should they jump into the very high 9.0% yield on Frontier Communications (FTR)? The answer might surprise you, considering the past of this long-suffering sector.

Having been an analyst in the telecommunications industry for 15 years, industry names such as Frontier, that focused on the wireline business, don't conjure up much excitement. Most wrote off those companies for the trash heap years ago.

A surprising thing happened on the way to total annihilation: the companies have been able to maintain a considerable amount of the wireline base while also dramatically reducing costs.

Read the full article at Seeking Alpha.


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




Wednesday, August 1, 2012

Did Green Dot Just Die?

After reporting earnings last Thursday night, Green Dot (GDOT) plunged over 60% during trading on Friday. So did the company just die?

The company provides widely distributed, low cost banking and payment solutions to a broad base of U.S. consumers. Green Dot's products and services include its market leading category of General Purpose Reloadable (GPR/) prepaid cards and its industry-leading cash transfer network which are available directly to consumers online and through a network of approximately 60,000 retail stores nationwide where 95% of Americans shop.

For the most part, the company provides the prepaid cards available at Wal-Mart (WMT). This program accounted for 62% of revenue during Q2. The biggest fear is that Green Dot will no longer dominate the market as larger players in the banking industry enter the sector in mass.

Read the full article at Seeking Alpha.


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