Showing posts from November, 2013

IB Net Payout Yields Model

Cleared For Takeoff

Interesting video from American Airlines (AAMRQ) uploaded to YouTube saying the merger is "cleared for takeoff". Anybody following this blog knows that Stone Fox Capital has been bullish on this merger with an investment in US Airways (LCC) . As the largest airline in the world, the new American Airlines Group (LCC ) should eventually claim the largest valuation as well. Disclosure: Long LCC. Please review the disclaimer page for more details. 

Seadrill Dividend Hike: Will the Stock Price Follow?

Seadrill Limited ( NYSE: SDRL     ) plunged over 6% when the company announced a quarterly dividend hike by $0.04 to $0.95, or 4.3%. Typically a dividend hike is greeted with positive stock returns, but in this case investors appear more concerned by other issues in the sector. Seadrill is a global leader in offshore drilling with a fleet of modern, high-specification rigs. The company is a serial deal maker with a 77.5% ownership of Seadrill Partners ( NYSE: SDLP     ) and a recent deal to acquire the majority of Sevan Drilling. The addition of Sevan during the quarter added operating costs that reduced the bottom line. Read the full article here . Disclosure: Long ATW. Please review the disclaimer page for more details. 

More Delays at Glue Mobile Sabotage a Great Deer Hunt

Glu Mobile ( NASDAQ: GLUU     ) shares were absolutely clobbered after the third-quarter earnings report that easily beat estimates. On top of the beat, the mobile game developer increased guidance for the fourth quarter that would typically send a stock soaring. Why was the market so unforgiving this time? The issue with Glu Mobile was twofold. The first issue was that investors had hyped up the release to the extent of expecting unreasonable guidance for the fourth quarter. The second issue and probably most concerning was the unexpected delay in the release of several titles forecasted to contribute highly to fourth-quarter numbers. Read the full article here . Disclosure: Long GLUU and ZNGA. Please review the disclaimer page for more details. 

Silver Bay Realty Growing NAV Despite High Expense Levels

Investors still aren't convinced that the single-family rental house market provides an investable opportunity, and for good reason. The cost for a corporation to build up a portfolio of rental houses, renovate them, and lease the properties continues to be expensive. Missed by the focus on cash flows, Silver Bay Realty Trust ( NYSE: SBY     ) continues to grow its net asset value (NAV) by seeing the valuation of its houses rebound. Fellow rental property owner American Homes 4 Rent ( NYSE: AMH     ) has seen similar stock weakness. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

3 Takeaways From Helmerich & Payne's Earnings

For investors who only read the earnings headlines, a ton of additional information can usually be gleaned by reading the details of the earnings report and comparing to competitors. For investors interested in the domestic land-drilling market, Helmerich & Payne ( NYSE: HP     ) happens to be one of the better providers of useful numbers. The driller had some encouraging signs on new rig orders and increasing rig revenue per day, but the numbers show more stability than growth. As with Patterson-UTI Energy ( NASDAQ: PTEN     ) and Nabors Industries ( NYSE: NBR     ) , the troubling sign continues to be that customers want the new rigs at the expense of idled rigs. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

3 Sprouts Farmers Market Numbers You Shouldn't Miss

Shareholders who only read the earnings headlines for the stocks they own are missing out: A ton of additional information can usually be gleaned from the related conference calls. For investors interested in the increasingly highly competitive fresh and organic market, Sprouts Farmer Market   ( NASDAQ: SFM     )  provided some solid numbers to digest during its recent third quarter. The organic chain, mostly located in the Southwest, has ample opportunities for a regional to national expansion plan. The stock, however, faces short-term pressure from a significant stock sale from its largest shareholder,  Apollo Global Management ( NYSE: APO     ). Additionally, mounting pressure continues to build in an industry that is becoming overly competitive based on reduced guidance from organic leader Whole Foods Market ( NASDAQ: WFM     ). Read the full article here . Disclosure: No position mentioned. Please review the disclaimer page for more details. 

3 Key Takeaways From Zillow's Earnings Call

Zillow ( NASDAQ: Z     ) is facing increasing pressure for the leadership position in the online real estate marketplace. The recent purchase of Market Leader by Trulia ( NYSE: TRLA     ) places it in a more comparable position based on revenue. Move ( NASDAQ: MOVE     ) continues to make long-needed enhancements to, but it has fallen far behind the monthly unique users, or MUUs, of Zillow and Trulia. The previous week's earnings call for Zillow provided several key numbers that suggest the leadership position isn't as much in question. While Trulia made a big step forward on the professional agent aspect of the business, it fell even further behind on traffic to its core sites. In addition, Move recently got approval to become more competitive via quicker updates to the primary website, but the consumer traffic levels suggest it might be too far behind to catch up. After all, President Obama chose Zillow to participate in a discussion on the

Why the Defense Sector's Yields Are Shrinking?

Though investors had every right to expect the defense sector to struggle over the last year, the way defense stocks Lockheed Martin ( NYSE: LMT     ), Northrop Grumman ( NYSE: NOC     ), and Raytheon ( NYSE: RTN     ) spent their precious shareholder capital sent other signals. Coming into 2012, these three businesses poured substantial amounts into share buybacks. In addition, all three pay solid dividends, providing astute investors signs that their ability to generate strong cash flows might have exceeded the market's expectations. Read the full article here . Disclosure: Long LMT and NOC. Please review the disclaimer page for more details. 

2 Stocks To Buy Using The Chipotle Example

After reviewing the top gainers in the S&P 500 since March 9, 2009 provided by Bespoke Investment Group, one stock really stuck out. Chipotle Mexican Grill ( CMG ) generated one of the largest gains at nearly 1,000% during that period. What really stood out is that Chipotle unlike other stocks on the list was considered a high quality company all along yet it presented several extreme-buying opportunities over those years. Using that same general concept of buying quality stocks on dips, a couple of top performing companies with huge opportunities really stick out. Both Yelp ( YELP ) and Zillow ( Z ) have very desirable, market leading models. The issue is that the stocks trade at high multiples that make the stocks difficult to purchase at the current levels. Following the Chipotle example, the market will provide several opportunities in the future to buy these stocks at lower multiples. The key is whether investors are prepared and ready to pounce when it occu

3 HomeAway Numbers You Shouldn't Miss

Investors often read only the earnings headlines, but a ton of useful information can usually be gleaned from the related conference calls. For those interested in the online travel industry, HomeAway ( NASDAQ: AWAY     ) provided some useful information on last week's earnings call on the developing marketplace for vacation rentals. The sector is starting to cross over into the traditional online travel industry with a pilot test with Expedia ( NASDAQ: EXPE     ) , and the company is starting to face tough competition from TripAdvisor ( NASDAQ: TRIP     ). Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

3 Important Numbers from the American-USAir Settlement

The surprising announcement on Nov. 12 that the Department of Justice, or DOJ, had agreed to a settlement allowing the merger of US Airways ( NYSE: LCC     ) and AMR Corporation ( NASDAQOTH: AAMRQ     ) to form the new American Airlines Group, with an expected close in December 2013. With this settlement in place and the merger proceeding, investors can now review three important numbers for the new American Airlines, which place the new company at very favorable multiples against industry leader  Delta Air Lines  ( NYSE: DAL     ) . Slot pairs manageable The DOJ agreement obliges US Airways and AMR Corp. to give up 52 slot pairs at Washington Reagan National Airport, or DCA, and 17 slot pairs at New York LaGuardia Airport, or LGA. The new American also has to divest two gates and related support facilities each at Boston Logan International Airport, Chicago O'Hare International Airport, Dallas Love Field, Los Angeles International Airport, and Miami Internatio

Riverbed Impacted By Government Shutdown

Typical of the quarterly reports over the last couple of years,  Riverbed Technology  ( NASDAQ: RVBD     )   easily surpassed earnings estimates. The concerning part for investors are that the WAN optimization specialists failed to meet revenue numbers. On top of that, the primary Steelhead product had virtually flat growth from the prior year. The application performance company is still busy wrapping up the integration of the OPNET acquisition from the end of last year. So far the deal isn't generating the revenue synergies expected, but that could be due to a staggering slowdown in government spending. The company obtains a large portion of revenue especially during the third quarter of the year so a rebound in government spending could benefit Riverbed more than most. Read the full article here . Disclosure: Long RVBD. Please review the disclaimer page for more details. 

Chegg: New Issue To Follow

The ability to revolutionize the education process in the US and maybe even the world could make the education technology sector an interesting sector in the next decade. Chegg (CHGG) started off as a textbook rental firm, but it is quickly moving to the digital world of making a platform for high school and college students. This is an interesting stock that Stone Fox Capital owns via an investment in GSV Capital (GSVC) that has it as a top 5 investment. Potential investors should listen to this interview with the CEO on CNBC this morning. Chegg has slumped some 20% from an IPO pricing above the range at $12.50. The market doesn't appear ready for the education tech sector and especially a stock losing tons of money. This company offers the future potential of being the financial and social platform for higher education students. Disclosure: Long GSVC. Please review the disclaimer page for more details. 

3 Clean Energy Numbers You Shouldn't Miss

For investors that only read the earnings headlines, a ton of additional information can usually be gleaned from the related conference calls. For those interested in the development of the natural gas transportation fuel market, Clean Energy Fuels ( NASDAQ: CLNE     ) happens to be one of the better providers of useful numbers. The leader in providing both CNG and LNG transportation fueling solutions in North America typically loads up the earnings call with numerous useful numbers. The numbers range from the development of the Cummins ( NYSE: CMI     ) – Westport ( NASDAQ: WPRT     ) engines to margins per gallon to trucking fleets transitioning to natural gas for fuel. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Nuverra: On the Cusp of a Rebound?

After yet another disappointing earnings report for Nuverra Environmental Solutions ( NYSE: NES     ), investors need to remain focused on the long-term picture. Sure the company announced plans for a reverse split, and reduced EBITDA brings debt covenants into question, but investors always need to keep cool and research all the facts. You can't deny that Nuverra has been a serial disappointer, on the path to becoming a complete environmental solutions provider to customers in the energy and industrial end-markets. The promise of providing environmental solutions for the dangerous materials produced by hydraulic fracturing once provided enormous potential. Read the full article here . Disclosure: Long NES. Please review the disclaimer page for more details. 

Weatherford Is Finally on Track for Success

After a few rocky years with major accounting issues regarding taxes and major losses from an Iraqi contract, Weatherford International ( NYSE: WFT     ) finally appears on a path to success. The oil services firm famously shifted headquarters to Switzerland back in 2009 to reduce taxes and ended up paying a higher effective tax rate, then ran into issues requiring a restatement of taxes. All of those issues led to a major slump in the stock as 2012 ended. In the latest quarter, the company showed improvements in operations with a focus on margins; the effective tax rate also dropped to an incredible low rate of 20%. Finally, Weatherford is on track and could achieve numbers comparable to other top oil service firms such as Halliburton ( NYSE: HAL     ) and Baker Hughes ( NYSE: BHI     ) . The inability

How Delta Air Lines and Lower Fuel Costs Could Equal Huge Returns

When reviewing the numbers of Delta Airlines ( NYSE: DAL     ) , you might be shocked that it's, well, an airline. The domestic airline with the largest market cap is starting to act like a real corporate citizen: paying down debt, paying a dividend, and actually buying back company stock. And amazingly, it's achieved this success despite stubbornly high oil prices. Just last year, Delta bought a refinery in an attempt to dramatically reduce the costs of jet fuel. What originally looked like a desperate, ill-conceived move has become almost an afterthought, with Delta and other airlines reporting strong profits despite the high price of fuel. Even bankrupt  AMR (NASDAQOTH: AAMRQ) and its prospective partner  US Airways ( NYSE: LCC     ) are generating huge gains, despite fuel costs and a merger blocked by the Department of Justice. Read the full article here . Disclosure: Long LCC. Please review the disclaimer page for more details. 

After a Juicy Sell, Is Fifth & Pacific Worth More?

Anybody following Fifth & Pacific ( NYSE: FNP     ) knows the stock trades based on the prospects of the fast-growing Kate Spade brand. Not surprisingly, the company recently unloaded the Juicy Couture brand to focus on further growing Kate Spade. The deal was for what appears to be a sizable discount, and Lucky Brands could be next. Will this streamlining of Fifth & Pacific into solely Kate Spade provide more value, or did management sell Juicy at a pittance to the detriment of long-term shareholders? Back in 2012, the three brands had roughly equal sales, but the success of Kate Spade offered greater potential. Also, the recent success and valuation of Michael Kors ( NYSE: KORS     ) and the past success of Coach ( NYSE: COH     ) encouraged a focus on Kate Spade. At the same time, though, both Juicy Couture and Lucky Brands provided the potential for major turnarounds. Unfortunately, as 2013 has progressed, the secondary brands haven't developed b

Sears Holdings: More Value Unlocking Transactions

Though Sears Holdings ( NASDAQ: SHLD     ) soared nearly 12% during the trading session last Tuesday on news of further transformational transactions to unlock value, investors shouldn't be surprised by the announcement. Sears is one of the largest retailers in the U.S., but most investors don't realize the numerous business units that are hidden under the surface. The media has mostly spun the plans for Lands End and Sears Auto Centers, or SAC, as "liquidation moves", but investors should note the proposals don't involve raising cash from these units. Read the article here . Disclosure: Long SHLD. Please review the disclaimer page for more details. 

Facebook: Bored Teens Surface In Full Force

As mentioned many times in the past, Facebook ( FB ) executives appeared in denial over the teen usage debate. Over and over the executives have claimed that teen usage and engagement continues to grow while every credible report suggests teens no longer favor the social network. Most of the debate probably stems from semantics of what counts as teen usage. Sure teens still use the site on possibly a monthly or even daily basis and possibly even more kids use the site as parents become more and more comfortable allowing them access to it. In that essence, Facebook might technically have been correct all along that teen usage remained strong. Evidence all along continues to suggest that teen engagement and interest in using the service continues to decline. Piper Jaffray again disclosed that the teen survey it conducts places Twitter ( TWTR ) and Instagram as favorites. In fact, the below chart showcases how Facebook popularity has plunged in the last year. Read the full

High Growth Furniture Stock With Catalysts

In general, most furniture manufacturing stocks peaked at least a decade ago. That is, until the recent housing rebound and reduced competition led to a rebound in the space. Sector leaders such as Bassett Furniture ( BSET ) and Hooker Furniture ( HOFT ) continue to see rising share prices, but both stocks remain considerably below all-time highs. Upstart manufacturer Nova Lifestyle ( OTC:STVS ) trades close to all-time highs after several acquisitions have helped push up revenues and profits. Even though furniture manufacturing has turned into a commodity business, most of these stocks are solidly profitable these days. Due to all of them having relatively small market capitalizations, none of these stocks obtains much in the way of analyst coverage either. With Nova Lifestyle, investors now have the opportunity to discover it before the market learns about it and its growth potential. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Plea

Westport: The Good, Bad, and Ugly

After another quarterly report, Westport Innovations ( WPRT ) had mixed results with good news for longs and bad news for shorts. Any investor checking back into the story after an absence should realize that since the last earnings release, the much-anticipated Cummins ( CMI ) - Westport , or CWI, joint venture's 400HP 12-liter engine hit production and the company completed a secondary offering to raise cash. The combination of news items sets the company up for positive results in the future. Unfortunately, the leader of natural gas engines didn't provide details on the earnings report that helped the stock, though it shouldn't be hurt that bad either. The lack of details regarding CWI growth and the continued focus on new development projects again left the investment community with concerns about profitability. Read the full article at Seeking Alpha. Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Are These 3 Stocks Buyout Targets?

Recently, analyst firm Jefferies  listed several retail stocks as top leverage buyout, or LBO, candidates. Basically, the analysts think the stocks have gotten so cheap that private equity will take them private via borrowing debt to restructure and hopefully create value. Jefferies thinks that Aeropostale ( NYSE: ARO     ) , American Eagle Outfitters ( NYSE: AEO     ) , and Body Central  provide interesting values with high internal rate of return, or IRR, and limited debt. The only problem is that the teen retail segment has become highly competitive, with numerous players that can easily compete online with cloud software tools and social media advertising. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Below the Surface at Carrizo Oil & Gas

With the recent run-up in Carrizo Oil & Gas ( NASDAQ: CRZO     ), you are probably wondering if the stock has any room for future gains. Balancing long-term potential and the risk of losing 100% in gains can be a difficult task. The company is a small exploration firm focused on the production of oil in the Eagle Ford Shale, Niobrara Shale, and natural gas in the Marcellus Shale. In addition, it recently completed the first well in the Utica Shale. Read the full article here . Disclosure: Long CRZO. Please review the disclaimer page for more details. 

Legacy Airlines Like the Look of Thanksgiving Ticket Prices

More signs of strong pricing discipline in the airline sector make the legacy stocks look worth pursuing. After well-documented decades of losses, the airlines appear more inclined to focus on profits than on passenger growth. Recently, both Orbitz ( NYSE: OWW     ) and Travelocity announced that Thanksgiving airfares were expected to be 7%-9% higher than fares from last year. This trend might not be welcome news to the people planning to fly over the holiday period, but it should be very encouraging news to airlines. Yet, online travel sites such as Orbitz might struggle if the higher fares push some travelers to seek alternative transportation. Read the full article here . Disclosure: Long LCC. Please review the disclaimer page for more details. 

Beautiful Chart - Alpha Natural Resources

Even after reporting further loses and weak pricing in the met coal market, Alpha Natural Resources (ANR) has formed a beautiful chart. Won't ever claim to be a technical expert, but this chart shows consolidation for a year and an eventual rise above the 200ema. When a stock starts breaking above the moving averages and the news isn't overly bullish, its a good sign that the momentum has turned in the stock. The sellers are done for the time being. Everybody needs to remember that Alpha Natural has very significant and valuable met coal assets. At this point, its just a matter of rationalizing supply and demand to get prices higher. These resources will be valuable again at some point. Disclosure: Long ANR. Please review the disclaimer page for more details. 

Huge Mobile Opportunity at Zynga

Another quarter and the user metrics at Zynga ( NASDAQ: ZNGA     ) continue to slump. The good news for the social game producer is that the company easily surpassed estimates on bookings and revenue, providing a level of comfort that the slide is coming to an end. The new CEO Don Mattrick hasn't so much produced new games as he has instilled confidence in the future. Last quarter, Don outlined enormous future growth on mobile platforms that unfortunately other public game producers aren't reaching either. Massive game publisher Electronic Arts ( NASDAQ: EA     ) and small developer Glu Mobile ( NASDAQ: GLUU     ) have both struggled to capture significant market share from the future platform of gaming. Read the full article here . Disclosure: Long ZNGA and GLUU. Please review the disclaimer page for more details.