Thursday, May 30, 2013

Seadrill Remains An Aggressive 8% Yielder To Own


Anybody following the offshore drilling market knows that CEO Fredrik Halvorsen of Seadrill Limited (SDRL) is an aggressive operator. Not only does the company pay substantial dividends unlike the competition, but it also continuously wheels and deals rigs, divisions, and subsidiaries.

The company is a leading offshore deepwater drilling expert with a fleet of drillships, jack-up rigs, and semi-submersible rigs operating in Northern Europe, U.S. Gulf of Mexico, Mexico, South America, West Africa, Middle East, and Southeast Asia. The company owns positions in numerous other drilling oil services firms including 75.7% of Seadrill Partners (SDLP) that alone is worth nearly $1 billion.

Read the full article at Seeking Alpha.


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



CenturyLink Defies The Critics With Buyback


Back on the Q113 earnings report, CenturyLink, Inc. (CTL) defied the critics by announcing that the company had already repurchased $682 million worth of stock through May 7, 2013. Remember the company had slashed the dividend back in February, in order to better allocate cash and implement a more flexible stock buyback plan (see Did CenturyLink Just Become A Gold Mine To New Investors?) Critics at the time suggested that the company would never actually repurchase shares.

The mega-cap stock plunged 26% that day, but it has since rebounded to nearly $38 from the lows below $32. The third-largest telecommunications provider in the U.S. has already provided savvy investors with a nearly 20% gain from those first-day lows not even counting dividends.

Read the full article at Seeking Alpha.


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




Tuesday, May 28, 2013

Can Delta Air Lines Really Return $1 Billion to Shareholders?


One of the biggest surprises this month had to be the announcement by Delta Air Lines (NYSE: DAL) that it planned to return as much as $1 billion to shareholders over the next three years. How could it be possible that one of the worst industries around is now able to return cash to shareholders?

The airline sector has seen a major shift towards profitability after the financial crisis forced more »


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



Monday, May 27, 2013

No Bargains in Wi-Fi Solutions Providers


After recent weakness in the Wi-Fi solutions providers, do any of the stocks provide bargains now? Both Aruba Networks (NASDAQ: ARUN) and Ruckus Wireless (NYSE: RKUS) have been absolutely crushed recently while Ubiquiti Networks (NASDAQ: UBNT) has been the lone winner in the sector. One big question is whether the big boy in wireless network gear, Cisco Systems has returned to reclaim market share in the sector.

Through most of more »


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



Williams: Struggling Now But Opportunities Abound


Williams Companies (WMB) has consistently missed earnings estimates over the last year, but the company has a ton of growth opportunities in the decade ahead. The company has been hit with lower natural gas liquids (NGL) margins and Ethane rejections along with higher natural gas prices.

Williams has one of the leading energy infrastructures in North America. It owns interests in, or operates, 15,000 miles of interstate gas pipelines, 1,000 miles of NGL transportation pipelines, and more than 10,000 miles of oil and gas gathering pipelines. It owns more than 70% of Williams Partners L.P. (WPZ), one of the largest diversified energy master limited partnerships.

Read the full article at Seeking Alpha.


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



Saturday, May 25, 2013

Some Good Trends At Pandora Media


After the close on Thursday, Pandora Media (P) reported some encouraging trends that sparked the stock higher in after-hours trading. The company though continues to lose money questioning the validity of any rally on whether meaningful profits will ever be produced.

The company is a leader in custom-radio internet services.

Even with competitors such as Google (GOOG) venturing into the online radio market, Pandora continues to trade towards the all-time highs around $20 back after the IPO in the summer of 2011. The question is whether this service has a profitable future.

Read the full article at Seeking Alpha.


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



Disagreeing With Analysts On SodaStream


Now that SodaStream (SODA) has finally regained some interest from the market, the analyst community can't wait to downgrade the stock. The company continues to under promise and over deliver with results beating expectations quarter after quarter. The stock though recently stalled at $65 or only roughly 20x this year's "real" earnings estimates.

The company is a leading manufacturer of home beverage carbonation systems sold at major retailers around the world with a primary target on growing in the Americas where soda usage is significantly higher than in Western Europe.

The stock has historically traded at sub-growth rate multiples for various reasons whether from the company reporting in Euros or the current focus away from adjusted earnings. The question is whether the stock will reach multiples compared to its historical and forecasted growth rates or will it remain at a cheap valuation that appears crazy.

Read the full article at Seeking Alpha.


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





Friday, May 24, 2013

Amazing Upside Left at Ocwen Financial


While the market remains focused on chasing every business run by Elon Musk, it continues to ignore huge cash flow generators such as Ocwen Financial (NYSE: OCN). The company grew revenue by 147% during the first quarter of 2013 yet all indications are that the pipeline is loaded with further growth.

The mortgage servicing sector has become a very profitable business since the financial crisis as large banks have sold more »


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




Is Now The Time For Alpha Natural Resources?


Though coal could not be more hated and analysts expect years of losses at Alpha Natural Resources (ANR), this might actually be the time for the stock. As written last month (see Is The Coal Supercycle Back?), the coal super cycle could be intact so investors need to keep an eye on this sector.

The world's third-leading producer of metallurgical coal faces a tough road ahead due to pricing impacted by structural changes for CAPP thermal coal and weak global demand for metallurgical coal. As with any commodity, the market can be very cyclical and volatile providing opportunities to invest at periods of severe weakness.

The company has been in a continuous restructuring mode for several years now allowing it to dramatically reduce costs for the next up cycle. Now might be the time to move back into Alpha Natural.

Read the full article at Seeking Alpha.


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



Thursday, May 23, 2013

Covestor Content On The Street

Always a good sign to see your work now listed on a website such as theStreet.com. This months monthly investment report for the Net Payout Yields model made it. See here.




Stratasys Impresses But Revenue Growth Needs Improvement


For such a hot sector, the 3D printing leaders are showing surprisingly low organic growth. Leader 3D Systems (DDD) reported only 22.1% organic growth for the latest quarter while Stratasys Ltd (SSYS) only managed 18% after merging with Objet. Those aren't exactly the growth rates expected of stocks with forward earnings multiples of over 35x estimates. The sector is very profitable and has huge potential, but several other sectors have higher growth rates.

For 3D Systems, the revenue growth numbers are even worse if you look at the revenue per share. That number only increased 9% year-over-year to $1.11 from $1.02 due to a higher share count. For an acquisitive company, this calculation takes out the impact of shares issued and such similar to earnings per share. For any shareholder, the more important fact isn't the actual top and bottom line growth, but the total growth per share.

Read the full article at Seeking Alpha.


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



Monday, May 20, 2013

Shocking Results At ExOne


As warned back after the massive IPO gains, ExOne Company (XONE) was set up for a potentially rocky public market experience. The company only reported $28.7 million in revenue for all of 2012 and had a limited experience of actually selling 3D printers.

The 3D industrial printer company focuses on manufacturing and selling 3D printing machines in fact didn't even sell a machine in Q1 of 2012.

The stock surged to $49 prior to the earnings report after initially pricing the offering at $18 providing those initial investors with over a 170% gain in roughly four months. The Q113 numbers though were shockingly disappointing as the company yet again missed estimates blaming European weakness.

Read the full article at Seeking Alpha.


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




Friday, May 17, 2013

What's Holding Up Equinix?


After the 50% plunge in Rackspace Hosting (NYSE: RAX), one has to wonder what is holding Equinix (NASDAQ: EQIX) up near all-time highs. The stock has shown some fatigue since the Rackspace disappointment, but it appears now set for a test of the recent highs over the $230 level. Not a scenario suggestive of a stock on the verge of a plunge.

A leader in the data collocation field, Equinix more »


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




Thursday, May 16, 2013

Net Payout Yield Model - 20% Annualized Returns

Our Net Payout Yields model managed on the Covestor platform has now reached annualized returns of over 20%. All while the the Beta is only 0.90 even with the fund fully invested since inception back on 11/2/10.


Covestor Performance Table


The combination of strong buybacks and high dividends provides for a strong investment thesis.

Please contact us directly at info@stonefoxcapital.com or Covestor directly to invest.



Disclosure: Please review the disclaimer page for more details. 



Wednesday, May 15, 2013

Green Dot: Shaking Off the Competition


The summary of the Green Dot (NYSE: GDOT) Q1 2013 earnings report had to be that the company was shaking off the increased competition in the prepaid debit card arena. The long-term market leader famously plunged 50%% back in July of last year after forecasting that earnings would be greatly impacted by increased competition primarily from the Bluebird Card via American Express (NYSE: AMX) at Wal-Mart stores.

Ironically, the leading more »


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



Zillow Is Worth How Much?

As a leader in the real estate online market place, investors might be shocked that Zillow (NASDAQ: Z) is only worth $1.8 billion. The website has long been a go-to place to review houses for sale and home values, yet the level of revenue and market value might surprise investors. In fact, this investor regularly used the website back before the financial crisis in an era before Facebook and more »


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



Tuesday, May 14, 2013

Prospect Capital: Record Originations Lack Income Punch


While Prospect Capital Corporation (PSEC) continues to report record originations, the company is failing to pull those numbers to the net investment income (NII) line. Not only did the last quarter show essentially flat NII, but also it occurred on a substantially higher share base.

Prospect Capital is a leading provider of flexible private debt and equity capital to sponsor-owned and non-sponsor-owned middle market companies in the United States and Canada. It trades as a closed-end investment company that has elected to be treated as a business development company (BDC) under the Investment Company Act of 1940.

Read the full article at Seeking Alpha.


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



Is This the Biggest Threat to the Major Airlines?


All of the benefits of consolidation undertaken by the major airlines to create three behemoths could unravel if new competitive threats enter the market. After decades of losses, new airlines entering the industry don’t appear as likely a threat as some of the established, more regional players aggressively expanding to fill the voids created by the mergers.

Enter Spirit Airlines (NASDAQ: SAVE) as possibly the biggest threat to the more »


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



Lots to Like at Trulia Except the Stock Price


After the market close on Tuesday, Trulia (NYSE: TRLA) reported results that missed analyst estimates. The stock though jumped after hours based on the rapid revenue growth and guidance.

The online marketplace for real estate has been on a tear of late and the latest news apparently didn’t disappoint those stockholders. Are investors overly excited about the prospects of a stock trading at nearly 10 times revenue estimates that more »


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




Monday, May 13, 2013

Has The Future Changed That Much For Tesla Motors?


After the close on Wednesday, Tesla Motors, Inc. (TSLA) reported a surprising profit beat for Q113 that sent the stock soaring in the two trading days after the report. The stock that closed Wednesday regular trading at $55.79 soared to touch $81 on Friday. Did the earnings news, while encouraging considering the history of missing earnings estimates, actually change the direction of the profit picture for the company?

The leading developer of electric vehicles has been on a roll in the last couple of months with the stock soaring from $35 in mid-March to gain more than 130% by mid-day Friday. The bullish move all started when CEO Elon Musk famously tweeted about a profitable quarter and the stock has exploded ever since that day.

Read the full article at Seeking Alpha.


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





Clean Energy Turns Profits Into Stock Losses


After the close on Wednesday, Clean Energy Fuels Corp. (CLNE) reported a surprising profit for Q113 that sent the stock soaring in after hours trading. By the time the market opened on Thursday, the stock opened down and eventually lost 4.3% for the day. As investors quickly found out from reading the details, the profits only occurred due to the collection of $20.8 million of VTEC revenues for all of 2012 that the company didn't exclude from the non-GAAP numbers.

Per the company, it is the largest provider of natural gas fuel for transportation in North America and a global leader in the expanding natural gas vehicle fueling market. Unfortunately though, that market isn't building out nearly fast enough to make this company profitable. The margins remain razor thin as Clean Energy is forced to pass along all the costs savings of using natural gas to the customers.

The profits and positive EBITDA though alluded to by the company all through the report didn't sit well with investors that quickly deducted the $20.8 million VTEC revenue from 2012 for all of the Q1 numbers. The numbers quickly turned back into the losses alluded to in a previous article (see As Predicted, Larger Losses At Clean Energy Fuels).

Read the full article at Seeking Alpha.


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




Saturday, May 11, 2013

Nuance Hit By Shift To 'On Demand' Services


As with any company that offers software services, the ongoing shift to the cloud and on-demand services has been disruptive to revenues and profits in the short-term. The issue previously impacted Adobe Systems (ADBE) and Intuit (INTU) and now Nuance Communications, Inc. (NUAN) has been greatly impacted by the shift.

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.

Read the full article at Seeking Alpha.


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



Wednesday, May 8, 2013

Investment Report: Net Payout Yields Model - May 2013


This model was up 3.4% in April versus a 1.8% gain for the benchmark S&P 500. The model out performed the market in April to build onto a solid start from the first quarter of 2013. As of the end of April, the model was up nearly 15.1% for the year compared to 12.0% for the S&P 500.  

In general, the model remains very uneventful with only one trade for the month.

Bottom Performers
Since the model had a strong month, only a couple of stocks had a negative return for April. The weakest stock was Motorola Solutions (MSI) with a loss of over 10%. Only a few other stocks even posted a loss and none of those are worth mentioning.

Motorola Solutions reported a weak quarterly report that sent the stock down significantly. The theory of the model doesn’t care about the fundamentals of the company so the key will be whether the management team continues to buyback stock and pay dividends. With a dividend yield of only 1.8%, the key with this stock will be future stock buybacks. Considering the company bought $357 million worth of stock during Q1 2013, Motorola Solutions remains on a solid inclusion in the model.

Top Performers
The majority of stocks had good months considering the strong market returns in April. The biggest gains came from WellPoint (WLP), Hartford Financial (HIG), Northrop Grumman (NOC), and Vodafone (VOD). All of the stocks had gains of nearly 8% or more.

WellPoint jumped in April after a convincing earnings beat sent the stock soaring 10%. The company only pays a 2% dividend so whether it continues to repurchase shares, as the stock races higher will be telling.

Hartford gained 9% as the company starts buying back shares at a considerable reduction to Net Asset Value. The company pays a 1.4% dividend so further buybacks will be key.

As with WellPoint, Northrop gained 8% as it reported earnings for Q1 that easily surpassed analyst estimates. Considering the company still pays a 3% dividend, stock buybacks won’t be as important to keeping the stock in the model.

Vodafone gained nearly 8% as the rumors continue to swirl that Verizon (VZ) is in the process of working out a deal to buy out the 45% of Verizon Wireless owned by Vodafone for up to $130B. Such a windfall could allow the company to return more capital to shareholders and invest in beaten down European and Emerging Market assets on the cheap.

Trades

The only trade for the month was the purchase of CenturyLink (CTL) for around $35 after the stock cratered following a decision to cut the dividend and buyback stock with the savings. Even with the dividend slashed, the yield approaches 6% with the stock up to $37 now. This quick move is rare for this model, as typically the stock would need to initiate the buyback to a significant scale in order to elicit a purchase. In this case, the stock offered too compelling of a value after the large selloff.

Conclusion
With all of the fears regarding Europe and domestic debt waning, the market continues to hit all-time highs. Naturally the search for yield has sent the high net payout yield stocks to higher and higher levels. With fixed income yields so low, investors are likely to continue this trend all year and as with any trend it will continue until it doesn’t. Investors that disagree with the prices should slowly rotate out of the stocks that have huge gains, but fighting the trend is not suggested.

Even as the market continues increasing, the model rotates out of the winners and into stocks such as CenturyLink that underperformed. This non-emotional basis of investing provides for superior returns as typical investors keep winning stocks too long allowing gains to eventually slip away.



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

Top 10 Net Payout Yield Stocks For May 2013


This article is a continuation of a monthly series highlighting the top net payout yield stocks that was started back in June, 2012 (see article). The series highlights the best stocks for the upcoming month. Please review the original article for more information on the net payout yield concept.

April Returns
Below are two charts highlighting the monthly returns of the top 10 stocks from April (see list here). Due to limitations with YCharts, the chart was broken into the Top Five and Next Five lists.

The Top Five stocks had a disappointing month after a strong April. American International Group (AIG) and Kohl's (KSS) had solid gains for the month that easily beat the 2.4% gain of the S&P 500. Both Seagate Technology (STX) and DirecTV (DTV) performed ok with flat results for the month. The biggest problem was that Motorola Solutions (MSI) plunged 10.2% after an earnings warning.

Read the full article at Seeking Alpha.


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



Tuesday, May 7, 2013

SodaStream CEO On Bloomberg

Great interview on Bloomberg with the SodaStream (SODA) CEO Daniel Birnbaum. While the interview talks about a ton of growth at SOD, the title is very intriguing suggesting that the company is ok with eroding profits for growth. The CEO was very clear that any profit erosion was very minimal in order to service huge growth.






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


Monday, May 6, 2013

Is Facebook In Denial?


Every research firm and data analysis over the last couple of months suggested that Facebook (FB) is losing users especially amongst the younger generation. Reading the Q113 earnings call transcript, one gets the impression that the company has unlimited user growth ahead and no issue with the teen crowd. Why does such a dramatic dichotomy exist in the market?

While Facebook remains the dominant leader in social media, sources from Piper Jaffray analyst Gene Munster to SocialBakers suggests that the younger generation and especially teens are quickly moving on from the site to Twitter or other social outlets. The company is desperately attempting to address the issue via numerous new products that aren't attracting enough revenue to exceed the cost of the products.

Read the full article at Seeking Alpha.


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



After the Selloff is The Fresh Market a Value Now?


At the end of 2012, The Fresh Market (NASDAQ: TFM) could do no wrong as the stock traded at $62 with a lofty forward PE in the 30s. The stock had doubled in a 12-month period from the lows in August 2011.

Back in January the stock sprung a leak on weak earnings and our research suggested that investors tread lightly. The fast growing fresh foods retailer traded at a more »


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



Baidu: Investing For The Future

A common theory in the technology world is the concept of investing for the future. Typically, these phases take place prior to a company going public, but lately several large-cap techs have started campaigns to dramatically increase expenses to capture mobile growth. Ironically, the market has chosen to punish one stock while giving the other a big pass. Not to mention, the mobile transition has been a constant profit disruption to most major firms, as the initial traffic flows don't offset the lower monetization levels.

Over the last couple of weeks, both Baidu (BIDU) and Facebook (FB) have reported that margins were greatly impacted by ramped up spending for mobile. The only difference is that Facebook continues heading to recent highs while Baidu languishes at multi-year lows, appearing as if the stock might head much lower.

Read the full article at Seeking Alpha.


Disclosure: Long BIDU. Please review the disclaimer page. 




Sunday, May 5, 2013

InvenSense: Growth At An Incredible Price


InvenSense (INVN) has remained an incredible technology firm with huge upside potential since its IPO back in 2011. Yet the stock trades near the IPO pricing as the company has had to continuously throttle back expectations including the guidance for Q1 2014 provided on the earnings call.

As pointed out in previous articles, the maker of motion sensing technology had tons of potential held back by the inability to correctly forecast the growth potential. Prior to earnings Thursday night, the stock traded at roughly 12x this year's earnings expectation yet the company just completed a year of over 100% growth. Even after a huge gain following the strong outlook for fiscal 2014, the stock might offer the most incredible price in the market.

Read the full article at Seeking Alpha.


Disclosure: Long INVN and AAPL. Please read the disclaimer page for more details. 




Thursday, May 2, 2013

Dive Into Mobile Video

Great discussion on mobile advertising. Long video but worth watching if your interested in the mobile ad sector such as Google (GOOG) and Millennial Media (MM).




For those paying attention, Millennial Media trades near all time lows yet there the ones involved in a discussion with Google.


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