Monday, March 31, 2014

Energy XXI: Buying Accretive Growth Whether the Market Likes It or Not


A couple of weeks ago, Energy XXI (NASDAQ: EXXI  ) bought EPL Oil & Gas (NYSE: EPL  ) in an accretive deal that initially sent the stock down. The stock has recovered to pre-announcement levels, but the deal suggests a more premium pricing for the stock is due, instead of scraping along the bottom near three-year lows.

Energy XXI is a leading oil and natural gas production firm on the Gulf of Mexico shelf. The company has a history of growing via acquiring and exploiting the assets for increased production and reserves. The oil-heavy producer continues to expand reserves and significantly repurchase shares below net asset value, or NAV.

Read the full article here.


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



Sunday, March 30, 2014

Sears Holdings Is Unlocking More Value With Lands' End Spinoff


The transformation of Sears Holdings (NASDAQ: SHLD  ) continues to progress with the recent news that the spin off of Lands' End will occur on April 4. The company will trade on the Nasdaq under the ticker symbol "LE."

The move has long been speculated by investors who have been awaiting Sears Holdings' divestment of non-core retail operations stuck within the giant conglomerate. Based on Lands' End's recent results, it appears that this move isn't happening soon enough. While many investors fret over Sears unloading a profitable business unit, the stalled growth at Lands' End suggests the retailer needs to regain its own identity and capital structure to prosper.

Read the full article here.


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




Friday, March 28, 2014

Overstock.com And Bitcoin Shop Offer Virtual Currency First-Mover Advantages


Summary
  • Bitcoin troubles haven't dented virtual currency demand.
  • Overstock.com Bitcoin sales have exceeded estimates.
  • Solution providers need to provide payment options for multiple virtual currencies.
With the bankruptcy filing of Bitcoin exchange Mt. Gox and potential loss of 850,000 bitcoins worth nearly $500 million, the Bitcoin market got a rude awakening to the risks involved in virtual currencies. On top of that, the supposed founder of the Bitcoin was identified and failed to back up those claims, leaving investors unsure of the origins of the concept. The shroud of secrecy and fraud isn't helpful for the development of the cryptocurrency.

Read the full article at Seeking Alpha.


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



Thursday, March 27, 2014

Cramer Thinks American Airlines Goes Much Higher

With the stock getting hit today, it's worth a refresher on the valuation of American Airlines (AAL). Sure the stock has jumped from $24 to $36 since the merger with U.S. Airways was competed back in December, but the new airline expects to make nearly $6 next year. With the stock trading at only 6x earnings expectations, it still trades like the old airlines that faced extreme competition and wouldn't have been this profitable in the first place. Why shouldn't a healthy industry trade at a multiple of 10x earnings, at least?

The only disagreement is that Cramer says the deal shouldn't have been approved, but I tend to disagree. The U.S. needs a healthy airline industry in order to update facilities and expand and the only way this is possible was via consolidation. The country now has 3 legacy airlines along with a very strong Southwest Airlines (LUV). Cramer might be correct about several routes lacking competition, but the discount airlines will work over the next few years to correct that. Some displacements in the short-term shouldn't alter the need for strong airlines.





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

Tuesday, March 25, 2014

Big Developments Make Rice Energy 1 to Watch


The recent IPO of Rice Energy (NYSE: RICE  ) brought investors an exploration and production firm with substantial growth in the Marcellus shale. With all of the hype recently on cloud software and biotech stocks, the company hasn't gotten the deserved attention.

Rice Energy is a unique energy firm that claims to be the first of the shale generation with the youngest management team in the industry. The company has a highly concentrated acreage position in the core areas of the Marcellus and Utica.


Read the full article here.


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



MasterCard Is Losing Momentum


Summary
  • MasterCard has lost momentum after several years of substantial gains.
  • High operating margins are attracting competitive threats.
  • Virtual currencies offer lower costs.
Back in January, Stone Fox Capital warned that the MasterCard Incorporated (MA) stock split could signal a top in the stock. The company followed up the split with an earnings miss that further hit the stock. Suddenly, a stock that had ridden an uptrend for several years faces the reality that a bullish trend doesn't mean a never ending stock gain.

MasterCard is the second largest payment processing network behind Visa (V). The company connects consumers, financial institutions, merchants, and businesses in more than 210 countries around the globe. Even after the recent stock weakness, MasterCard is still worth around $90 billion.

Read the full article at Seeking Alpha.


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



Saturday, March 22, 2014

Investors Are Missing the Big Opportunity with GSV Capital Corp.


After reporting that net asset value, or NAV, jumped to nearly $15, why would the stock of GSV Capital Corp. (NASDAQ: GSVC  ) plunge nearly 10% to below $12?

GSV Capital is a business development corporation that invests in pre-IPO, venture-backed firms. The company has a portfolio of nearly 50 investments with a focus on social media, education tech, and big data. The investment firm competes in the industry against Firsthand Technology Value Fund (NASDAQ: SVVC  ) and other venture firms for the investment positions and investor dollars. The goal of the two funds is to provide regular investors the opportunity to participate in the pre-IPO markets.

Read the full article here.


Disclosure: Long GSVC. Please review the disclaimer for more details. 



Walter Energy: Avoid on Debt Concerns


With Bank of America issuing a negative report on metallurgical coal, Walter Energy (NYSE: WLT  ) slumped 20% on the news. The analyst was also bearish on other met coal producers including Alpha Natural Resources (NYSE: ANR  ) and Arch Coal (NYSE: ACI  ) . Typically a beaten down stock would grab some interest in the market, but in the case of Walter Energy, recent debt financings and weak prices for met coal make it questionable whether the stock will rebound.

Walter Energy is the largest pure play, met coal miner in North America with operations primarily in Alabama and Canada. The stock was a poster child for the booming commodity sector back in 2011 when it soared to over $140 on relentless demand from China. Now, the stock has a prominent firm placing a $2 target on the stock.

Read the full article here.


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

Wednesday, March 19, 2014

Freeport-McMoRan Can't Overcome China Weakness


While signs existed last week that Freeport-McMoRan Copper & Gold (NYSE: FCX  ) was close to a resolution in Indonesia, the stock is going to have a much harder time overcoming the plunging copper prices due to China. As with most commodities, China is the engine that drives demand and ultimately pricing of copper. In the last few years, the Asian power has grown to account for roughly 40% of copper demand worldwide.

Freeport-McMoRan is a leading global mining company with interests in copper, gold, and oil. The miner has a mix of mines throughout North America, South America, the Democratic Republic of Congo, and Indonesia. The mix of commodities and geographic locations helps it overcome political issues in any particular country, but the one thing the company won't overcome is plunging copper prices due to weak demand in China.

Read the full article here.


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



Did Zillow Just Wrap up Industry Dominance?


The real estate market needs a destination site on a domestic and possibly global basis, and that's what makes Zillow (NASDAQ: Z  ) such an interesting investment prospect. The top online real estate marketplace could eventually rival the valuations of a LinkedIn or Priceline.com, which average more than $40 billion now.

The biggest issue in the real estate sector continues to be the lack of a comprehensive solution that incorporates all houses listed for sale. Several listing networks limit real estate listings to internal networks, hence the reason for the Trulia (NYSE: TRLA  ) purchase of Market Leader. The other threat has been Move, (NASDAQ: MOVE  ) which runs Realtor.com. But both of those situations involve operating under the influence of Realtors instead of home buyers who want an independent website to view.


Read the full article here.


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





Tuesday, March 18, 2014

Windstream: Stop Focusing On The Dividend Yield


Summary
  • Investors should focus on the solid free cash flow.
  • 12% dividend is abnormally high due to investor fear.
  • Company should consider a more flexible capital allocation strategy.
The typical investor interest in Windstream (WIN) centers on whether the company can continue paying out a $1 annual dividend that equals a 12% yield. The bizarre focus on what the company pays out to shareholders has investors looking in the wrong direction.

Windstream is a provider of advanced network communications to businesses and consumers primarily in suburban and rural areas. The company continues to transition from legacy voice consumer services to more advanced cloud computing, managed services, broadband, and digital TV services.

Read the full article at Seeking Alpha.


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




Monday, March 17, 2014

Transocean Ltd. Faces a Daunting Contract Book


The debate over the current slowdown in the deepwater market covers a wide range of opinion regarding the duration and impact. Regardless of an investor's ultimate opinion, the offshore drilling sector always faces cyclical troughs and peaks. The key is the ability of the driller to take advantage of weakness and thrive during the following rebound.

In the case of Transocean (NYSE: RIG  ), the company is the largest deepwater driller with 79 rigs in total and 46 of those listed as either deepwater, ultra-deepwater, or harsh environment. The deepwater specialist is now facing a bifurcated market that it is quickly finding itself on the wrong side of the contract ledger. On top of that, Carl Icahn is pressing the company for changes, but his actions can't fight industry momentum. Idled rigs in a weak market might is never a good thing, but will the stock continue to plunge?

Read the full article here.


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



Friday, March 14, 2014

Buy These Domestic Oil Services Firms


Several trends are colliding to make 2014 likely a lucrative one for investors in domestic oil services firms. First, natural gas inventories have plunged 40% below five-year averages. Second, domestic drilling rig counts are starting to move up. Third, there has been a pullback in deepwater capital budgets despite high oil prices. All of these scenarios set up the need for increasing domestic drilling budgets, at least short-term.

Despite the bullish trends and the bull market in stocks, a lot of the domestic oil service stocks trade below levels of the 2011 peaks. The firms of intrigue include: C&J Energy Services (NYSE: CJES  ), Baker Hughes (NYSE: BHI  ), and even lowly Key Energy Services (NYSE: KEG  ).

Read the full article here.


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



Thursday, March 13, 2014

Pioneer Natural Resources: What's Not to Like But The Price?


Over the last couple of years, Pioneer Natural Resources  (NYSE: PXD  ) has quickly developed into an oil major with a massive reserve base in the Permian Basin. Unfortunately, the company has garnered a stock valuation that equally matches the potential for production growth. At $28 billion, the stock now trades for seven times expected 2014 revenue.

After the divestiture of Alaska and Barnett shale assets, Pioneer Natural Resources is now focused on developing the Permian Basin and Eagle Ford Shale acreage with a net recoverable reserve potential of more than 10 billion barrels of oil equivalent.

Read the full article here.


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




Key Takeaways From Nuverra Environmental Solutions Inc's Earnings


Nuverra Environmental Solutions (NYSE: NES  ) plunged 15% this week following the fourth-quarter earnings report. Though the company tends to disappoint investors with missing guidance or reducing numbers going forward, this quarter had the hint of something different. This time it appears that investors had concerns about the potential of higher capital expenditures and the sales price for the Thermo Fluids assets.

The company is an environmental solutions provider to customers in the energy and industrial end-markets.

Read the full article here.


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




Wednesday, March 12, 2014

Top 10 Net Payout Yield Stocks For March 2014


Summary
  • List of top net payout yield stocks for March.
  • Reviews returns from the February list.
  • Discusses the benefits of net payout yields.
This article is a continuation of a monthly series highlighting the top net payout yield (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. Please review the original articles for more information on the NPY concept.

February Returns
Below are two charts highlighting the monthly returns of the top ten stocks from February (see list here). Due to limitations with YCharts, the chart was broken into the Top 5 and Next 5 lists.

Read the full article on Seeking Alpha.


Disclosure: Long CTL, DTV, HAL, MSI, NLY, NOC, and T. Please review the disclaimer page for more details. 




American Airlines: Surviving The Polar Vortex


In the monthly release of traffic data, American Airlines Group (AAL) reported solid February results despite a brutal winter. In the past, a bad weather would've sent the airline industry into a tailspin, but this isn't your fathers airline industry anymore.

American Airlines Group is a massive airline after merging American Airlines and US Airways back in December. The combination hasn't skipped a beat even in the face of extreme weather that could've disrupted or even crippled operations of a badly operated airline.

Read the full article on Seeking Alpha.


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



Tuesday, March 11, 2014

Zynga Inc: Hidden Progress


Recent large gains by Zynga, (NASDAQ: ZNGA  )  highlight the benefits of long-term investing around a concept or management team. The struggling social game maker was languishing, until it hired a new CEO with extensive industry experience. Ironically, a month after the hiring of Don Mattrick you could've bought the stock for around $2.75, or roughly the same price the stock traded prior to the announcement.

Mattrick experience includes building up Electronic Arts (NASDAQ: EA  ) and he was considered the architect of the Xbox at Microsoft. Following solid quarterly numbers, the stock plunged on angst that Mattrick wasn't making any progress. Outside of a proclamation that the company would double down its focus on social games, the new management team left analysts with limited details on new game development. It also had some wondering how it would allocate its $1.5 billion cash balance.

Read the full article here.


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



Freeport-McMoRan Copper & Gold Inc: Wrapping Up the Indonesia Issue


By all accounts, it appears that Freeport-McMoRan Copper & Gold (NYSE: FCX  ) is wrapping up any lingering issues with the Indonesian government. The stock fell more than $7 back in January on a decree by the government to impose a heavy export duty on unprocessed materials, including copper and gold.

Freeport-McMoRan is a leading copper producer with global operations, though the largest mine is located in the Grasberg mining complex in Indonesia. Similar to Newmont Mining (NYSE: NEM  ), the stock was affected by the government decree, though expectations were for a peaceful resolution. The stock remains down nearly $5, providing an opportunity for long-term investors willing to accept some of the global risk but also the rewards of a diversified portfolio of commodities.

Read the full article here.


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



Saturday, March 8, 2014

3D Systems: Printing Revenue Instead Of Profits


Along with Q413 earnings, 3D Systems (DDD) made the proclamation that it would reach revenue of $1 billion during 2015. While the news generated a great deal of buzz, especially considering analysts only forecast revenue of around $900 million, the real deal is that the company will again print the revenue via acquisitions instead of organic growth. As with the guidance for declining earnings in 2014, the company continues to focus on growth over profits.

The company is a leading provider of 3-D printers, print materials, and on-demand customer parts for professionals and consumers. After a recent stock slide, 3D Systems has a market value of nearly $8 billion, with revenue forecasted to average $700 million in 2014.

Read the full article at Seeking Alpha.


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



Friday, March 7, 2014

Clean Energy: Heading Towards Flop Of The Year


In what has become a quarterly tradition, Clean Energy (CLNE) reported Q413 results that generally disappointed the market. With the promise of the new Cummins (CMI) - Westport (WPRT) 12-liter engine opening up the long haul, heavy-duty truck markets, investors had long expected an earnings call by early 2014 to contain some outlandish growth figures and expectations. Instead, the company delivered more promises of a developing market while providing little actual results.

Along with Westport Innovations, Clean Energy offers investors potential huge returns from developing natural gas as a transportation fuel in the refuse, airport, and trucking industries, yet the end results are continued losses. At the same time, Tesla Motors (TSLA) has greatly revolutionized the electric car market, pushing the stock to the stratosphere. Ironically, more issues exist with a electrical vehicle that still uses a coal based power generation system and limited charging options, yet a visionary leader as managed to convince the market and automobile buyers.

Read the full article at Seeking Alpha.


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




Wednesday, March 5, 2014

SeaDrill: The Pause That Accelerates Demand


While Seadrill (NYSE: SDRL  ) confirmed that exploration and production firms had recently cut back on capital spending budgets for 2014 due to escalating costs, the company actually sees a very positive scenario on the future outlook. Other deepwater drillers have speculated that the pause to drilling growth is needed for crews and suppliers to catch up with demand in order to refresh the market. Seadrill actually predicts the pause is greater undersupply of rigs by 2016.

Seadrill is a leading deepwater driller with a focus on aggressively building out new rigs for what it forecasts as a major undersupply in rigs by 2020. Ironically, fellow deepwater driller Transocean (NYSE: RIG  ) expects a weak market yet recently ordered two ultra-deepwater drillships.

Read the full article here.


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




Tuesday, March 4, 2014

Indonesia Isn't the Problem for Newmont Mining Corp


While the export tax issue in Indonesia gets all the press, the real reason Newmont Mining (NYSE: NEM  ) continues to hit new 52-week lows is related to gold prices. Though facing the same issue in Indonesia, Freeport-McMoRan Copper & Gold (NYSE: FCX  ) has seen some bounce-back with a bigger focus on copper and oil.

Both miners export a considerable amount of material from Indonesia and have so far failed to obtain export licenses or waivers on the new export tax. Back in January, the Indonesian government entered an order for punitive taxes for miners that don't process materials in the country. While Freeport-McMoRan has publicly discussed plans of potentially building a smelter, Newmont hasn't done the same.

Read the full article here.


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