Wednesday, April 30, 2014

Why Coal Prices Might Be Set for a Rebound


Though the coal sector continues to struggle due to plunging prices, the news isn't all bad for the sector. In fact, the confluence of information from Peabody Energy (NYSE: BTU  ) suggests that a turn is all but certain.

For domestic coal investors, Peabody Energy provides the best insight into the global commodity with mines in both the U.S. and Australia along with customers on six different continents. The industry news is consistent with the information doled out by Arch Coal (NYSE: ACI  ) a few days ago.

Read the full article here.


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



Tuesday, April 29, 2014

Apple's Capital Program Is Not Financial Engineering


Summary

  • Apple’s capital program enhances shareholder returns.
  • Despite returning record amounts to shareholders, the cash balance remains extremely high.
  • Research shows that high net payout yield stocks outperform the market.
For whatever reason, a company can't repurchase stock or execute a stock split without market participants claiming some level of financial engineering these days. The high profile announcement by Apple (AAPL) along with the Q214 earnings report brought out all sorts of sarcasm, but is it justified?

Read the full article at Seeking Alpha.


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



The Zynga Inc Turnaround Is Real


The market doesn't seem to like it, but the first-quarter earnings results from Zynga (NASDAQ: ZNGA  ) provided solid indications that the company's turnaround is for real. After a little over two years of large declines in most metrics, the social game developer is finally showing some signs of live.

The company hired Don Mattrick away from Microsoft to be the CEO nearly 10 months ago. With this release, former CEO Mark Pincus is now stepping away from his position leading the product development group to only focus on the Chairman position. This is another sign that Pincus is letting go of the past and allowing the highly respected Mattrick to run the company.

Read the full article here.


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



Saturday, April 26, 2014

Why the Numbers Just Don't Add Up to Buy United Airlines


It seems as though every month the improving fundamentals in the airline sector make it worth scouring the group for a cheap pick. Inevitably, United Airlines (NYSE: UAL  ) pops up on the list with either a low price-to-sales multiple or a lagging stock price. Every time, though, the numbers just don't justify buying the stock.

United Airlines is now the second-largest domestic airline in terms of revenue behind the new American Airlines Group (NASDAQ: AAL  ) . United operates more than 5,300 flights a day to more than 360 airports across six continents.

Read the full article here.


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



Friday, April 25, 2014

Surprisingly Strong North America Results at Baker Hughes Inc


After constantly hearing about the severe weather disruptions for the energy sector in North America, Baker Hughes (NYSE: BHI  ) reported one of the strongest quarters in recent history. Even more surprising to investors not following the oil services industry is that the stock surged to highs not seen since the summer of 2011 on the bullish news.

Baker Hughes is a global leader in supplying oilfield services, products, technology, and systems to the oil and natural gas industry. Though the company has a substantial global business approaching $24 billion, it pales in comparison to Schlumberger (NYSE: SLB  ) , which reported first-quarter earnings on the same day. Schlumberger has a massive oilfield services business expected to reach annual sales of nearly $50 billion this year.

Read the full article here.


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



Uranium Energy Corp. Sell-Off Provides Opportunity


Small-cap Insight

Summary

  • Uranium market provides long-term opportunity despite recent weakness.
  • Japan approval of nuclear energy provides a near-term catalyst.
  • Uranium Energy offers the cheapest valuation amongst the junior miners.
After the Fukushima nuclear disaster in Japan roughly three years ago, the uranium market has been crushed. The spot uranium price is off by more than 50% and now sits at multi-year lows. The stock prices of junior uranium miners such as Ur-Energy Inc. (URG) and Uranerz Energy Corporation (URZ) are only now starting to recover while Uranium Energy Corp (UEC) continues plunging towards financial crisis lows.


Read the full article at Seeking Alpha.


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




Thursday, April 24, 2014

Investors Ignore the Benefits of the Lands End Spinoff. Here's Why You Shouldn't


The recent negative reaction to the Lands' End  (NASDAQ: LE  ) spin-off from Sears Holdings Corporation (NASDAQ: SHLD  ) has unfolded similarly to traditional spin-offs in the past. The market continues to focus on the past results of Lands' End to justify its current valuation while at the same time it has overly focused on the company's connection to Sears Holdings.

Lands' End is a specialty retailer that mainly focuses on web and catalog sales. Sears bought the company back in 2002 for $1.9 billion in cash. Over the years Sears started placing Lands' End stores within its department stores, but this hasn't helped stop the recent slides in revenue for either retailer.


Read full article here.


Disclosure: Long LE and SHLD. Please read the disclaimer page for details.

Will Arch Coal Ever Rebound?


After another weak earnings report, it appears that Arch Coal (NYSE: ACI  ) may never regain momentum. The coal miner can't seem to catch a break with domestic thermal coal demand improving, but the high dollar metallurgical coal market plunging to new lows.

Arch Coal remains one of the largest domestic coal producers with a target of selling at least 130 million tons during 2014. Unfortunately, a rebound in one segment is being met by a loss in another segment. The company is suffering substantial losses, bringing up doubts of whether a strong enough rebound will occur.

Read the full article here.


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




Wednesday, April 23, 2014

Chevron Corporation: Oil Major on the Cheap


n a market constantly claimed to be overvalued, the major oil exploration and production firms provide attractive valuations. Not only are global energy prices at highs, with Brent crude hovering near $110, but several catalysts also exist to keep prices high going forward.

Chevron (NYSE: CVX  ) is a prime example of a strong E&P firm with a solid dividend and numerous large-scale projects ready to usher in growth.

Read the full article here.


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



Tuesday, April 22, 2014

Key Takeaways From Noble Corp's Earnings


After warnings from a number of sources highlighted the current pause in the offshore drilling sector, Noble Corp. (NYSE: NE  ) reported solid first-quarter earnings that smashed estimates. The stock wasn't so upbeat, however, trading slightly down.

The offshore driller continues to transition the fleet to a more modern one with high specification ultra-deepwater drillships and high-specification jackups. Also, Noble is in the midst of spinning off the old standard specification rigs into a new firm called Paragon Offshore via an IPO later this year.

Read the full article here.


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



Schlumberger: Severe Weather Can't Stop All-Time Highs


Summary
  • Schlumberger generated substantial earnings growth despite severe weather.
  • North America revenue saw a sequential increase.
  • Oil services stocks sit near all-time highs.
While the oil services firms had every excuse to turn in a weak first quarter, the initial results were very solid. Baker Hughes (BHI) solidly beat analyst expectations and Schlumberger (SLB) squeaked out a small beat.

Read the full article at Seeking Alpha.


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



Friday, April 18, 2014

Yet Another Plunge Forecast for Deepwater Drillers


It seems that just about every analyst can't wait to forecast a potential plunge in deepwater and offshore drillers. The latest is an analyst call out of Barclays that the general offshore sector, including the deepwater drillers, will take a hit.

Only a few weeks back, the focus was on the difference between the legacy drillers and the modern drillers. The latest report from Barclays brought a few more firms into focus, including Atwood Oceanics (NYSE: ATW  ) , Rowan (NYSE: RDC  ) , and a big hit to Diamond Offshore Drilling


Read full article here.


Disclosure: Long ATW. Please read the disclaimer page for details.

Thursday, April 17, 2014

Apple: Already Too Late To The Phablet Market


Summary
  • Research firms expect huge growth for phablet devices.
  • Analyst sees enthusiasm in Asia around a larger screen iPhone.
  • Apple appears already late to the large screen device market.
The evidence continues to mount that Apple (AAPL) is extremely late to the large screen smartphone market and the in-between phablet market. Legendary CEO Steve Jobs claimed that consumers didn't want or need large screen smartphones. To a certain extent, he was probably right when viewing a domestic market where consumers largely have a computer at home. Unfortunately, in the developing Asian markets and other emerging economies where consumers don't own computers, a phablet provides an almost required phone size. These consumers get a mobile phone plus a screen capable of some computing and gaming functions that bridges them into the modern world.

Read the full article at Seeking Alpha.


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



Tuesday, April 15, 2014

Comstock Resources Inc: A Hidden Play on LNG Exports


The recent data points from the CEO of Cheniere Energy (NYSEMKT: LNG  ) should catch the attention of all investors interested in the natural gas revolution ongoing in the U.S. For those not familiar with Cheniere Energy, the company is working toward exporting liquefied natural gas, or LNG, at the Sabine Pass Terminal in La. and the Corpus Christi Terminal in Tx.

With Cheniere nearly doubling over the past year, one of the best ways to play the export boom are natural gas producers in the Haynesville shale in La. One such producer is Comstock Resources (NYSE: CRK  ) , and naturally the largest landholder in that area is Chesapeake Energy (NYSE: CHK  ).

Read the full article here.


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



Top 10 Net Payout Yield Stocks For April 2014


Summary
  • Net Payout Yield stocks outperformed the market in March.
  • The Top 10 Net Payout Yield stocks averaged 11.9% yields.
  • Dollar Tree joined the list for April and Halliburton dropped off.
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.

Read the full article at Seeking Alpha.


Disclosure: Long AAPL, CTL, HAL, NLY, NOC, SDRL, T. Please review the disclaimer page for more details. 



Monday, April 14, 2014

New PotashCorp CEO Won't Change Fundamental Issues


Over the weekend, PotashCorp (NYSE: POT  ) announced that an external mining executive had been chosen to replace longtime CEO Bill Doyle. While investors have been unhappy with the company's stock returns, the industry as a whole faces numerous fundamental issues that will override the effect of the CEO selection. The recent breakdown in the Belarusian potash marketing arrangement and new market entrants such as BHP Billiton (NYSE: BHP  ) will have bigger impacts on the stock.

PotashCorp is the leading contributor to the North American potash marketing organization called Canpotex. The new leader will have to stabilize demand for this arrangement with the disruptions caused by Russia and determine how to deal with high margins for potash that are drawing global miners into the market.

Read the full article here


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




Is MRC Global Inc Set for a Rebound?


After a recent weak earnings report and numerous analyst downgrades, shares of MRC Global (NYSE: MRC  ) did something remarkable. Instead of collapsing even further after the initial 15% plunge, the company's stock started heading back up. Such a scenario is a signal that the analysts were too focused on the short-term problems and not the long-term potential.

MRC Global is a distributor of pipe, valve, and fitting (PVF) products and services to the energy and industrial markets. The company is working on capturing a larger share of global spending from energy companies that heavily rely on their products and services domestically.

Read the full article here.


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

Thursday, April 10, 2014

Did Consol Energy Inc Really Signal a Bottom in Coal Stocks?


Consol Energy (NYSE: CNX  ) released first quarter updates for the gas operations and coal mines that sent coal stocks soaring. No surprise that the Marcellus producer saw strong growth in the gas operations, but the market sent the coal sector higher with the forecast for higher coal production for the year.

Consol Energy was traditionally a coal miner that is quickly shifting toward a natural gas focus with the fast growth in Marcellus Shale production. The news comes on an interesting day, with James River Coal Co. filing for bankruptcy at the same time.

Read the full article here.


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



Wednesday, April 9, 2014

Marathon Patent Group: Steady Cash Flows From Patents


Summary
  • Seeking strong cash flow from monetizing patents.
  • Conducting numerous licensing campaigns providing catalysts for the stock.
  • The patent stocks are currently unloved after big losses during the last couple of years.
A few years back, the patent investment segment was one of the hottest sectors in the stock market. Now the segment has gone mostly flat with few big patent victories and declining stock prices. The momentum investor looking for the big gains moved into the hot social media and biotech stocks. Typically, once investors lose interest in a sector is the best time to become interested.

Read the full article at Seeking Alpha.


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



Sprouts Farmers Market Offers An Opportunity on Shareholder Sales


Typically, when large insiders unload shares, investors need to be careful that the original investors are not cashing out at the top. In the case of Sprouts Farmers Market (NASDAQ: SFM  ) , the recent unloading of shares by major insider Apollo Global Management (NYSE: APO  ) is actually a good sign for new investors.

Sprouts Farmers Market is a specialty retailer of fresh, natural, and organic foods with a focus on great prices. The company operates roughly 170 stores in just nine states, with the ultimate goal of reaching 1,200 locations.

Read the full article here.


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



Tuesday, April 8, 2014

The Market Is Ignoring the Demand Side of the Natural Gas Equation


The past couple of years there has been focus on increasing natural gas supplies, but most ignore surging demand that isn't being met with higher drilling. With natural gas inventories plunging to 11-year lows last week, the market needs to start including the demand side in the equation. One of the best examples of the increase in demand is the recent facility built by Nucor  (NYSE: NUE  ) in La.

The biggest mistake most make is assuming that abundant supplies in the ground will turn into production by E&P companies. The ironic part of the equation is that producers have left natural gas areas of the Haynesville Shale, (and other surrounding plays), while industrial and chemical plants are moving into the Gulf Coast.

Read the full article here.


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

Not Much Value in the Chesapeake Energy Spinoff


With a high debt load, it is understandable that Chesapeake Energy (NYSE: CHK  ) is cutting back on spending and spinning off some of its assets. Unfortunately, the combination doesn't necessarily portend well for a separated subsidiary that depends on the previous parent for a substantial portion of its revenue.

Chesapeake Energy spent the last several years struggling with a superior asset base of leading acreage positions in most of the primary shale areas. The company's stock continues to struggle due to expenses and the high debt load that is now causing it to cut capital spending at a time of low natural gas inventories.

Read the full article here.


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



The Education Technology Sector Offers Several Intriguing Investment Options


With the recent IPO of 2U  (NASDAQ: TWOU  ) , the education technology sector is grabbing more attention and offering investors more options to invest. Combined with Chegg (NYSE: CHGG  ) , the sector finally has a couple of interesting opportunities in the rapidly growing area.

With every service thinkable moving to the cloud, it only makes sense that higher education involving the most social-media- and technology-savvy generation would be highly involved in online endeavors.

Read the full article here.


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



Monday, April 7, 2014

American Capital: Time To Stop The Buyback


Summary
  • Substantial buyback ends after 3 years of purchases below NAV.
  • Reducing the complexity of the corporate structure should boost valuation.
  • ACAM has several initiatives to grow funds under management to further drive growth.
After three years of a relentless buyback, American Capital, Ltd. (ACAS) announced that the company has suspended the buyback. Over the years, the company bought shares at substantial discounts to net asset value, or NAV, but the stock never got the deserved respect.

Read the full article on Seeking Alpha.


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




Saturday, April 5, 2014

Deepwater Driller Plunge: Modern Drillers


In a previous article, I explored the bifurcation in the deepwater drilling sector with a focus on the legacy stocks having older rigs not suited for modern exploration demand. This article will focus on the group of modern rig operators not facing the issue of rigs over 20 years old.

Analysts are negative on the whole sector, though the modern drillers – Seadrill Limited (NYSE: SDRL  ) , Ocean Rig UDW (NASDAQ: ORIG  ) , and Pacific Drilling SA (NYSE: PACD  ) – are in the attractive position of having modern drillships replacing older rigs operated by the legacy drillers.

Read the full article here.


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



Deepwater Driller Plunge: Legacy Drillers


Over the last several months, several analysts have come out with dire warnings of a further plunge in shares of deepwater drillers. The market, which had already soured on the sector from several warnings of a pause in demand for offshore drilling in the deepest areas, is questioning the timing of the analyst calls.

The cyclical offshore-drilling market faces an interesting dynamic of customers rethinking capital projects while oil and natural gas prices sit near recent highs. On top of that dynamic, a bifurcation is occurring in the market where the newest high-specification rigs remain in solid demand while the oldest rigs face idle time and the potential for being cold-stacked or dismantled.


Read the full article here.


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



Thursday, April 3, 2014

Altisource Portfolio Solutions: Facing An Attractive Conflict

Small-cap Insight


Summary
  • NY DFS case appears reaching but the stock and business could suffer short-term.
  • The company has plenty of plans to diversify business away from Ocwen reliance.
  • The stock appears cheap considering the regulation risks and growth potential.
After astonishing returns following a spin-off from Ocwen Financial Corporation (OCN) several years back, Altisource Portfolio Solutions (ASPS) shareholders face a surprising dilemma. The company that was benefiting in a way from government legislation that is pushing large financial institutions to sell mortgage-servicing rights now faces a government intent on limiting the growth going forward.

Read the full article at Seeking Alpha.


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



Wednesday, April 2, 2014

Stock Split Could Doom Google


Summary
  • Stock split raises corporate governance issues.
  • Stock could lose momentum with investors inclined to trim shares after long run.
  • Unforeseen threats could hit the stock similar to MasterCard.
Next week, Google (GOOG) plans to finally split its stock nearly two years after announcing the original plan. After a relentless run beyond $1,000, the stock is actually being split for an unrelated reason that brings up corporate governance concerns.

Even the market cap reaching $376 billion and annual sales expected to reach over $70 billion this year, Google remains a fast growing technology leader. The company still obtains the majority of revenue from online search even though it continues to attempt diversification into mobile operating software and wearable devices amongst other far-flung operations.

Read the full article at Seeking Alpha.


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




Tuesday, April 1, 2014

More Proof That Sector Matters for Stock Gains


In the stock market, as in life, it's better to be lucky than right. One of the biggest frustrations and misunderstandings by investors is the belief that a stock moves based solely on the direct results of the individual company. In reality, a lot of stock gains are based on the sector, and Weatherford International (NYSE: WFT  ) probably proves that theory better than any large-cap stock.

Weatherford is one of the largest oilfield services firms in the world. The company has constantly struggled with accounting issues, contract overruns, and just plain bad management. The stock, though, currently sits at near two-year highs despite all the internal drama.


Read the full article here.


Disclosure: Long HAL and WFT. Please read the disclaimer page for more details.