Monday, June 30, 2014

C&J Energy Services Hits It Out of the Park With Nabors Industries


Maybe Schlumberger's  (NYSE: SLB  )  announcement that it was increasing its long-term growth rates was a sign that the oilfield services sector was about to consolidate to exploit improving industrywide growth rates. In this case, C&J Energy Services (NYSE: CJES  ) is purchasing the completion and production services of Nabors Industries (NYSE: NBR  ).

The Nabors division is actually roughly double the size of C&J Energy in nearly all key metrics. Making the deal even more interesting, Nabors will accept a sizable position in the new combined entity instead of completely cashing out. Typically when a business accepts a lot of stock in such a deal it views the combination as having plenty of synergies that will create value and make the company more valuable.

Read the full article here.


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




Sunday, June 29, 2014

Comcast Is Unable to Rationalize the Time Warner Cable Deal


After years of strong stock gains for the cable operators, the deal to buy Time Warner Cable (NYSE: TWC  ) by Comcast Corp. (NASDAQ: CMCSA  ) raises a lot of eyebrows that the company is overpaying for the assets . In light of the news that AT&T (NYSE: T  ) is going to purchase satellite provider DirecTV (NASDAQ: DTV  ) in a $50 billion deal, investors need to consider whether these deals are top ticking the market.

The odd part of the equation is that the companies' stocks have surged the last couple of years, while their revenues are seeing limited growth. In fact, Time Warner Cable now trades at a historically high 21x trailing earnings. The company has squeezed out higher profits from existing operations, but how long can that last with revenue only growing roughly 4% each year? Based on the chart below and the limited revenue growth, now  doesn't appear the time to buy these stocks.

Read the full article here.


Disclosure: Long T, DTV. Please read the disclaimer page for more details.

Friday, June 27, 2014

InvenSense Inc. Is a Good Fit for the Burgeoning Health Revolution


With the announcement of Google (NASDAQ: GOOG  ) (NASDAQ: GOOGL  )  Fit, the revolution of health care monitoring and recording is in full force. This news comes within a month of Apple (NASDAQ: AAPL  ) touting the new Health app and HealthFit developer's tool. The goal of both services is to become the central hub of a myriad of apps and wearable sensors that measure health and fitness activities.

With the two tech giants battling it out for consumers' health data and the focus of developers, the one stock that appears best-situated to benefit from the proliferation of sensors in these new devices is InvenSense (NYSE: INVN  ) . Remember that Google, at a market valuation of $390 billion, is the smallest of those tech giants, making it very difficult for a health hub to change the value of the related stocks. On the other hand, InvenSense sits with a valuation just below $2 billion, and the advancement of sensors in medical and fitness devices will greatly move the needle for this small company.

Read the full article here.


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

Why Sanchez Energy Is Headed Even Higher


Following the release of a major deal to purchase producing acreage in the Eagle Ford, Sanchez Energy Corp. (NYSE: SN  ) surged to record highs. The stock had seen solid gains in the last year following mediocre returns after an IPO at the end of 2011. While the stock has surged nearly $10 following the deal in late May, to reach $38, there are several reasons the stock could head much higher.

Prior to the deal to buy Eagle Ford assets from Royal Dutch Shell Plc (NYSE: RDS-B  ) , Sanchez Energy was producing significant growth from its own Eagle Ford assets. Besides the strong Eagle Ford position, the company has a solid position in the up-and-coming Tuscaloosa Marine Shale, which gives it a strong foothold for building production.

Read the full article here.


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



Thursday, June 26, 2014

How Safe Is This 10% Dividend?


In a surprise move, offshore driller Seadrill Limited (NYSE: SDRL  ) raised its dividend in the face of a difficult market for new contracts. The company even faced some operating issues during the first quarter, yet that didn't prevent solid earnings and cash flows from supporting the dividend.

At the time, investors couldn't grasp the 11% dividend considering the large debt load and 19 newbuilds under construction in a tough offshore drilling market. The stock has now rallied, and investors need to understand that the bifurcation of the market provides long-term stability for a company with limited rigs older than 10 years. Companies with older rigs like Transocean (NYSE: RIG  ) face a tougher road with limited contract coverage for 2015, so why is the market still allowing Seadrill to pay a high 10% dividend yield?

Read the full article here.


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

The Health App Is Intriguing For Apple, But Data Suggests It Won't Move The Needle



  • Health monitoring offers immense potential, though it might not move the needle for Apple.
  • History suggests consumers and doctors aren't motivated to use health records.
  • With the big three of Apple, Google, and Samsung fighting it out over the health hub, the innovation isn't unique enough for a game changer.
In my last article on Apple (AAPL), I suggested the stock didn't have huge upside due to the lack of innovative products. Many comments were quick to point out that my analysis ignored some of the revolutionary aspects hidden in software updates. One such area is the new Health app and HealthKit tool for developers that do offer some interesting potential to eventually move the needle at a technology giant.

Read the full article at Seeking Alpha.


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




Why Sanchez Energy Is Headed Even Higher

               

 Following the release of a major deal to purchase producing acreage in the Eagle Ford, Sanchez Energy Corp. (NYSE: SN  ) surged to record highs. The stock had seen solid gains in the last year following mediocre returns after an IPO at the end of 2011. While the stock has surged nearly $10 following the deal in late May, to reach $38, there are several reasons the stock could head much higher.

Prior to the deal to buy Eagle Ford assets from Royal Dutch Shell Plc (NYSE: RDS-B  ) , Sanchez Energy was producing significant growth from its own Eagle Ford assets. Besides the strong Eagle Ford position, the company has a solid position in the up-and-coming Tuscaloosa Marine Shale, which gives it a strong foothold for building production.

 Read the full article here.


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

Wednesday, June 25, 2014

American Airlines Group: How Embracing the 120-Day Distribution Set Investors Up for Long-Term Gains


As part of its bankruptcy agreement, American Airlines Group (NASDAQ: AAL  ) had to distribute a large amount of shares to creditors and labor groups around the 120th day following the finalization of the US Airways merger. The company's stock had already survived a few smaller distributions, but the large distribution in early April but more pressure on it.

Whether due to the general market weakness or the stock distribution, the stock dropped from a high of $38 in early April to a bottom of $32. While a substantial increase in the amount of shares available to be sold by creditors and labor unions might have pressured the stock short term, most stocks eventually trade based on the fundamentals of the company and the industry.

Read the full article here.


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

Why Sempra Energy's Gas Exports Won't Help Ukraine

The recent announcement that the Federal Energy Regulatory Commission (FERC) approved the Cameron LNG export project is big news for Sempra Energy (NYSE: SRE  ) , but investors shouldn't get too excited just yet. The project is the second such LNG export facility to get approved, and the media suggests that the approval process was recently expedited to ship natural gas to Europe, and specifically Ukraine. The gas may never reach that country, though. In addition, the energy department recently changed the approval process to expedite decision-making procedures on LNG exports.

Read the full article here.


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




Tuesday, June 24, 2014

Huge Growth Ahead For Zoes Kitchen

The newest entry into our high growth portfolio is the Zoes Kitchen (ZOES). The recent IPO is a fast casual restaurant concept serving Mediterranean-inspired dishes. The restaurant is riding the fresh food craze with tons of growth remaining. The below chart from the recent presentation highlights how the concept is only getting started:







At only roughly 3x sales, Zoes Kitchen is actually one of the best values in the market.



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



Monday, June 23, 2014

Silver Bay Realty Trust Is Cheap, But Is It Any Better Than Competitor American Homes 4 Rent?


The latest results from Silver Bay Realty Trust (NYSE: SBY  ) continue to highlight a concerning problem with the structure of the company. It is the prime reason that investors aren't interested in the company's stock despite it trading considerably below the net asset value that grows on a quarterly basis.

Silver Bay Realty was created to exploit an opportunity to invest in attractive housing prices and the expanding single-family rental market.

Prior to the financial crisis, mom-and-pop investors with a few rental homes dominated the sector. Silver Bay, along with other recently established companies like American Residential (NYSE: ARPI  ) and American Homes 4 Rent (NYSE: AMH  ) , rushed into the market. While a lot of the rental properties were purchased during the ongoing housing crisis at values below replacement costs, the firms still have the important task of proving that the individual investments can scale to generate profits for investors.

Read the full article here.


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

A Fracking Good Deal for Williams Gone Too Far


On the back of a nearly 25% gain following the (NYSE: WMB  ) proposed deal to acquire parts of Access Midstream Partners L.P. (NYSE: ACMP  ) it doesn't already own and merge them with Williams Partners L.P. (NYSE: WPZ  ) , Williams Companies  (NYSE: WMB  ) investors have to wonder if the deal was really that good.

The deal is naturally interesting in that it provides Williams with access to the rapidly growing infrastructure needs in most of the primary shale plays. On the back of the deal, Williams proposes increasing the third quarter dividend by an astonishing 32% to an annualized rate of $2.24, providing the impetus for the stock gains. The company quickly rushed out to sell stock to pay for the deal, further suggesting that its stock rose too fast.

Read the full article here.


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

Friday, June 20, 2014

Is Westport Innovations Really Headed In The Right Direction?


Summary

  • Operational improvements aren't hitting the bottom line.
  • Analysts appear more negative despite the stock jump.
  • Westport remains a technology leader in natural gas engines, but shareholders may not profit.
It's really shocking to see Westport Innovations (WPRT) surge 24% on the day following earnings to only find out that analysts have actually cut estimates for the current and next fiscal years. Sure, the stock was beaten down so some bounce back is possible based solely on first-quarter results being better than feared, but the trend isn't so encouraging.

Read the full article at Seeking Alpha.


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




Thursday, June 19, 2014

Is Gulfport Energy's 250% Production Growth Enough to Keep Investors Happy?


Gulfport Energy Corp (NASDAQ: GPOR  ) stands out in the exploration and production sector with forecasted growth for 2014 in the 250% range. The incredible part is that the stock collapsed around 20% back in May due to expectations for much higher growth.

The company is a leading pure-play in the Utica Shale with several other interesting investment positions, yet it has one glaring problem, especially considering the rich valuation of over $5.5 billion. The company has favorable production growth compared to other pure-plays such as Rice Energy (NYSE: RICE  ) in the Marcellus Shale and Diamondback Energy (NASDAQ: FANG  ) in the Permian Basin, but it is lacking in some of the more important areas.

Read the full article here.

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

Wednesday, June 18, 2014

Will a Merger With T-Mobile Reward Sprint Shareholders?


With rumors and speculation swirling around a potential merger between Sprint (NYSE: S  ) and T-Mobile US (NYSE: TMUS  ) , a big question is whether such a move would reward shareholders. In theory, consolidation in the wireless space should eliminate the aggressive pricing in the sector and benefit the remaining companies.

Based on the recent consolidation to three major legacy airlines, the airline sector is stronger and more profitable but not all of the players are performing the same. In addition, the consolidation in the wireless sector would leave AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) as dominant players with the new Sprint a very distant third.


Read the full article here.


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




Monday, June 16, 2014

Why Consol Energy Is an Expensive Coal Play


The headlines for Consol Energy's  (NYSE: CNX  ) recent quarterly earnings report focused on the huge ramp-up in Marcellus shale production, yet the vast majority of the company's revenue is still derived from coal. Even worse, Consol obtains more revenue from other natural gas properties outside the Marcellus shale that lack growth.

Consol Energy generated an impressive 94% production growth in the booming shale in Pennsylvania and West Virginia, but the coal operations make the stock difficult to value any higher. Even the best-run domestic coal miner, Peabody Energy (NYSE: BTU  ) , trades at a substantial discount to annual sales. In that manner, investors are placing a huge premium on Marcellus shale growth to justify a market cap of nearly $11 billion for Consol Energy with forecast annual sales for 2014 of less than $4 billion, mostly obtained from coal mining.


Read the full article here.


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

Friday, June 13, 2014

Why GSV Capital Is Worth Much More


The public markets continue to doubt the strategy of investing in high-growth private firms, yet GSV Capital (NASDAQ: GSVC  ) continues to execute on its strategy and drive value higher. The recent market volatility highlights the value of investing in a diversified group of firms with a long-term horizon.

For the first quarter, GSV saw the net asset value, or NAV, remain flat sequentially at $14.91 even with a volatile market for high-growth investments whether public or private. The NAV of GSV was able to withstand the large losses in Twitter (NYSE: TWTR  ) by offsetting it with gains in other portfolio stocks such as Palantir Technologies and Dropbox. Investors weren't as forgiving with the stock plunging to now sit substantially below that NAV at $10. Oddly, the theme is consistent with other venture capital funds including Firsthand Technology Fund (NASDAQ: SVVC  ) that trades significantly below NAV as well.

Read the full article here.


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

What To Do Now With Apple


Summary

  • Stock split likely pushed Apple to near all-time highs.
  • Apple still lacks a leap forward in innovation.
  • Still, stock has more upside based on multiple expansion.
After the stock split and a surge toward record highs and a double top around $95, the big question now is whether Apple (AAPL) offers investors any value. The stock has surged over the last year without the company providing much in the way of innovation, potentially eliminating future outsized gains.

Read the full article at Seeking Alpha.


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



Thursday, June 12, 2014

Rowan Companies Shifts to the Deepwaters


After decades as an onshore and shallow water drilling specialist, Rowan Companies plc (NYSE: RDC  ) is quickly shifting toward a mix of deepwater drillships. The company has four ultra-deepwater (UDW) drillships either recently starting operations or under construction. With the recent announcement of a contract for the last of the four drillships, the driller now has secured contracts for all of the UDW ships through mid-2017.

The recent contract signed with Freeport-McMoRan Copper & Gold (NYSE: FCX  ) has mostly positive indications for Rowan, which is good as the company began the year with a substantial amount of rigs rolling off contract. Also noteworthy, Noble Corp. (NYSE: NE  ) didn't obtain this contract after securing a couple of deals for new drillships with Freeport-McMoRan starting operations soon.

Read the full article here.


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

Wednesday, June 11, 2014

Wal-Mart Rollout Puts the Fizz Back Into SodaStream



SodaStream (NASDAQ: SODA  ) continues to offer the promise of providing a home beverage maker solution for the U.S. market, yet the company struggled through a difficult couple of quarters that has the stock at multi-year lows. After decades of solid growth in Europe and continuing success in the first quarter, the Americas were suppose to offer unlimited growth with the ability of the home beverage maker to take market share from Cola-Cola's  (NYSE: KO  ) and PepsiCo's vast soda operations. The recent seasonal summer display by retail giant Wal-Mart Stores (NYSE: WMT  ) offers some hope for reinvigorated growth in the very important U.S. market.

For various reasons including an inventory overstock and a brutal winter that greatly damaged the whole retail sector, revenue for the Americas  plunged 28% to a meager $34.8 million for the quarter. For investors following SodaStream this news was right in line with expectations. For those who see the recent weakness as only a bump in the road typically encountered by high-growth stories, the recent mega roll-out by Wal-Mart provides ample reason to believe that the long-term potential has not disappeared.

Read the full article here.


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

Chevron Is Cheap, But Where Is the Growth?


The first quarter earnings report from Chevron Corporation (NYSE: CVX  ) again highlights the lack of production growth from the majors. The oil major continues to obtain the majority of its profits from projects around the globe while domestic energy production soars.

The results are similar to those produced by ExxonMobil Corporation (NYSE: XOM  ) , which sits virtually in the middle of the energy explosion in Texas but has widely missed out. Both companies' shares remain cheap at around 11 times forward earnings; this is especially cheap in a market that a lot of analysts consider expensive.

Read the full article here.


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

Key Takeaways From C&J Energy Services' Earnings


C&J Energy Services (NYSE: CJES  ) continues to be one of the most aggressive firms in the oil services sector. In the first quarter, the company is starting to see the benefit of aggressively building out assets during the downturn of the last couple of years.

The interesting takeaways from the earnings report are a substantial increase in revenue, a rebound in income, an ongoing push to add more assets, and no mention of weather disruptions despite industrywide issues during the quarter. The growth surpasses the gains made by the oil services majors and hugely disappointing results from Key Energy Services (NYSE: KEG  ) . Even Basic Energy Services (NYSE: BAS  ) , which has seen a huge gain in its shares, still reported a loss for the quarter, but the oil service player is making some aggressive moves.

Read the full article here.


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

A High Yielding Play on the Marcellus Shale


A constant conundrum for investors in the exploration and production sector is deriving a valid valuation based on normalized pricing for the commodity produced. The issue has come to the forefront with the quick rise of shale regions that see explosive growth that outstrips infrastructure, leading to lower pricing realizations for a period of time. Typically, it's only a matter of time before the bottlenecks are worked out; the short-term impact is difficult to derive, however.

A prime example is Cabot Oil & Gas (NYSE: COG  ) . The company achieved production of 1 trillion cubic feet (Tcf) in the Marcellus shale within six years of starting drilling. Due to this massive production growth, the company is struggling with the price it obtains for natural gas. In the first quarter, Cabot only obtained a price realization of $3.74 per million cubic feet (Mcf) compared to substantially higher prices. In total, the company had price realizations of $0.60 to $0.65 below NYMEX settlement prices.

Read the full article here.


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

Tuesday, June 10, 2014

Why Yelp Is Worth Every Penny


The shift to mobile search is expected to have a profound impact on paid search. No longer are users searching only within browsers. Consumers now search directly in mobile apps like the one from Yelp (NYSE: YELP  ) . The shift could have a profound impact on dominant paid search leader Google (NASDAQ: GOOG  ) (NASDAQ: GOOGL  ) .

Research firm eMarketer estimates that mobile will account for roughly 86% of digital ad search by 2018,  with Google maintaining a 64.2% market share. While impressive, the market share is expected to drop 18 percentage points from the 2012 level. With an estimated $28 billion up for grabs on mobile search within four years, the market-share gains won't come easy, but here is why Yelp appears worth every penny of its current $4.7 billion market cap.

Read the full article here.


Disclosure: Long YELP. Please read the disclaimer page for more details.

Monday, June 9, 2014

Vodafone Group Is Down, But It's Certainly Not Out


Vodafone (NASDAQ: VOD  ) shares dropped 5% on the fourth-quarter earnings release, providing investors with an ideal entry point. After the disposal of Verizon Wireless to Verizon Communications (NYSE: VZ  ) , investors got a view into the stand-alone operations of the mostly European and India wireless operator and the market didn't like that initial view of Vodafone. It's important for investors to step back and assess the situation now.

Hammered by Europe
Results for Vodafone from the fourth quarter that ended in March were greatly affected by a European market that remains extremely weak. Organic service revenue in the region plunged 9.1% from the prior-year period, pushing down full-year revenue by nearly 4%.

Read the full article here.


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




Why Zynga's Drop Is a Buying Opportunity


Following an investor presentation -- on the back of news of more executive departures -- Zynga (NASDAQ: ZNGA  ) shares plunged to lows not seen in nearly a year. While investors shouldn't attempt to time the market, they should take advantage of large moves in either direction to modify positions. As long as an investing thesis hasn't changed, investors can use their acquired knowledge of the company to take advantage of a large, outsized market move that happens too often these days.

Anybody following Zynga over the last year knows that the company is in the midst of finishing up a turnaround led by CEO Don Mattrick. The company has shown a promising reversal in user trends and monetization metrics and is now embarking on a path toward growth. In the midst of all these improvements, investors became overly cautious on the mobile and social gaming sector following the disappointing IPO of King Digital Entertainment (NYSE: KING  ) .

Read the full article here.


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

Thursday, June 5, 2014

Why SolarCity Needed to Offer a Groupon


With growth rates in most key metrics exceeding 100%, SolarCity (NASDAQ: SCTY  ) seemed like the last company that would need to engage Groupon (NASDAQ: GRPN  ) to hock its products.

The installer of rooftop solar systems at monthly costs comparable to the local power utility, SolarCity doesn't appear to lack customers after reaching the 110,000 threshold in the last quarter. Typically Groupon provides promotions for small business clients to attract customer attention in crowded marketplaces. The business proposition relies on obtaining repeat business after getting the customer in the door for the first time.

Read the full article here.


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

Wednesday, June 4, 2014

Do Surging Natural Gas Prices Solve Chesapeake Energy Corporation's Problems?


Based on first-quarter earnings, the surge in natural gas prices cured a lot of the ailments hurting Chesapeake Energy (NYSE: CHK  ) over the last couple of years. According to the company, it remains the second-largest producer of natural gas and now the tenth largest producer of oil and natural gas liquids. So while the shift to liquids continues to gather steam, the company remains solidly reliant on the price of natural gas to achieve outsized returns for shareholders.

With the large valuations obtained by smaller natural gas focused producers Range Resources  (NYSE: RRC  ) and Antero Resources  (NYSE: AR  ) , it is clear that shifting away from natural gas isn't a requirement for success.

Read the full article here.


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

Here's Why Walter Energy Isn't Impacted by the Proposed EPA Rules


The new proposed rules by the Environmental Protection Agency, or EPA, have far reaching impacts on coal used by power plants to produce electricity. It doesn't, however, impact coal used for steel and especially that exported to foreign locations. Based on this news, the large 10% decline by Walter Energy (NYSE: WLT  ) is perplexing considering the coal miner is almost completely focused on the metallurgical export market.

With the recently released first-quarter results, the company has plenty of issues outside the EPA. From a China slowdown to an oversupplied metallurgical coal market, the company has plunged to new low after new low. Ironically, the ruling has a greater impact on Peabody Energy (NYSE: BTU  ) and the majority of stocks in the Market Vectors Coal ETF, which ended up virtually flat the day of the ruling. The reaction is very suggestive of a market overly negative on Walter Energy and fellow met coal leader Alpha Natural Resources (NYSE: ANR  ) despite the smaller EPA impact.

Read the full article here.


Disclosure: Long ANR. Please read disclaimer page for more details.

Tuesday, June 3, 2014

Freeport-McMoRan Copper & Gold: 2 Reasons Not to Fret Over Indonesia


With news breaking that the CEO of Freeport-McMoRan Copper & Gold (NYSE: FCX  ) is heading to Indonesia next week to discuss the ongoing tax issue, investors have a couple of reasons not to fret over the outcome. The issue is entering the sixth month of dispute and has forced the company to cut production in the country by 60%. Even Newmont Mining (NYSE: NEM  ) is reaching a copper stockpile capacity that would force it to cut production as well.

According to Reuters, the country claims that the escalating tax on miners has led to plans for 66 smelter projects to improve the economy and help the country move up the value chain versus only exporting minerals. It's possible the meetings could involve finalization of the talks between Freeport-McMoRan and Newmont with Indonesia's state-owned PT Aneka Tambang to build a $2.2 billion copper smelter; this could lead to a quick removal of the export ban and punitive tax. If not, investors don't need to fret over the lingering issue.

Read the full article here.


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

Nothing is Wrong with Twitter Inc. that Price Can't Fix


The difference between a company performance and its stock is no clearer than the action in Twitter (NYSE: TWTR  ) following tits IPO. Recently, the company reported that revenue surged over 100% while its stock collapsed 50%. For investors, it should bring to bear that the market routinely disengages from the fundamental analysis and valuation of a company. The company's stock becomes a trading mechanism where traders hope to see the price jump in the next couple of hours or days, regardless of the underlying fundamentals.

Typical with a company's stock that's down 50%, the conversation moves away from the greatness of the company to the weakness of the stock. In reality, Twitter is a great growth story that was out of balance with the stock valuation.

Read the full article here.


Disclosure: Long YELP. Please read the disclaimer page for more details.

Why Seadrill Ltd's Deal Russia Is a Huge Opportunity


Alert investors shouldn't be all that surprised that despite a weak offshore drilling market, a Seadrill Ltd (NYSE: SDRL  ) subsidiary signed a landmark deal. In this case, relatively new spin-off North Atlantic Drilling Ltd (NYSE: NADL  ) reached a large deal to work with Rosneft, a large Russian energy producer. The deal was significant enough that Vladimir Putin is raising some red flags about its long-term validity.

North Atlantic Drilling is a pure-play, harsh environment firm with eight offshore rigs and a focus on the North Sea in Norway and now the Arctic Shelf aspirations of Russia. The company has a ninth rig under construction with a delivery date of 2015 and a likely destination of the Russian Arctic. The harsh environments of the Arctic are expected to contain vast amounts of energy resources, and North Atlantic Drilling happens to have a young fleet focused on the sector.

Read the full article here.


Disclosure: Long SDRL. Please read disclaimer page for more details.

Monday, June 2, 2014

This Energy Is Spending 21% More This Year -- Here's Why It Matters


Last week, Basic Energy Services (NYSE: BAS  ) announced a $50 million increase in capital spending for 2014 that shot the company's stock up 4% on the day. The news didn't have much of a ripple effect on other smaller oilfield services firms, probably due to the lack of appreciation for the scope of the increase.

Most investors probably missed the company's run from only $12 back in October to the current level of $27. The quickly-changing dynamics in the domestic land-drilling sector have analysts forecasting the company earning $1.14 in 2015 after producing a large loss last year. At the same time, other oilfield services firms aren't seeing the same gains. Superior Energy Services (NYSE: SPN  ) is up solidly from February levels, but its stock has gained nowhere near the increases of Basic Energy. Key Energy Services  (NYSE: KEG  ) has seen its stock price pull back to levels last seen in October.

Read the full article here.


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