Sunday, March 29, 2015

Merck: Buyback Plan Not As Impressive As It Appears


Summary

  • Merck announces another large stock buyback.
  • Though Merck has a solid net payout yield, the yield doesn't match the highest in the market.
  • The smaller buybacks plan than two years ago along with the higher stock price is a big negative for the stock going forward.
Merck (NYSE:MRK) made headlines this week with the announcement of adding $10 billion to the stock buyback program. The large pharma has a long history of returning cash to shareholders, but the company made a perplexing statement regarding shares outstanding that convolutes the benefits of the buyback. On top of that, the stock has a market value of $163 billion making one wonder if the announced capital return is enough to make the stock interesting after a few years of strong stock gains.

Read the full article on Seeking Alpha.


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




Saturday, March 28, 2015

Yelp Has A Solution To The Google Problem


Summary

  • Yelp trades at multi-year lows due to user problems and an unflattering documentary.
  • Mobile app provides a solution to the user problem, but it requires execution.
  • Yelp remains an extremely attractive valuation with plenty of upside potential if it can execute on the mobile potential.
Though claims continue to persist that Yelp (NYSE:YELP) extorts business owners to extract advertising spending, Google (NASDAQ:GOOG) (NASDAQ:GOOGL) remains the biggest issue. While the Kickstarter documentary is a headache and a concern that could plague Yelp for a while, the company actually has a solution to the Google problem, if it executes.

Read the full article on Seeking Alpha.


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




Friday, March 27, 2015

Twitter: Livestreaming App Provides User Catalyst


Summary

  • Twitter bought Periscope for under $100 million.
  • The app in beta provides livestreaming in a similar manner to the Meerkat app that stole the show at SXSW.
  • The livestreaming engagement metrics are very promising and could provide a huge boost to the struggling user metrics at Twitter.
The news of the month is that Twitter (NYSE:TWTR) is taking the next step to becoming a real-time broadcast service with the purchase of live-streaming app Periscope for under $100 million. The new app will allow the social media service to provide users the ability to broadcast the news, instead of just reporting on it in 140 characters or a short video clip.

Read the full article on Seeking Alpha.


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




Potbelly: Rebound Potential


Summary

  • Potbelly continues a trend of beating estimates while the stock bumps along the bottom.
  • Despite the large stock decline after irrational trading following an IPO, the stock trades at an exceptionally large forward PE ratio.
  • Investors need to keep the stock on a watch list due to the long-term growth potential, but one shouldn't expect the stock to rebound now.
After writing about Noodles & Company (NASDAQ:NDLS) earlier in the week, this article focuses on Potbelly (NASDAQ:PBPB). Both restaurant concepts had hot IPOs in 2013 and share similar less-than returns, though Potbelly has traded better than Noodles over the last 9 months.

Read the full article at Seeking Alpha.


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




Thursday, March 26, 2015

Qualcomm: Wait For The Accelerated Buyback To Kick In Before Buying


Summary

  • Qualcomm announced a large buyback plan with an accelerated portion to start during FQ3.
  • While the headline is attention grabbing, stock option grants could dilute the impact.
  • Research suggests only loading up on a stock based on buybacks after they occur and not prior.
The recent major stock buyback announcement by Qualcomm (NASDAQ:QCOM) obtained a lot of attention. The headline grabbing news was exciting for shareholders, but the real news is whether the company spends the money without granting a ton of stock options in the process.

Read the full article at Seeking Alpha.


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



Wednesday, March 25, 2015

Glu Mobile: Aligning The Stars


Summary

  • Glu Mobile signs the Jenner sisters to the celebrity game platform.
  • The sisters have a social media following similar to when the Kim Kardashian game was announced back in late 2013.
  • Along with the Katy Perry game, Glu Mobile appears set to yet again smash conservative revenue forecasts for 2015.
Going over nine months after watching the stock soar to over $7.50, Glu Mobile (NASDAQ:GLUU) now trades substantially below that level. The stock initially hit those highs on the basis of the Kim Kardashian game success, yet months later the game has remained relevant and Glu Mobile has other celebrity stars lined up. The fear that the game and concept aren't repeatable should continue to disappear as the year progresses.

Read the full article at Seeking Alpha.


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



Saturday, March 21, 2015

Should Visa, MasterCard Fear IBM?


Summary

  • IBM is reportedly working on a digital cash technology to work with global currencies.
  • Such a digital payments network could have major repercussions for the high margins of Visa and MasterCard.
  • The technology concept has an interesting twist considering the partnership IBM is forging with Apple and the ability to connect this network with Apple Pay.
Last week, Reuters broke news that IBM (NYSE:IBM) was working on adopting bitcoin technology to potentially develop a form of digital cash for a payments system. The details are sketchy at this point, but the news should give pause to a few high-priced stocks in the payments processing sector.

Read the full article on Seeking Alpha. 


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



Thursday, March 19, 2015

Goldman Sachs: How To Play The Mysterious Capital Return Plan


Summary

  • Goldman Sachs had to resubmit the capital return plan, leaving a lot unknown about the approved stock buyback plan.
  • The investment bank hiked the dividend by $0.05 to a yield of 1.4%.
  • Investors should pay less attention to the stock buyback plan and more attention to the cheap valuation.
Of all the major financial institutions, Goldman Sachs (NYSE:GS) is the one that doesn't disclose the stock buyback plan approved after the Comprehensive Capital Analysis and Review, or CCAR. Though passing the stress test, the investment bank had to revise its capital return plan, leaving most analysts questioning whether it will reduce the stock repurchase amounts of the last couple of years.

Read the full article at Seeking Alpha.


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




Friday, March 13, 2015

Citigroup: Capital Returns Higher Than Expected


Summary

  • Citigroup submitted a surprisingly large capital return plan that met no objections from the Fed.
  • The results show the other large financial institutions requiring adjusted capital return plans.
  • Previous recommendation to own the stock remains intact.
For a very beleaguered bank, Citigroup (NYSE:C) passed the Fed stress tests with flying colors. Considering the failure last year and the executive jobs on the line, the opinion all along was that the bank would easily pass the test this year. The surprise is the size of the capital returns approved and the struggles of the other leading financial institutions.

Read the full article on Seeking Alpha.


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



Thursday, March 12, 2015

Sprint: Don't Follow Executives Into Stock


Summary

  • Sprint insiders make large stock purchases at prices around $5.
  • The company hasn't resolved liquidity issues with a likely asset sale required.
  • The pricing war and liquidity situation haven't improved suggesting investors don't follow the insiders in purchasing the stock at $5.
In the last couple of weeks, it was disclosed that Sprint (NYSE:S) CEO Marcelo Clarue and CFO Joseph Euteneuer purchased shares of the struggling wireless provider. The amounts were impressive with the CEO buying five million shares of the company's stock for nearly $25 million and the CFO buying roughly $100,000 worth of stock. Though multiple insider purchases of that magnitude are typically a bullish signal, one major issue needs resolution before investors should blindly follow the executives into the stock.

Read the full article at Seeking Alpha.


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




Wednesday, March 11, 2015

Top 10 Net Payout Yield Stocks For March 2015


Summary

  • The top net payout yield stocks underperformed the market in February despite strong gains.
  • The top ten net payout yield stocks averaged 12.7% yields to start March.
  • Motorola Solutions now has the highest yield at 16.7%.
This article is a continuation of a monthly series highlighting the top net payout yield (NYSE: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 utilized in part to make investment decisions for the Covestor model that has beaten the S&P 500 for four consecutive years. Please review the original articles for more information on the NPY concept.

Read the full article on Seeking Alpha.


Disclosure: Long HIG, IBM, MSI, NLY, NTAP, TRV, VIAB. Please review the disclaimer page for more details. 



Tuesday, March 10, 2015

Qihoo 360: Extreme Value Or Value Trap?


Summary

  • Qihoo 360 easily surpassed analyst estimates for Q414.
  • The Chinese Internet stock continues to trade at a compelling valuation forecast by one analyst at roughly 9x 2016 EPS estimates.
  • The quarterly report did nothing to alleviate concerns that leave the stock in the value trap position.
After the close on Monday, Chinese technology company Qihoo 360 Technology (NYSE:QIHU) reported Q4 results that generally smashed analyst estimates. While the top line growth rate was phenomenal, the lingering issues that sent the stock plunging from over $120 to below $50 in the last year probably weren't resolved.

Read the full article at Seeking Alpha.


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




Bank Of America: Why So Much Stress Over The Stress Test?


Summary

  • BoA passed the Fed stress test, setting up increased capital return.
  • The CCAR due to be released on the 11th has an overstated importance.
  • Investors should use the weakness in the stock to load up based on valuation and not any capital return plan that is not needed to justify value.
The stress tests and corresponding CCAR, or Comprehensive Capital Analysis and Review, plans are peculiar events created out of the financial crisis. Sure, banks and the Fed need to understand the impacts of adverse economic events on capital levels, but the results under crazy scenarios unlikely to occur in our lifetime again aren't impacting actual bank results.

Read the full article on Seeking Alpha.


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




Saturday, March 7, 2015

Ocean Rig - Modern Rigs To Lead Rebound


Summary

  • Ocean Rig owns an attractive fleet of modern, preferred rigs.
  • The company trades at a fraction of book value, despite remaining extremely profitable.
  • The recent stock action provides an ideal entry point around $7.
The offshore drilling market is setting up a unique scenario of a bifurcated rig market and correspondingly flipped stock valuations. E&P firms are increasingly demanding new rigs with modern capabilities giving an advantage to the newer fleets, yet the stock market isn't placing the modern fleet owners in the same positive light.

Read the full article at Seeking Alpha.


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




Friday, March 6, 2015

Sprouts Farmers Market: Last Dip To Buy?


Summary

  • Apollo Global Management files to sell remaining Sprouts shares.
  • The investor management has regularly sold shares since the IPO.
  • Sprouts isn't a cheap stock, but this recent dip is likely the best opportunity to buy the stock now.
For investors interested in the long-term story at Sprouts Farmers Market (NASDAQ:SFM), the after market news on March 4 was a long-awaited event. The stock of the organic grocer was repeatedly hit over the last couple of years after leading shareholder Apollo Global Management (NYSE:APO) dumped pre-IPO shares. At the time of the IPO, the investment manager had made it known that it planned to unload shares in theory placing a lid on the stock.

Read the full article at Seeking Alpha.


Disclaimer: No position mentioned. Please review the disclosure page for more details. 




Thursday, March 5, 2015

Stratasys: Normalized Earnings Are Attractive


Summary

  • Stratasys reported Q414 earnings inline with pre-announced estimates.
  • The 3-D printer manufacturer continues to guide to impressive long-term growth with a target of reaching revenue of $3 billion in 2020.
  • The investments of 2014 and 2015 will lead to significantly higher normalized earnings long term.
For investors interested in the 3-D printing and additive manufacturing sector, one should seriously start considering an investment in Stratasys (NASDAQ:SSYS). The recent quarterly results confirmed the pre-announcement of weak results from the MakerBot division, but the company continues to predict a positive long-term trend that will support a rebound in the stock.

Read the full article at Seeking Alpha.


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

Citigroup: Bullish Trends For A Cheap Stock


Summary

  • Citigroup announced two positive deals this week.
  • The news sets the company up for a strong capital return plan in 2015.
  • Stock remains cheap trading below tangible book value.
For a very maligned stock, Citigroup (NYSE:C) is starting to generate a bullish trend. Just this week, the large financial institution announced the selling of subprime lender OneMain Financial Holdings and the signing of a co-branded credit card deal with Costco (NASDAQ:COST). The stock remains stuck in a channel for the last two years between $45 and $55. Will this combination of bullish events finally push the stock higher?

Read the full article at Seeking Alpha.


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