Tuesday, June 30, 2015

InvenSense: Leveraging Up Research Expenses


  • InvenSense continues to produce solid revenue growth while the stock struggles to gain.
  • Lower gross margins from two large mobile customers are wrongfully blamed for the struggling stock.
  • InvenSense is set up to leverage higher spending into solid leverage going forward.
For the last year or so, too much of the focus on InvenSense (NYSE:INVN) surrounds gross margins. The developer of motion sensing solutions has a stock sitting near multi-year lows while the company continues to fire on all cylinders with surging revenues and customer wins.

Read the full article on Seeking Alpha.


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



Monday, June 29, 2015

Apple: Focus On This Trend


  • Apple's stock price has followed the EPS trend over the last five years.
  • The large level of stock buybacks provides a massive tailwind to keep the EPS trend positive.
  • Investors should use the attractive value and earnings trend to buy the stock on any dip caused by Greece.
For most stocks, and specifically Apple (NASDAQ:AAPL), only one trend ultimately matters. Over the last five years, the stock has risen and fallen based on the trend of this one key number, and not based on valuation metrics. Even the Greek tragedy that might unfold this week won't matter to the stock price other than a short-term blip.

Read the full article at Seeking Alpha.


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




Saturday, June 27, 2015

Verizon: Best Value In Years


  • Verizon completes the AOL merger that distracted investors on the valuation of the stock.
  • The domestic pricing wars are starting to lose steam.
  • Verizon provides the best valuation the stock has offered in several years.
With the closing of the AOL (NYSE:AOL) deal, Verizon Communications (NYSE:VZ) can now move forward. While AT&T (NYSE:T) is surging to new highs building off the April surge in the stock, Verizon is down after going forward with AOL. Part of this is due to some excitement building for the DirecTV (NASDAQ:DTV) merger, but the market appears to be overlooking Verizon now.

Read the full article on Seeking Alpha.


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



Some Perspective On Ambarella


  • Ambarella had traded wildly in the last month.
  • Negative research caused the stock to collapse from recent highs.
  • Depending on an investors perspective, the stock trades at a mixed valuation not suggestive of a collapsing price.
The recent drama surrounding Ambarella (NASDAQ:AMBA) needs some perspective for the bull and bear cases. The stock has seen substantial gains since the IPO back in 2012 with some of the gains during the last couple of months seeming a little frothy. One has to wonder why an investor would buy a stock for $130 when it traded for around $70 only a month ago.


Read the full article on Seeking Alpha.


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




Fitbit After The Post IPO Pop


  • Fitbit completed a successful IPO last week.
  • The stock has continued rising after the IPO following the path of GoPro.
  • The market valuation of Fitbit and lack of scarcity value makes it unlikely that Fitbit follows the GoPro path to $100.
The hot IPOs of the last couple of years generally fit into two categories: ones that soar on day one and peak and those that continue rising after the IPO to extreme levels. Either way, the stocks quickly obtain lofty valuations that make it difficult to own the stock going forward.

Read the full article at Seeking Alpha.


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



Thursday, June 25, 2015

GrubHub: CEO Dumping Shares As Competition Intensifies


  • GrubHub trades close to all-time lows.
  • The online takeout ordering and delivery service faces a competitive environment while at the same executives are cashing in stock options and dumping shares.
  • The stock will eventually reward investors though the timing is a major concern in the short term.
GrubHub (NYSE:GRUB) traded down to post-IPO lows on the heels of executives unloading shares. The online takeout ordering service is uniquely profitable for an early stage Internet marketplace, yet the stock isn't catching on with investors.

Read the full article at Seeking Alpha.


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



Wednesday, June 24, 2015

How Can Williams Turn Down A $64 Offer?


  • Williams rejects unsolicited bid for $64 and plans to explore strategic alternatives.
  • Energy Transfer Equity proposes that a merger with Williams will provide a higher dividend and growth.
  • The lack of details from Energy Transfer Equity makes it difficult to understand how it can propose a higher dividend after shifting to a C corp.
  • The proposed offering doesn't provide much of a premium to where Williams likely trades in 2016 as a standalone stock.
On the headlines only, it is initially difficult to see how a $48 stock could turn down a $64 offer. In the case of Williams Companies (NYSE:WMB), the executives did just that.

Read the full article on Seeking Alpha.


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



Sunday, June 21, 2015

Should You Underweight Southwest Airlines?


  • Barclays made a dramatic shift in the rating of Southwest Airlines.
  • The stock traded under pressure all day despite the big gains in the stock market.
  • Southwest Airlines isn't the most attractively priced airline stock, but it is the last stock investors should dump from a diversified portfolio.
The news of the day in the airline sector was the big call of Barclays to underweight Southwest Airlines (NYSE:LUV). The call was deemed negative and appeared bearish, but the analysts are actually forecasting a 15% gain for the stock.

Read the full article at Seeking Alpha.


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



Friday, June 19, 2015

Premium Research By Chris Lau

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Interested subscribers should click on the link to obtain more information about the service.



Are Mobile Game Developers Overlooked?


  • Mobile game developers are struggling now, but investors shouldn't overlook the valuation prospects when the stocks turn around.
  • Electronic Arts and Activision Blizzard don't offer any growth, yet the market is rewarding these stocks higher valuations.
  • Investors should review how the console game developers turned around weak prospects to huge stock gains before dismissing the stocks focused on mobile games.
Everybody knows that videogame players are shifting to mobile, but ironically the console game developers continue to reign supreme. Typically, the small growth companies garner the highest valuation multiples, but that isn't the case in the videogame developer sector.

Read the full article on Seeking Alpha.


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



Tuesday, June 16, 2015

NXP Semi: Extremely Cheap Based On Realistic Targets


  • NXP Semi has flat-lined since the original excitement over the Freescale merger.
  • Industry consolidation could help improve margins industry wide and provides realistic upside to the current analyst EPS projections for NXP Semi.
  • The stock faces normal risks with a merger that might hold the stock down for now, but investors need to own this stock on approval.
NXP Semiconductors (NASDAQ:NXPI) remains a favorite stock as it leverages a buyout of Freescale Semiconductor (NYSE:FSL) to higher profits. The stock has mostly stalled at the $100 level following the merger announcement in early March despite some bullish analyst calls.

Read the full article on Seeking Alpha.


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



FitBit: Another Pricey IPO?


  • FitBit upped the IPO price range to $17 to $19.
  • The integrated fitness tracking company is producing explosive growth and strong profits.
  • The IPO is a no brainer buy, but investors should tread lightly if the stock surges beyond $30.
The upcoming IPO of FitBit (Pending:FIT) is intriguing, yet scary at the same time. The fitness device and tracking company has a commanding market share in the developing market segment, but the company faces extreme competition from tech giants including the recent launch of the Apple (NASDAQ:AAPL) Watch.

Read the full article at Seeking Alpha.


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



General Motors: Don't Fear The Opportunity


  • GM trades lower than it did prior to the decision to return billions more to shareholders via a stock buyback plan.
  • The company continues producing solid earnings with forecasted growth in the next few years.
  • GM provides the rare opportunity to buy a stock with a cheap P/E ratio that the company itself is purchasing shares.
Months after announcing a large-scale capital return plan, investors can buy General Motors (NYSE:GM) at a cheaper price. The original announcement in March concluded a two-month run that saw the stock jump from $32 to $39. Ironically though, the stock doesn't even sit at two-year highs months following the positive news.

Read the full article at Seeking Alpha.


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




Baidu: Mobile Dominance Provides Catalysts


  • Baidu continues building a dominant position in the mobile search market in China.
  • The market has several catalysts that will naturally grow the opportunity for the stock.
  • Baidu remains attractively valued in comparison to other Internet giants.
After about a year of going nowhere, Baidu (NASDAQ:BIDU) appears ripe to build on the recent rally from early May. The Chinese Internet search giant remains a mostly underappreciated stock despite many catalysts for growth. The stock sits around $207, a level that is toward the bottom of the range for the last year.

Read the full article on Seeking Alpha.


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



Google: Payment Fees Aren't The Point


  • Google recently announced Android Pay as a launch partner with a new tokenization security service from Visa.
  • The Visa plan includes blocking transaction fees on mobile payments for technology companies like Google.
  • Google is positioned to benefit long term via other arrangements including marketing fees from credit card issuers and loyalty programs with consumers.
Making money off any service is always a nice outcome, but sometimes the intent of services is to maintain customer loyalty or attract new customers. In the case of mobile payments, the vision heading into the end of May was that new payment providers would collect small fees that might eventually add up to billions. The news of the day suggests that the apple cart might have been turned over by the payment processors of Visa (NYSE:V) and MasterCard (NYSE:MA).

Read the full article on Seeking Alpha.


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



Monday, June 15, 2015

Atwood Oceanics: Positioned Well Despite Analyst Concerns


  • Atwood Oceanics remains well positioned for the offshore drilling market.
  • Barclays placed an extremely negative call on the deepwater drilling segment even after huge declines by the associated stocks.
  • The company has a modern fleet of rigs that already produce the majority of EBITDA.
The negative call on the offshore drillers by Barclays is strange considering the segment is already beaten down. The analyst call was very bearish on some of the drillers that lack a fleet of modern rigs, but the call was rather neutral on Atwood Oceanics (NYSE:ATW) despite the positive rig position.

Read the full article at Seeking Alpha.


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



Does Westport Innovations Finally Get It?


  • Westport Innovations has a history of large losses and heavy spending on research and development.
  • The company changed directions towards the end of 2014 with a stronger focus on financial discipline.
  • The stock is investable for the first time in years though still extremely risky.
It has been almost a year now since our last full coverage on Westport Innovations (NASDAQ:WPRT) warned investors that the stock wasn't investable until it had turned around the financials. The unquestioned leader in natural gas engines hadn't figured out how to turn a technological advantage in the growing sector into a profitable business. At the time, the stock was down to roughly $15 from a previous high of $50, but investors were in for further turmoil.

Read the full article on Seeking Alpha.


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




Has Halcon Resources Improved The Financial Situation Enough?


  • Halcon Resources recently refinanced and exchanged debt to reduce leverage and interest expenses.
  • The company no longer focuses on the TMS after making a big financing deal only a year ago.
  • The $1 stock still faces an uphill battle to consider an investment at this point.
Probably no other stock in the energy exploration and production sector of its size garnered so much attention as Halcon Resources (NYSE:HK). Ironically though, the company has struggled mightily despite well-respected CEO Floyd Wilson. Halcon Resources has long been a lightning rod in the investor community due to the high debt position and late entry into shale drilling.

Read the full article at Seeking Alpha.


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

Friday, June 12, 2015

Target's Capital Returns Aren't On Target


  • Target announced details of an improved capital return plan.
  • The details of the plan are far less impressive than the headlines numbers and the excitement stirred up from the early release of the details.
  • Target is offering up the potential for solid yields, but the company has a poor history of implementing previous buybacks.
The news of updated Target (NYSE:TGT) capital returns received a ton of media attention over the last few days due to internal company issues and possibly undue respect for the headline numbers.

Read the full article on Seeking Alpha.


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



Glu Mobile: Realistic 2020 Projections?


  • Glu Mobile provided aggressive 2020 revenue projections.
  • The long-term forecasts don't match the short-term forecasts presented in each earnings report.
  • The analysis suggests the 2020 projections are more probable due to emerging mobile-game trends and a consistent history of beating short-term targets.
  • The stock is attractively valued at around $6.50 based on the potential to smash analyst revenue estimates for 2015 and beyond.
As discussed in a previous article, Glu Mobile (NASDAQ:GLUU) provided an exceptionally large revenue target for 2020 at their Analyst Day. These targets are usually scary to see from a corporation when a business such as mobile games is inherently difficult to predict. It's best for the company to stick to beating one-year goals.

Read the full article on Seeking Alpha.


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




Thursday, June 11, 2015

Lending Club: After The Initial Lockup Expiration


  • The initial lockup expiration of 150 million shares occurred on June 9.
  • A larger lockup expirations occurs in August.
  • Lending Club doesn't offer the valuation metrics needed for a stock facing the potential unloading of shares by venture funds.
One of the most annoying events in the stock market is the lockup expiration that occurs usually six months after an IPO. This is the point at which most insiders, including large venture capital investors, are able to dump shares acquired before the company went public. The annoying part of the event is that it usually pressures the stock down despite full knowledge of all market participants of the event occurring months in advance.

Read the full article on Seeking Alpha.


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




Tuesday, June 9, 2015

Why Is Everybody Down On The Legacy Airlines?


  • The airline sector reached new 2015 lows.
  • IATA raised the projections for 2015 airline profits.
  • Raymond James downgrades hit the legacy airline stocks hard, but the forecasts are actually very bullish for the stocks.
At the same time that the IATA dramatically raised its estimate for global airline profits, an analyst firm downgraded the legacy airline stocks crashing them to recent lows. While some capacity concerns have propped up this year, one has to wonder why so much fear exists in stocks trading at exceptionally low PE multiples.

Read the full article on Seeking Alpha.


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



Monday, June 8, 2015

TripAdvisor: This Negative Trend Needs To End


  • TripAdvisor continued several negative earnings trends during Q1.
  • The online travel review and booking site has several catalysts, including the expected growth in online travel booking in Asia-Pacific.
  • With the CFO transition, TripAdvisor remains on the watch list until a turnaround takes hold.
Over the last year, TripAdvisor (NASDAQ:TRIP) has done the most to trip up its own stock. The online travel review site has consistently missed earnings estimates, even while generating fast growth for a stock worth more than $10 billion.

Read the full article on Seeking Alpha.


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



Sunday, June 7, 2015

Sears Holdings: Promising REIT Details


  • Sears Holdings continues moving forward with unlocking value via the sell and leaseback of real estate assets.
  • The stock continues trading substantially below the value of the real estate.
  • The stock is attractively priced at $40, but the company needs to show more progress towards reducing cash burn with the Q1 earnings report on June 8.
Back in April, Sears Holdings (NASDAQ:SHLD) announced several agreements regarding selling real estate assets to a REIT and several joint venture partners. The recent S-11 filing for Seritage Growth Properties provided key details, including the stores involved and the percentage of the locations that already have non-Sears leases. Some of the details including the involvement of General Growth Properties (NYSE:GGP) and Simon Property Group (NYSE:SPG) in the JVs and the real estate valuations were encouraging.

Read the full article on Seeking Alpha.


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




Saturday, June 6, 2015

Should Ocean Rig Shareholders Panic?


  • Ocean Rig priced a perplexing secondary offering below the market price and substantially below book value.
  • The apparent negative secondary has the positive outcome of reducing the ownership position of DryShips.
  • The stock offers a compelling value at or below the offering price.
The news of the day on Ocean Rig (NASDAQ:ORIG) continues to highlight the risks of owning a stock with a weak owner. Prior to the news of the last few weeks, DryShips (NASDAQ:DRYS) was listed as owning 59.2% of the outstanding shares. Prior to the recent moves, the position in Ocean Rig was worth more than the valuation the market gave DryShips showing the concern or its financial position.

Read the full article on Seeking Alpha.


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



Zoe's Kitchen: Still Overlooked


  • Zoe's Kitchen produced a strong Q1'15 earnings beat.
  • The Mediterranean-themed concept remains attractively valued compared to other restaurant peers with similar growth rates.
  • The stock remains too cheap to pass up, especially with a potential breakout above $35.
Another solid quarter and Zoe's Kitchen (NYSE:ZOES) still trades at a discount compared to other fast-casual stocks that are on fire. The Mediterranean-themed concept fails to grab the market's attention in a similar manner as a Shake Shak (NYSE:SHAK) or a Habit Restaurant (NASDAQ:HABT), despite similar growth projections.


Read the full article at Seeking Alpha.


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





Friday, June 5, 2015

Freeport-McMoRan: Positive Prospects For Copper


  • Freeport-McMoRan faces a tough road in 2015 due to cash flow concerns and low copper prices.
  • The company has much better prospects heading into 2016 with better cash flows from reduced capital spending and the outlook for copper prices.
  • The stock should remain a prime an investment target for 2016.
The story for Freeport-McMoRan (NYSE:FCX) continues to remain relatively simple. The stock will move in relation copper prices over the long term. As highlighted in Freeport-McMoRan: Focus On Copper Prices, Not Earnings, the miner obtains the majority of revenues and cash flows from the copper mines.

Read the full article at Seeking Alpha.


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




Wednesday, June 3, 2015

Vodafone: Deja Vu?


  • Vodafone is rallying similar to early 2014 due to another potential deal.
  • The European focused wireless operator has an interesting opportunity for a combination with Liberty Global.
  • The details suggest the operational overlap might not provide the necessary synergies and benefits expected of such a large-scale deal.
The recent stock surge of Vodafone (NASDAQ:VOD) toward $40 has a similar feeling to the run with the sale of Verizon Wireless to Verizon (NYSE:VZ). In both cases, the stock made a rapid rise within a few months from the low $30s. The question is whether Vodafone holds and even builds on the gains this time.

Read the full article on Seeking Alpha.


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




OnDeck Capital: Looking For A Bounce Off The Bottom


  • OnDeck Capital continues generating exceptional growth though the stock now trades at the lows.
  • Too much capital chasing too few loans is the biggest risk in the online lending category.
  • OnDeck Capital is a stock to own if it holds the recent bottom around $15.
It didn't take long for the exciting fintech category to cool off. Even without a lot of competition for capital in the public markets, a stock like OnDeck Capital (NYSE:ONDK) is already trading down 50% from the all-time highs. At $15, the stock actually trades right at the lows from earlier this year.

Read the full article on Seeking Alpha.


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