Wednesday, July 29, 2015

Yelp: Is It Really That Bad?


  • The downward momentum continues to add up at Yelp.
  • The local consumer review site provided weak revenue guidance due to a couple of short-term factors that didn't please the market.
  • Yelp continues to have compelling growth in key metrics generally misunderstood by the market which focuses on flawed total unique users.
Prior to reporting Q215 earnings, Yelp (NYSE:YELP) traded at multi-year lows. The momentum the stock saw in rushing above $100 in early 2014 was all about gone so it wasn't a big shock that any perceived negative news sent the stock collapsing in after-hours trading.

Read the full article on Seeking Alpha.


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



Saturday, July 18, 2015

ConocoPhillips: Dividend Obsession Hurts The Company


Summary

  • ConocoPhillips announces small hike in the dividend.
  • The E&P firm cancels a ultra-deepwater drillship contract with high termination fees.
  • The stock is hitting new oils due to the company protecting the dividend while oil prices head lower.
   While a lot of comments don't agree with my previous points on the dividends paid by ConocoPhillips (NYSE:COP), the latest news again backs up my claims. The exploration and production firm made another bizarre move based on protecting the dividend at the expense of prudent financial moves.

 Read the full article on Seeking Alpha.


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

Does Google Have Any More Upside?


Summary

  • Google smashes Q2 2015 earnings estimates.
  • The Internet-search giant is benefiting from better cost control and YouTube growth.
  • The stock lost a lot of the valuation appeal after the nearly $100 gain, but it still provides solid annual growth potential.
    The surprising aspect of the Q2 results for Google (NASDAQ:GOOG)(NASDAQ:GOOGL) was that expense controls were already evident in the numbers. In the article (see Is Google Finally Growing Up?) released just prior to the earnings report, the research highlighted how the stock could head a lot higher based on tighter expense controls. The level of operating margins had the potential to grow to be inline with other tech giants.


 Read the full article on Seeking Alpha.


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

Bank Of America: Still Not At New Highs


Summary

  • Bank of America produced a solid Q2'15 that finally produced strong earnings.
  • The bank continues reducing noninterest expenses to levels not seen in years.
  • With the bank stock standing to benefit from rising interest rates, BOA offers the unique opportunity to own a financial not already trading at new highs.
   Despite improving results for the large financial institutes, Bank of America (NYSE:BAC) still isn't trading at new multi-year highs. Even lowly Citigroup (NYSE:C) hit new highs after a strong Q2 report. BOA has now made a third attempt at breaking above $18 in just over the last year. Anybody buying the stock back in March 2014 has hardly made a dime in that time period.


 Read the full article on Seeking Alpha.


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

Friday, July 17, 2015

Citigroup: Don't Fret Over Revenue Growth


Summary

  • Citigroup reported another solid quarter, with Q2'15 earnings easily beating analyst estimates.
  • Revenue remains weak for several prime reasons that investors should ignore.
  • Citigroup remain extremely cheap, and shareholders now get the benefit of large share buybacks.
   The Citigroup (NYSE:C) Q2'15 earnings were solidly better than the market expected, yet the commentary wants to focus on the lack of revenue growth. With the large financial busy focusing on efficiency improvements and winding down underperforming, investors need to realize what they've got.

 Read the full article on Seeking Alpha.



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

OnDeck Capital: Potential Rewarding Shift To A Marketplace


Summary

  • OnDeck Capital released Q2'15 results that easily surpassed internal guidance.
  • The stock recently bounced off all-time lows to start the month.
  • A shift away from balance sheet risk will reward shareholders going forward.
  A big difference in the market valuations between OnDeck Capital (NYSE:ONDK) and LendingClub (NYSE:LC) is centered on the marketplace focus by the latter. In addition, OnDeck Capital carries the risk of the loans originated on its platform bringing in a higher level of risk and balance sheet requirements adding up to a lower valuation.

 Read the full article on Seeking Alpha.


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

Thursday, July 16, 2015

Delta Air Lines: Earnings Are Better Than Appearance


Summary

  • Delta Air Lines easily surpassed analyst estimates for Q2'15.
  • The airline ramped up the capital return plan by returning $1 billion to shareholders during the quarter.
  • The stock remains inexpensive at 10x current year EPS estimates and catalysts for higher earnings going forward.
  Another strong quarter by Delta Air Lines (NYSE:DAL) is apparently not appreciated by the market. The stock initially dropped over a $1 before rebounding. Not only did the airline beat analyst estimates, but also the company produced several financial metrics typically associated with much higher stock prices.

 Read the full article at Seeking Alpha.


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

Helmerich & Payne Is Positioned For A Land Drilling Rebound


Summary

  • Helmerich & Payne is positioned to continue stealing market share from competitors struggling to produce profits.
  • The stock is bottoming along with the domestic drilling rig demand.
  • Helmerich & Payne is positioned to lead the rebound with a fleet of modern land drilling rigs and the ability to consolidate the space.
   The domestic drilling market remains under pressure, but Helmerich & Payne (NYSE:HP) is positioned to benefit from a pending rebound. The stock is down roughly 50% from the peak near $115 providing an interesting entry point for new investors around $65. Over the last year, the stock has collapsed similar to the price of oil.

  Read the full article at Seeking Alpha.


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

JPMorgan Chase: Bullish Thesis Continues Playing Out


  • JPMorgan Chase produced another quarter of strong earnings that easily surpassed analyst estimates.
  • The promise of lower legal fees and regulatory fines is playing out while higher interest rates appear on the way.
  • Despite a roughly 10% gain in the last quarter, the stock remains extremely cheap and has multiple catalysts to push it higher.
For Q2'15, JPMorgan Chase (NYSE:JPM) reported quarterly results that again easily surpassed analyst estimates. The bank continues to generate large profits despite an unfavorable interest rate environment. The company is able to trim expenses even while revenues struggle.

Read the full article on Seeking Alpha.


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




Is Google Finally Growing Up?


  • Signs are emerging that the new CFO is starting to implement some financial discipline at Google.
  • The Internet search giant has long frustrated shareholders with out of control expenses.
  • Google has operating margins far below the other tech giants.
  • A grown up Google could head much higher.
The hiring of a new CFO a few months back had shareholders hopeful that the new finance leader would help constrain the spending at Google (NASDAQ:GOOG) (NASDAQ:GOOGL). The Internet search leader has long spent heavy on research and development for projects far astray of the main money generator.

Read the full article on Seeking Alpha.


Disclosure: Please review the disclaimer page for more details. 




Wednesday, July 15, 2015

Freeport-McMoRan: Copper Prices Heading Lower Will Hurt


Summary

  • Freeport-McMoRan will struggle if copper prices head below $2.50/lb for an extended period.
  • The company faces a large reduction in cash flow expectations from the lower copper prices.
  • Freeport-McMoRan holding $16 sets the stock up for a potential bounce, but it appears unlikely to hold due to copper prices.
   Despite some positive long-term expectations for the copper market, the current issues in China crushed the commodity over the last couple of months. Unfortunately, for Freeport-McMoRan (NYSE:FCX), the prospects of the company (see Freeport-McMoRan: Positive Prospects For Copper) are all built on copper prices that aren't faring so well now.

 Read the full article on Seeking Alpha.


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

The New Dogs Of The Dow - Q2 2015


Summary

  • The New Dogs of the Dow had Q2 returns that exceeded the gains of the DJIA, but it failed to match the rebound of the Dogs of Dow theory.
  • The average stock in the Net Payout Yields based list has a yield of 8.3% starting Q3.
  • After a large loss in Q2, Travelers tops the list with a 12.3% yield.
   This article will focus on the quarterly returns and changes in the new "Dogs of the Dow" strategy originally introduced (see The New Dogs Of The Dow - 2015) back in January. The goal of the series is to highlight that the old theory of buying the Dow stocks with the highest dividend yields is outdated. The more modern version involves using the Net Payout Yield (NPY) that adds the net stock buyback yield to the dividend yield. This yield more accurately reflects the modern corporate structure that utilizes a large amount of stock buybacks.

Read the full article on Seeking Alpha.


 Disclosure: Long AAPL, CAT, IBM, TRV. Please read the disclaimer page for more details.

IBM: Tentative Buy


Summary

  • IBM is set to report another quarter of declining results.
  • The stock remains cheap and is supported by stock buybacks that haven't been effective.
  • IBM is generally cheap and pays a solid 3.2% dividend for investors willing to wait out the rebound.
   When last writing about the investment potential of IBM (NYSE:IBM), I wrote two articles (here, here) attempting to get investors to load up on the stock on the dip to $150 due to strong yields. At the time, the stock was down considerably and trading at multi-year lows. The investment community had become exceptionally bearish on IBM despite a strong stock buyback program and the profits and cash flow to support a higher valuation.

 Read the full article on Seeking Alpha.


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

Spirit Airlines: Down But Not Out


Summary

  • Spirit Airlines provided disappointing margin guidance for the rest of 2015.
  • The discount airline continues to face growing pains from a capacity surge in excess of 30%.
  • The recent stumbles in the airline industry provide a solid buying opportunity, especially considering the cheap valuation of Spirit Airlines.
   After the close, Spirit Airlines (NASDAQ:SAVE) reported substantially reduced margins for Q2 and the full year. A key distinction though is a large amount of the reduced numbers are due to weather related issues during Q2. At the same time, the airline is definitely facing more airfare pressure during the prime summer travel months. A big part of the issue is self inflicted due to the greater than 30% capacity growth while most other airlines maintain capacity discipline.


Read the full article on Seeking Alpha.


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

Monday, July 13, 2015

T-Mobile Remains The Big Winner


Summary

  • T-Mobile announced the addition of 2.1 million customers during Q215.
  • The company continues to lead domestic wireless providers in both service revenue growth and stock gains.
  • T-Mobile remains expensive considering the general inability to turn customer additions into consistent profits.
   In the domestic wireless pricing war, T-Mobile (NYSE:TMUS) remains the big winner. The stock has seen significant gains in the last couple of years while the other domestic providers struggled to reward shareholders. Both AT&T (NYSE:T) and Verizon Communications (NYSE:VZ) saw small capital losses that were offset by solid dividends while Sprint (NYSE:S) collapsed.

Read the full article on Seeking Alpha.


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

Sprint's Greatest Fears Realized


  • Sprint continues to struggle with the stock hitting new multi-year lows and plunging on funding fears.
  • T-Mobile continues to gain market share and likely officially surpassed Sprint for the No. 3 position in the domestic wireless market.
  • Investors need to avoid the stock until funding issues are revolved.
Whether legitimate or not, the greatest fears in owning Sprint (NYSE:S) for the last year were realized during trading on Wednesday. Most shareholders don't want to hear it, but the biggest failure was an assumption that Softbank (OTCPK:SFTBY) and Chairman Son would bail the company out of financial purgatory.

Read the full article at Seeking Alpha.


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




Sunday, July 12, 2015

Twitter: Still Cheaper Than You Think


  • The market wrongfully sees Twitter as a struggling company.
  • The company has enormous untapped potential that Project Lightning and other opportunities will unleash.
  • Twitter appears expensive at 50x forward earnings, but the growth rate is significantly higher making the stock cheap.
After writing "Why Twitter Is Borderline Cheap" approaching roughly 11 months ago, the stock is trading down from that level now. Sure Twitter (NYSE:TWTR) has made a couple of runs significantly higher, but the stock has failed to break out. In both cases, it has traded down to roughly $35.

Read the full article on Seeking Alpha.


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



Cheniere Energy: Massive Long-Term Plans But With High Execution Risk


Summary

  • Cheniere Energy continues lining up new projects before getting the primary Sabine Pass LNG export project into production.
  • The company is continuing to build up debt levels.
  • The competitive landscape in the LNG export market continues heating up as the Gorgon LNG project faces issues with selling test gas.
  • Cheniere Energy's execution risks continue adding up until the company gets major projects into production.
    As alluded to in Cheniere Energy: Paying Up For Unfinished Projects, the company is in the midst of a major building boom. The scale of the proposed projects are almost unprecedented considering the company has limited production facilities and proven results. What Cheniere Energy (NYSEMKT:LNG) does have is ideal assets for building LNG export facilities and a first-mover advantage in getting FERC approval for exporting a precious resource that originally faced concerns that the government would ever allow such a move.

Read the full article on Seeking Alpha.


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

Saturday, July 11, 2015

Twitter: Still Cheaper Than You Think


Summary

  • The market wrongfully sees Twitter as a struggling company.
  • The company has enormous untapped potential that Project Lightning and other opportunities will unleash.
  • Twitter appears expensive at 50x forward earnings, but the growth rate is significantly higher making the stock cheap.
   After writing "Why Twitter Is Borderline Cheap" approaching roughly 11 months ago, the stock is trading down from that level now. Sure Twitter (NYSE:TWTR) has made a couple of runs significantly higher, but the stock has failed to break out. In both cases, it has traded down to roughly $35.

 Read the full article on Seeking Alpha.


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

Zillow: The Lost Summer


Summary

  • Zillow announces that the CFO is departing the company on August 7.
  • The company isn't going to see the typical seasonal stock gains.
  • The recommendation is for investors to sit on the sidelines until the Trulia merger and CFO issues are resolved, possibly providing a seasonal buying opportunity in the fall.
   The after hours news for Zillow (NASDAQ:Z) isn't very encouraging. The online real estate marketplace continues to feel the impact from a messy integration from the Trulia merger and the latest impact is the CFO leaving the building. The stock that peaked over $160 on the initial announcement of the supposed game-changing merger is now struggling to hold $80 in initial trading after this news.

 Read the full article on Seeking Alpha.


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

Friday, July 10, 2015

Shake Shack: Still Not Reasonably Priced After 50% Decline


  • Shake Shack continues to sell off following the absurd valuations achieved shortly after the IPO.
  • The stock still trades at expensive multiples compared to other high-valued stocks in the sector without offering the faster growth.
  • Shake Shack doesn't yet offer a compelling valuation proposition, even after the nearly 50% decline from the peak.
It is hard to explain why the market does it, but over and over great companies get valued at absurd valuations. The scenario is now playing out with Shake Shack (NYSE:SHAK). The ultra-hot burger joint saw the stock initially trade after the IPO in the $40 range and surge to over $95 within months.

Read the full article on Seeking Alpha.


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




Should Apple Investors Worry About China?


Summary

  • China has ramped up to become a significant market for Apple.
  • The market data doesn't support that the average retail investor in China is harmed.
  • Apple is a cheap stock even with a large hit to FY16 earnings.
   The recent collapse in the Chinese stock market has investors clamoring over the impact to tech stocks. In fact, the biggest stock of them all might have the most to worry about. Apple (NASDAQ:AAPL) saw the stock move to new highs following a huge jump in Q215 revenue from Greater China.

 Read the full article on Seeking Alpha.


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

Facebook: Trading Teens Doesn't Add Value


  • Facebook continues trading teen users on their different social platforms causing higher costs.
  • The company is still predicting higher cost growth for the year and will be a key indicator on the Q2 earnings report.
  • Facebook remains expensive considering the limited earnings growth.
It definitely isn't news that Facebook (NASDAQ:FB) has a teen issue, but it clearly hasn't hurt the stock. The real issue is whether the stock is worth $240 billion if the group of social networking sites is only swapping out users including teens.

Read the full article on Seeking Alpha.


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



InvenSense: China Is Not That Important Yet


  • InvenSense hit a new multi-year low on the back of weakness in China.
  • The company gets a decent amount of revenue from Chinese consumers, but it isn't the market leader at this point.
  • InvenSense is too cheap to pass up at these levels.
The latest selloff in InvenSense (NYSE:INVN) caps off a disappointing year in a stock that's producing record revenues. The latest drop to multi-year lows is blamed on the collapse of the Chinese stock market that has investors fearing that consumers in the growing economy will buy less tech gadgets.

Read the full article on Seeking Alpha.


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





Coca-Cola Enterprises: A Capital Return Play On A Europe Rebound


Summary

  • Coca-Cola Enterprises offer investors a strong capital return program.
  • The European bottler offers a better value than Coca-Cola Company.
  • Investors should buy alongside the company while getting paid 2.5% to wait for a European rebound.
   Coca-Cola Enterprises (NYSE:CCE) is a mostly under the radar investment opportunity not followed by many investors. The company acts as the distributor of Coca-Cola products in most European markets including Great Britain and France. Despite better growth prospects than Coca-Cola Company (NYSE:KO), it trades at a discount to the better known Coca-Cola.

 Read the full article on Seeking Alpha.


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

Potash Deal For K+S Highlights Industry Issues


Summary

  • Potash bid for K+S seems highly unlikely due to regulator issues, especially in Germany.
  • The deal is needed to limit or consolidate capacity in fertilizer where high margins encourages adding capacity.
  • Potash is not a stock to own unless it can complete this merger at an attractive value and reduce capacity.
   The desire of Potash Corp. (NYSE:POT) to buy out K+S AG (OTCQX:KPLUY) (OTCPK:KPLUF) is no surprise to the market. The German company has high-cost potash mines in Germany, but more importantly, it is building a potash mine in Canada that could flood the market with supply of the valuable fertilizer at a time it isn't needed. Or at least it isn't needed for Potash to maintain its high margins.

 Read the full article on Seeking Alpha.


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

Thursday, July 9, 2015

Did Iran Just Destroy ConocoPhillips' Cash Flow Plan?


Summary

  • The news that Iran might dump oil on the market is bearish for the price of the commodity.
  • ConocoPhillips has a plan that requires much higher oil prices to cover the dividend with cash flow.
  • The stock appears propped up by a dividend that isn't supported by cash flows.
   Due to a confluence of issues, oil prices plunged on July 6. The massive 7.7% drop in WTI left the benchmark at roughly $52.50 per bbl before a further drop mid-day on Tuesday. While Greece and China are short-term concerns, the biggest issue to the oil markets long term is Iran.

 Read the full article on Seeking Alpha.


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

Motorola Solutions: Was The Drop Warranted?


Summary

  • Motorola Solutions has seen the stock dip to multi-year lows after disappointing the market with weak Q2 guidance.
  • The stock continues to offer the highest net payout yield in the market for stocks with market caps above $10 billion.
  • Motorola Solutions is a stock to buy after the recent sell off with the company providing huge buybacks and solid earnings.
   The recent drop of Motorola Solutions (NYSE:MSI) to a multi-year low brings up an interesting dilemma. The tech company has one of the most aggressive stock buybacks in the market, yet investors aren't buying the stock alongside the company.


 Read the full article on Seeking Alpha.


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

Tuesday, July 7, 2015

Looks Like $55 Is The New Level For Shale Oil

Interesting research from Global Hunter Securities suggesting that a lot of shale producers are willing to increase capital spending when oil sits around the current WTI prices of $55. If so, this is bullish for airlines, consumer stocks, and even oil services firms. The move is bearish for E&P firms needing oil prices above $55.






Disclosure: Long airlines and oil services firms. Please review the disclaimer page for more details.



Top 10 Net Payout Yield Stocks For July 2015


  • The top ten net payout yields underperformed the market in June due to several stocks with larger losses than the S&P 500 index.
  • The top ten net payout yield stocks average yields of 14.0% to start July.
  • Motorola Solutions continues to hold the highest yield now at 27.0%.
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, MSI, NLY, NOC, NTAP, TRV, VIAB. Please review the disclaimer page for more details. 






Sunday, July 5, 2015

Yelp: Not For Sale, But Don't Panic


  • Yelp decides to take itself off the sales block sending the stock down 10%.
  • The consumer review site is no longer expensive after a major collapse in the stock this year.
  • Yelp is still failing to significantly improve user growth based on mobile app downloads, suggesting the stock will struggle in the short term.
In not such a surprising move, Yelp (NYSE:YELP) failed to find a buyer willing to pay up for the consumer review site. Though no details exist on any offers or whether any existed at all, the likelihood all along was that Yelp would fail to find a buyer willing to pay for the potential of the site.

Read the full article on Seeking Alpha.


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



American Airlines: Beaten Down Without Merit


  • Airline stocks were beaten down last week on fears of a DOJ probe.
  • The data suggests the probe is without merit, especially considering the PRSAM drop during Q2 for American Airlines.
  • The airline sector remains incredibly beaten down, with American Airlines trading at a PE multiple of only 5.
After an already weak year, airline stocks were beaten down last week by a probe from the Department of Justice, or DOJ. Anybody who owns an airline stock, and especially American Airlines Group (NASDAQ:AAL), is likely flabbergasted heading into the July 4th holiday weekend. The thought that American Airlines is colluding on capacity appears preposterous based on the big battle going on in Dallas between Southwest Airlines (NYSE:LUV) and Virgin America (NASDAQ:VA).

Read the full article at Seeking Alpha.


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



Wednesday, July 1, 2015

Peabody Energy - Will The Supreme Court Decision On Coal Really Help?


  • The recent Supreme Court ruling gives coal miners some hope of reduced regulations on the industry.
  • The news arrived too late for the coal industry, as investments have already been made to replace coal power plants.
  • Until Peabody Energy turns around the negative EPS trend, investors should avoid the stock.
Coal stocks remain in an absolute crash mode with a limited number trading above $1. The sector rallied on Monday due to a Supreme Court ruling that knocked down a hurtful rule for coal enacted by the Environmental Protection Agency in 2011. Coal stocks rallied on the news, but it isn't clear whether the overturning of the EPA air pollution rule will have any impact on the market considering the late date of the overturning. The power plant market has already shifted toward cheap natural gas, but if any stock has the potential to benefit from a Supreme Court decision, it would be Peabody Energy (NYSE:BTU). Looking at the chart below, one can see the damage of the last three years.


Read the full article on Seeking Alpha.


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