Tuesday, October 27, 2015

Too Much Love For Southwest Airlines?

  • Southwest Airlines exceeded Q3 estimates when excluding fuel hedges.
  • The airline is trading at all-time highs with a very attractive valuation.
  • The stock is not loved enough, especially considering the industry shifting down capacity growth heading into 2016.



Not long ago, Southwest Airlines (NYSE:LUV) helped trigger a major sell off in the airline sector. At the time, investors feared that the capacity additions of the airline were going to pressure profits. The fear that the industry was heading back to the one of irrational capacity additions of the past was foremost on investor minds.

Read the full article on Seeking Alpha


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



Monday, October 26, 2015

Does PMC-Sierra's Q3'15 Results Impact The Buyout?

  • PMC-Sierra reported solid Q3'15 results.
  • The strong results are supportive of a higher offer from Skyworks Solutions.
  • The best way to play the deal are the suitors with Skyworks offering the best valuation even if it fails to close the deal for PMC.



After the close PMC-Sierra (NASDAQ:PMCS) released Q315 earnings. The quarterly results of buyout targets are always worth viewing since a prime reason for a board of directors to relent on a buyout is weak results. The market got a prime example of this issue with Dialog Semiconductor (OTC:DLGNF) plunging on weak Q4 guidance following agreeing to buy Atmel (NASDAQ:ATML).

Read the full article on Seeking Alpha.


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



Sunday, October 25, 2015

Under Armour: Struggling To Justify Higher Prices

  • Under Armour generated strong revenue growth during Q3'15 that led to beating analyst estimates.
  • The company is working on numerous initiatives that are increasing revenues at the cost of margins.
  • The stock valuation isn't justified by growth path laid out by the company.



The quarterly results for Under Armour (NYSE:UA) were generally impressive, but the stock sank over 5% as the retailer couldn't match sky-high investor expectations. The stock has struggled over the last couple of months when it exceeds $100. Even bullish revenue targets released at the Investor Day a month ago were met with the stock hitting resistance around $105.

Read the full article on Seeking Alpha.


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



Saturday, October 24, 2015

AT&T: Still Cheap Despite The Confusion

  • AT&T easily surpassed Q3 2015 EPS estimates despite massive confusion regarding the revenue numbers.
  • The market continues to not appropriately value the stock based on synergy benefits that will kick in over the next year, whether or not the company achieves the ultimate $2.5.
  • The stock is cheap while paying a 5.6% dividend for investors to wait on synergy benefits.



The Q3 results for AT&T (NYSE:T) were a mass of confusion with the inclusion of DirecTV for only a partial period. The company came out early and pointed out that analysts were miscounting DirecTV revenue while previously changing how commercial satellite subscribers were counted. At the same time, the shift in video and broadband revenues from legacy AT&T to a new segment mingled with DirecTV revenues and expenses made quarterly comparisons difficult.

Read the full article on Seeking Alpha.


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



Friday, October 23, 2015

Are Grownups Really Running Google, I Mean Alphabet?

  • Alphabet surges to new highs based on surpassing Q3'15 estimates.
  • A big rationale for the recent gains isn't so apparent in the Q3 details that suggest financial discipline isn't in place following the hiring of the new CFO.
  • The stock likely continues rallying based on momentum until year-end before the market wakes up to the higher levels spent on other bets.



The investment thesis about 150 points and a name ago was that the stock of Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) would soar based on a grownup running the show. The prediction was that the stock had significant ability to not only grow earnings, but obtain higher multiples from the market with better financial stewardship.

Read the full article at Seeking Alpha.


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



Tuesday, October 20, 2015

Verizon: Low Churn Paving The Way For Huge Cash Flows

  • Verizon continues to churn out strong earnings as customers remain loyal to the wireless service.
  • The company is generating free cash flow of nearly double the quarterly dividends that alone yield 5%.
  • The stock remains cheap at 11.3x 2016 EPS estimates whether or not earnings plateau next year.



While the market focuses on the 2016 earnings plateau predictions of the company, Verizon Communications (NYSE:VZ) offers up attractive valuations now. The leading domestic wireless provider reported another quality quarter despite facing intense pressure from the other wireless providers trying to grab market share.

Read the full article on Seeking Alpha.


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



Sunday, October 18, 2015

The New Dogs Of The Dow - Q3 2015

  • The New Dogs of the Dow had substantial Q3 losses similar to the benchmark Dow.
  • The average stock in the Net Payout Yields based list has a yield of 9.1% to start Q4.
  • Even after a small gain in Q3, Travelers continues to top the list with a 12.1% 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 review the disclosure page for more details. 




Wednesday, October 14, 2015

Verizon: Mobile Ad Dumpster Diving

  • Verizon is slowly building up a mobile-ad service.
  • The go90 mobile service offers a glimpse of the future though providing limited impact to current financials.
  • The wireless provider continues to pivot toward the future while providing investors a 5% yield to enjoy in the mean time.



Though the AOL deal didn't originally appear to offer much value to a wireless behemoth like Verizon Communications (NYSE:VZ), considering its lack of growth and small size, some opportunties emerged that made the service all additive. In a similar manner, the purchase of Millennial Media (NYSE:MM) for a meager $248 million doesn't appear to offer anything meaningful to a company worth over $180 billion.

Read the full article on Seeking Alpha.


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



Saturday, October 10, 2015

Shake Shack: Insiders Continue To Confirm The Price Is Too Rich

  • Shake Shack files an updated S1 allowing pre-IPO shareholders to dump up to 26.1 million shares.
  • Even at the recent lows, the stock remains incredibly expensive.
  • Shake Shack faces too much selling pressure to recommend anybody it under this scenario of likely relentless insider sells.



Prior to the open on Thursday, Shake Shack (NYSE:SHAK) filed a S1 allowing pre-IPO insiders to dump up to 26.1 million shares. The filing allows insiders to sell the shares from time to time at what amounts to over $1.2 billion at current stock prices of $47.

Read the full article at Seeking Alpha.


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



Friday, October 9, 2015

Under Armour: Fads Tend To End Badly

  • Under Armour continues to trade near all-time highs despite the market weakness.
  • The athletic apparel retailer trades at multiples considered stretched for other fast-growing retailers.
  • Investors need to carefully consider what might happen to the stock when the party ends.



While the market was all caught up with Under Armour (NYSE:UA) raising the sales target at its Investor Day, investors need to keep in mind that retail "fad" stocks don't typically end well. The market has a recent history of Lululemon Athletica (NASDAQ:LULU) to Michael Kors (NYSE:KORS) to even athletic apparel leader Nike (NYSE:NKE) as reasons for caution.

Read the full article at Seeking Alpha.


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



Saturday, October 3, 2015

Twitter: The Value Of The Influencer Network

  • Research continues to point to point toward Twitter having a very valuable network of users that influence the market.
  • The numbers suggest that Twitter could eventually monetize the user base at a higher rate.
  • The stock still has some warts on it before recommending it as a long-term buy.



While concerned about more downside for Twitter (NYSE:TWTR) in the short term due to a lack of a permanent full-time CEO and some valuation concerns, the long-term prospects are rock solid. More data continues to show that the company has a user base that is influential and potentially more valuable than the typical social media follower.

Read the full article on Seeking Alpha.


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