Tuesday, December 29, 2015

Fitbit: Why Insiders Sold Out Prior To The Holidays

  • Fitbit tops the iOS app charts following an apparently blowout holiday sales.
  • The stock saw a muted reaction reinforcing the insider sales and highlighting fears of a repeat of the GoPro year.
  • The strong ecosystem makes the Fitbit story compelling, but the recommendation remains to wait until the holiday enthusiasm falls off.



My previous investment research highlighted the concerns with insiders rushing to dump shares of Fitbit (NYSE:FIT) prior to the promising holiday season. Activity-tracking devices were expected to be a top holiday gift so why would anybody want to sell shares at the lows following the June IPO?

Read the full article at Seeking Alpha.


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



Sunday, December 20, 2015

Halcon Resources Offers Clues On Oil Stabilization

  • Halton Resources cut capital spending levels again, marking dramatic reductions from the original 2015 levels.
  • The oil producer remains in a distressed position, requiring a reverse stock split.
  • The recommendation is to avoid the stock, but investors should watch oil production from the company for key indications on price stability.



The initial headline that Halcon Resources (NYSE:HK) was cutting 2016 capital spending in half yet maintaining flat production levels was very troubling. If the distressed oil producer can maintain production levels while undergoing a reverse split, the oil market is in big trouble next year.

Read the full article on Seeking Alpha.


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


Saturday, December 19, 2015

Why General Motors Heads Higher

  • General Motors continues trading in a small range below $35.
  • The fundamentals of the company continue to improve allowing for large capital returns in comparison to the market cap.
  • The stock remains a solid buy providing a dividend yield over 4% to pay investors while waiting for the stock to bounce higher.



For the last two years, the stock of General Motors (NYSE:GM) has flatlined. The market has worried endlessly about waning demand in China and liabilities from the ignition switch issue amongst others.

Read the full article on Seeking Alpha.


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



Why Is Delta Air Lines Still Trying To Kill The Boeing Party?

  • Delta Air Lines continues to tell anybody that will listen the purchase prices for used 777s. 
  • Along with a downgrade, Boeing is down sharply on the news. 
  • The recommendation is for investors to continue focusing on the order book for narrow-body planes and ignore the noise generated by a customer looking for cheaper planes. 



In an interesting news twist, Asia's largest carrier agreed to purchase 110 Boeing (NYSE:BA) airplanes, yet the market appeared more interested in the cost of one used plane. The news bits continued a spate over the last several months regarding a glut in the airplane market and specifically the wide-body jets. See my original research on the issue here.

Read the full article on Seeking Alpha.


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



Friday, December 18, 2015

Why All The Hate On Zoe's Kitchen?

  • Zoe's Kitchen trades back to support near $30 as the stock attracts a lot of shorts and a lethal downgrade.
  • The stock trades at a compelling valuation to the growth rate compared to a peer group.
  • The investment thesis in Zoe's Kitchen is only enhanced by the lack of a compelling reason for the negative thesis on the stock.


Suddenly the fast-growing concept of Zoe's Kitchen (NYSE:ZOES) isn't seeing any love. Short interest is soaring and a negative analyst call sent the stock down to recent lows.         

Read the full article on Seeking Alpha. 


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


Update: Stock provided an incredible buying opportunity hitting a low of $25.86 on Friday. 

Thursday, December 17, 2015

Spirit Airlines Headed For A Rebound In 2016

  • Spirit Airlines shareholders are glad to see 2015 end.
  • The airline is set for better traffic metrics in 2016 due to reduced capacity growth.
  • The stock is highly attractive at extreme lows compared to the long-term growth rate.



My investment thesis on Spirit Airlines (NASDAQ:SAVE) for a while now is that the airline caused self-inflicted wounds by growing capacity too fast. The stock is currently trading near multi-year lows, down roughly 50% from all-time highs.

Read the full article at Seeking Alpha.


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



Wednesday, December 16, 2015

Glu Mobile: Katy Perry Pop Game Targets

With the soft release of the Katy Perry Pop game yesterday,  Glu Mobile (GLUU) investors need to keep in mind the following records set with the release of Kim Kardashian: Hollywood. A lot of the milestones provided by Glu Mobile aren't specific numbers so some difficulty exists in matching up the success of the two games. Guess the ultimate key is reaching the #5 top grossing position on the iPhone.

Glu milestones include:
  • Single-day total company revenue record
  • Highest single-day DAU in company history (10M+)
  • Glu overall single-day revenues exceeding the previous one-day record each of the last 18 days
  • Dino Hunter: Deadly Shores and Kim Kardashian: Hollywood simultaneously achieved #1 and #3 chart position on U.S. App Store Top Free for iPhone
Dino Hunter: Deadly Shores milestones include: 
  • Single-day Glu record of (1.5M+) downloads globally from an individual Glu title
  • Glu record (5.7M+) downloads in first 5 days of global release
Kim Kardashian: Hollywood milestones include:
  • Record single-day revenue from an individual title, surpassing previous record set by Deer Hunter 2014
  • Single-day revenues have exceeded Deer Hunter 2014's previous single-day revenue record for 16 of the last 18 days
  • Reached #5 U.S. App Store Top Grossing chart position for iPhone
  • Highest sustained ARPDAU for a single Glu title in its initial 18 days of worldwide release


The iPhone installed base is significantly lager nearly 18 months later so a similar top 5 grossing position will generate more revenue. KKH ultimately produced $43.4 million in revenue during the first full quarter last Q3. 

Glu Mobile is an extremely cheap stock if KKP can follow that path. With the official launch tomorrow, the stock should start heating up. The game is now the #5 downloaded in the Adventure category and around the top 50 for all games. 



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



Tuesday, December 15, 2015

Avoid Cheniere Energy As Executive Shuffle Causes Uncertainty

  • Cheniere Energy votes to replace the founding the CEO after Carl Icahn upped his stake last week.
  • The exact same scenario played out on another Icahn position that hasn't rewarded shareholders.
  • The recommendation is for investors to pay attention to the industry problems and not the executive shuffle. 

Over the weekend, Cheniere Energy (NYSEMKT:LNG) replaced founding CEO and Chairman Charif Souki. The move follows the path of another Carl Icahn position that hasn't worked out very well this year.

Read the full article at Seeking Alpha.


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



Monday, December 14, 2015

Twitter: Here Comes The Logged-Out Audience

  • Twitter is moving forward with the plan to monetize the logged-out user base that exceeds 500 million people.
  • The revenue opportunity exceeds $1.3 billion providing a significant boost to a revenue base currently around $2 billion.
  • The recommendation remains to start building a position in the stock around $25 with cash held back for any dips to previous lows.



For a while now, the market has generally downplayed the fact that Twitter (NYSE:TWTR) has a substantial logged-out audience. The company noted the considerable number of users who view tweets without logging into the service over a year ago, but Wall Street has generally only focused on the stalling MAU totals.

Read the full article on Seeking Alpha.


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



Sunday, December 13, 2015

ConocoPhillips Didn't Deliver The Goods

  • ConocoPhillips provided investors with the 2016 capital budget and operating plan.
  • The company remains solidly focused on paying the dividend with no intent to curtail production.
  • The recommendation remains to avoid the stock until the priority is to focus on the business and not sending cash to shareholders that isn't earned.



With the new competitive environment in the commodity energy business, a company needs ultimate flexibility to build for the future. One of the biggest problems with capital intensive businesses is that volatile commodity prices make dividend payments to shareholders difficult during the lean years. A company must either borrow debt, sell assets at the bottom of the cycle, or cut capital spending to the bone to cover the cash payments. Neither is a good option and the latter two hurt the business over the long run.

Read the full article on Seeking Alpha.


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



Thursday, December 10, 2015

T-Mobile Remains Entertaining For The Holidays

T-Mobile (TMUS) CEO John Legere posted the following video to Twitter (TWTR). As usual, the message is extremely entertaining and a prime reason the wireless carrier has gained share on the mega carriers.






Jingle Bells, Verizon (VZ) smells, Go90 laid an egg... Clever and entertaining. Not sure if it helps the stock though. 


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



Tuesday, December 8, 2015

Follow This Apple Trend For Now

With the stock struggling to gain any momentum, Apple (AAPL) actually continues seeing the earnings estimates riding higher. The previous investment research on the stock recommended owning this stock as long as the earnings trend remains positive.



Trading at roughly 9x the '16 estimates ex-cash, Apple is too cheap. At the current price of $118, the stock appears ready to surge higher into year end.


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


What To Do With Williams Now?

  • The stock price continues plunging ahead of the finalization of the merger with ETE.
  • The deal complexity and required cash portion of the transaction were signals to avoid the stock.
  • Williams doesn't trade at enough of a discount to warrant owning the stock prior to the merger closing in early 2016.



The energy sector, and especially the infrastructure space, is in the midst of a massive collapse. One stock caught up in the carnage is Williams Cos. (NYSE:WMB), with the stock down 13% on Monday and nearly $10 in the previous four trading days before a rebound on Tuesday.









Read the full article on Seeking Alpha.


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



Saturday, December 5, 2015

Don't Rush Into Chipotle Mexican Grill

  • The CDC continues to report new cases related to the E. coli outbreak.
  • The new cases are related to the original outbreak dates that ended November 7.
  • Previous health illness cases and valuation concerns suggest avoiding Chipotle Mexican Grill even on the selloff predicted for Monday trading.



After the close on Friday, Chipotle Mexican Grill (NYSE:CMG) updated investors and the news wasn't very good. The restaurant chain that prides itself on serving quality food is having a difficult time shaking the recent E. coli outbreak.

Read the full article on Seeking Alpha.


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



Friday, December 4, 2015

Ambarella: Ongoing Timing Issues Will Erode Confidence

  • The forecasted timing issue with action camera revenues pulled forward in FQ2 is rolling over into the next two quarters.
  • The stock trades at healthy multiples for a company facing stalling revenue growth.
  • With the expectation that the market will lose confidence in Ambarella, the recommendation remains to hold off on buying the stock.



As presented in my previous research in early September, Ambarella (NASDAQ:AMBA) was likely to struggle in the short term as the company transitions away from a reliance on action cameras from a prime customer. Due to timing issues pulling revenues forward, the company previously predicted that FQ3 results would miss original high expectations.

Read the full article on Seeking Alpha.


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



Tuesday, December 1, 2015

Target - Cyber Future

The news from Target (TGT) appears to confirm that Black Friday is no longer crucial to most retailers. With the retailer starting to generate strong online momentum, the future is in the cyber world.

The data as well continues to confirm a electronic holidays. The top selling items game consoles, TVs, an iPad, and the interesting addition of the Nest thermostat. Guess Google (GOOG)(GOOGL) might have a decent business with that purchase.

Among the top sellers on Target.com’s top-selling day were:
  • Xbox One 500GB Gears of War: Ultimate Edition Bundle was the #1 selling item
  • Target sold two 48” Samsung 4K Ultra HD TVs per minute  
Other top sellers included:
  • Apple iPad Air 2
  • Graco 4Ever All-in-One Car Seat
  • Barbie Dream House
  • Nest Learning Thermostat
  • Pampers Baby Dry Diaper Super Size Pack

Without any hard numbers, it's difficult to get a read on the impact for Target. The retailer is finally making some inroads into claiming an online future. The stock trades at a middle of the roads valuation at 14x forward earnings. Not much of a bargain unless the Cyber Monday numbers suggest the company can actually survive against Amazon (AMZN) in the future. 


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