Saturday, November 10, 2018

Square: Cracks Forming

Square actually traded down following a big Q3 beat.
A lot of the negative signal from prior to the quarter contributed to the weakness in the stock.
The market has missed that share counts are exploding, up 15% YoY.
The stock still trades at about 23.5x '18 adjusted revenue estimates.
As some shareholders hate, my previous articles on Square (SQ) pointed out the substantial risks in owning the mobile payment provider with limited profits at stretched valuation multiples. Following the release of Q3 results, some more cracks are starting to form in the runaway growth story where my investment thesis already identified negative signals.
 Read the full article on Seeking Alpha. 

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

Friday, November 9, 2018

Qualcomm: Don't Overreact

Qualcomm is down over 8% on disappointing FQ1 guidance.
Apple remains the main thorn in their financials impacting the comparisons until the license dispute is resolved.
Business remains solid, with EPS targets rising even without ~$1.7 billion in high-margin license revenue.
The net payout yield is set to reach 35% make a very bullish buy signal.
The perplexing story of Qualcomm (QCOM) was further evident by the reaction to a large FQ4 earnings beat. After massive stock buybacks and with 5G on the horizon, now isn't the time to abandon ship just because Apple(AAPL) continues playing hardball. My long-term investment thesis remains solid.
Read the full article on Seeking Alpha. 

Disclosure: Long QCOM, AAPL. Please review the disclaimer pages for more details. 

 

Tuesday, October 30, 2018

Baidu: Buy China-Induced Weakness

  • Baidu continues to slump to multi-year lows.
  • The Chinese company has growth opportunities outside internet search in voice assistants and self-driving cars, among others.
  • The stock remains exceptionally cheap in the large-cap technology sector as margins rebound with the exit of transaction-related businesses.
The general weakness in Chinese tech stocks provides a substantial opportunity for a stock like Baidu (BIDU). The internet search leader in China has in-roads to new technologies and the Chinese economy is still transitioning online while the economy is growing at one of the fastest rates in the world. My investment research continues to support buying weakness in the stock, especially on irrational fears related to Google (GOOG, GOOGL) entering the Chinese internet search market.

Read the full article on Seeking Alpha. 


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

 

Monday, October 29, 2018

IBM: Bold Move

IBM agreed to pay a 63% premium for Red Hat to become a leader in hybrid cloud.
The deal is accretive to free cash flows starting around 2020.
The $34 billion of additional net debt adds risk to the story.
The transformative deal could be the bold move to change the perception of the stock trading at only 8.5x '19 earnings estimates.
The market has long complained that IBM (IBM) hasn't made a bold move to transform the company. The move to acquire Red Hat (RHT) was the move that the market always wanted, but no doubt views as highly risky now. The deal premium adds more risk than justified but IBM might just pull the company out of this tailspin with this bold move.
Read the full article on Seeking Alpha. 

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

 

Monday, October 22, 2018

eBay: Too Pessimistic On Split

eBay tanked following PayPal reporting weak TPV numbers for the online merchant.
The online retailer has only started the process of managed payments that removes PayPal from the process.
The stock is incredibly cheap with no actual confirmation that GMV will be weak due to the payments transition.
eBay (EBAY) plunged 9% on Friday as the market reacted to GMV numbers provided by PayPal (PYPL). Considering eBay is in the process of implementing managed payments that removes PayPal from the process, investors need to be careful with data from a potentially unhappy partner. My investment thesis remains bullish.
Read the full article on Seeking Alpha. 

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


Thursday, October 11, 2018

Square: Negative Signals

Square falls after moving further into risky loans.
The departure of the CFO is another big risk for the stock.
The long-term margin picture is mostly misunderstood by investors leading to the insane valuation when the stock reached $100.
Square is still too expensive at $70 with these negative signals.
In a predictable move, an overpriced stock like Square (SQ) quickly surged to $100 and just as quickly gave up the gains of the last few weeks. The mobile-payments company has quickly expanded into new areas and the market rapidly accepted them as easy money. Some likely doubts are emerging over a further expansion into the loan business, questioning if Square is running out of opportunities for customer expansion in more strategic areas.
Read the full article on Seeking Alpha. 

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

 

AMD: More Magic Left

The market is too focused on where AMD came from in this cycle due to irrational lows.
Compared to past trends with Intel, AMD hasn't reached market share levels, EPS numbers, or stock prices to even closely match past achievements.
Analysts are only tepidly bullish on AMD with the majority of analysts having Hold or Sell ratings.
The dip to $26 is an opportunity after a weak market over the last week.
Historically, Advanced Micro Devices (AMD) has generated a more volatile earnings trend than that of rival Intel (INTC). The weak link in the market always takes the hardest hit in down cycles as the market leader can squeeze profits. The recent dip in AMD to $26 is due in part to misplaced market fears that Intel is roaring back to life to reinsert their dominance. The data doesn't support this scenario, keeping us bullish on AMD having more magic left in this cycle.
Read the full article on Seeking Alpha. 

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

 

Monday, October 8, 2018

Apple: Raiding The Google Piggy Bank

Apple apparently obtained a large hike to the fees Google pay as the default search browser on Apple products.
Google has recently complained about the rising TAC.
The near pure profit search revenues should boost FY19 EPS targets towards $14.50.
One doesn't have to look very hard to make a bullish thesis on Apple (AAPL) based on their growth in the Services division. The shocking news of the last week is that a portion of the revenue base is set for a major boost thanks to Google (GOOG, GOOGL). These high-margin revenues might provide a bigger boost to the bottom line than the new iPhones.
Read the full article on Seeking Alpha. 

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

AT&T: Xandr Appears Mostly Hype

AT&T launched their rebranded digital ad business.
Xandr is only estimated at 3% of the total revenue base.
Any success of Xandr provides upside to my previous $40 base case target.
The business is off to a troubling start with AppNexus CEO leaving.
Last week, AT&T (T) ushered in the aggressive move into advertising. The wireless giant hopes to more effectively compete in the advertising sector against the tech giants by collecting more data from customers via various video and wireless connections. Unfortunately, the newly created Xandr is more likely to resemble the failure of Oath from Verizon Communications(VZ).
Read the full article on Seeking Alpha. 

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

Tuesday, October 2, 2018

Qualcomm: IoT Boost

Qualcomm has growth driver in the Internet-of-Things (IoT) market.
The market will start looking beyond just mobile communications as FY19 starts.
The $7 EPS target is a base case for FY19 with growth areas providing upside potential in the future.
As Qualcomm (QCOM) looks to move away from the termination of the NXP Semi. (NXPI) merger, a big key is whether the company can shift away from reliant on the maturing wireless sector. The NXP Semi. deal promised a shift into connected cars, but Qualcomm alone is making a strong push into the promising IoT sector providing a solid long-term boost to my investment thesis on the cheap stock.
Read the full article on Seeking Alpha. 

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

Monday, September 24, 2018

AMD: Digging Into Revenue Targets

The CFO did not guide down at a recent technology conference.
The GPU blockchain weakness actually provides a tailwind going forward.
2020 targets of $10.0 billion in sales and $1.75 EPS are doable as average analyst estimates appear more a base case.
A lot is being made of the AMD (AMD) CFO comments at a conference surrounding low revenue numbers while my previous research had generally questioned the company and analyst estimates as being too low. A lot of disconnect exists in regard to the general bullish market expectations and actual estimates.
Read the full article on Seeking Alpha. 

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

 

Thursday, September 20, 2018

Cisco Systems: Change Of Heart

Cisco Systems is now more appealing than originally thought at lower levels.
The catalyst from the shift to software is still taking a long time backing the original bearish thesis.
The ability to boost the net payout yield via massive stock buybacks has changed the equation.
The stock offers a near 11% yield.
My view on Cisco Systems (CSCO) was rather harsh as the networking giant saw the stock surge in the last year, but the actual quarterly results didn't improve significantly. The aggressive use of cash repatriated from foreign locations combined with solid execution on recent earnings reports has my view turning more bullish now.
Read the full article on Seeking Alpha. 

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


Monday, September 17, 2018

NXP Semi.: Gushing Cash

NXP Semi slumped last week following a confluence of negative events.
The company has plans to improve operating margins in the range of 500 basis points.
The CFO forecasts aggressive stock buybacks with the stock trading in the $90s after already repurchasing 12% of the company.
Last week, NXP Semiconductors (NXPI) slumped to yearly lows around $85 following weakness in the semiconductor segment, fears over China and possibly some disappointment surrounding the Analyst Day on September 11. The solid bounce again confirms my investment thesis of owning this semiconductor on these dips to $90 as the company itself snaps up billions worth of shares.
Read the full article on Seeking Alpha. 

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

 

Sunday, September 16, 2018

Fitbit: Apple Watch Is No Threat

The biggest takeaway from the Apple event this week were the medical features on the Series 4 watches.
Fitbit has plenty of work in the process on FDA clearance for medical monitoring functions.
The stock dip back below $5.50 provides enormous value for a stock with an EV below $1 billion.
At the Apple (AAPL) event on September 12, the tech giant unveiled the new Watch Series 4 along several new iPhones. In response, Fitbit (FIT) dipped nearly 7% to the $5.50 range providing the long awaited opportunity to buy fear induced weakness on the smartwatch and fitness tracker stock. The catalyst to the story is that Apple ushered in the era of the smartwatch as a med-tech device that will ultimately boost the struggling Fitbit.
Read the full article at Seeking Alpha. 

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

Friday, September 14, 2018

American Airlines: Beaten To A Pulp

American Airlines has been beaten down this last year as investors incorrectly focus on net debt levels.
Reduced capital expenditures and pension payments will free up around $3 billion in additional cash flows.
The stock trades at half the P/S multiple of Delta Air Lines.
The airline is in the middle of a $4.2 billion initiative to improve revenues and lower costs.
The amazing decline in American Airlines Group (AAL) has left the stock at such a discount to the sector that a major Wall Street analyst actually called the stock undervalued due to the simple P/S multiple. The airline has a lot more going on to support owning the stock, but an easy bull case always helps.
Read the full article on Seeking Alpha. 

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

Wednesday, September 12, 2018

AMD: Just Let It Run

AMD has the capacity to surpass forecasted weak sales growth in Q3 and beyond.
The chip company appears poised to make the jump to 40%-plus gross margins due to higher margins from EPYC.
Look for the long-term EPS target to get hiked above the $0.75 estimate.
After a stunning rally to $30, investors might be shocked to find out that Advanced Micro Devices (AMD) already is at the end of the growth phase, according to forecasts. As per my previous research, the cyclical nature of the business should haunt the stock at these levels, but the business trends remain far too bullish to dump AMD and run away here.
Read the full article on Seeking Alpha. 

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

Tuesday, September 11, 2018

Verizon: Near Perfect Dividend Hike

Verizon made a near perfect dividend hike of 2.1%.
The forward dividend yield is now about 4.5%.
The wireless company has annual dividend payout obligations of nearly $10 billion.
Exiting the media business would allow Verizon to avoid the tech wars.
Last week, Verizon Communications (VZ) increased the dividend for the 12th consecutive year. Investors wanted a bigger hike due to higher cash flows from tax reform, but this dividend hike was the perfect amount to not lose shareholders while preserving cash for the coming tech war.
 Read the full article on Seeking Alpha. 

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

 

Monday, September 10, 2018

TipRanks - Top 25 Financial Blogger

Nice to make the top 25 though I don't regularly pay attention to the TipRanks rankings. With over 6,600 financial bloggers ranked, its a nice accomplishment. Maybe more impressive is reaching the #154 spot out of all financial experts.








Sonos: Not Sure What People Expected

Sonos (SONO) is trading down about 14% in after-hours trading. Not sure what investors were thinking in pushing this recent IPO stock up over $21 prior to the 1st earnings report. My original research was highly negative on the stock.

The speaker company actually slightly beat analyst estimates for FQ3'18. The key was the expectations for declining numbers. A recent IPO isn't going to hold up when revenues are down YoY by nearly 10%.

The company even has negative adjusted EBITDA. Just avoid Sonos in the competitive voice-assisted speaker market.

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


Snap: Headed To $5

Snap continues to face incredible competition from Instagram that even challenges the dominance in the under 18 crowd.
The stock currently trades at a higher EV/S multiple in comparison to dominant peers.
Snap price target lowered from $7 to $5.
As Snap (SNAP) falls to new lows, investors need to understand that the stock doesn't offer any value. This isn't a stock to buy on dips other than for a quick dead-cat bounce. My previous target of $7 is lowered to $5 for a market valuation of roughly $7 billion.
Read the full article on Seeking Alpha. 

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

 

Thursday, September 6, 2018

The Power Of Twitter

CEO Jack Dorsey testified in Washington D.C. alongside Facebook COO Sheryl Sandberg.
One day Twitter will have a market value that matches the influence of the platform.
Revenue estimates and digital ad forecasts have missed the turnaround at the social platform.
As the social networking sites appeared in Washington D.C. to testify in front of the Senate Intelligence Committee, one noticeable distinguish occurred. Twitter (TWTR) leader Jack Dorsey became the center focus of the discussions with Congress including an additional committee meeting showcasing the power of Twitter even in comparison to Facebook (FB) and Alphabet (GOOG, GOOGL).
Read the full article on Seeking Alpha. 

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


Monday, August 27, 2018

Apple: Still Cheap At $1 Trillion

Despite surging past a $1 trillion market cap, Apple remains cheap trading at roughly 14x FY19 estimates, ex-cash.
Active iPhone device growth continues to provide a boost to service revenues.
Apple remains on pace for a 10% net payout yield.
Due to huge free cash flows in the December quarter, the tech giant will hardly reduce cash balances in the 2H at the $25 billion quarterly capital return pace.
Now that Apple (AAPL) has crossed the $1 trillion market cap threshold, the capital returns need to be reviewed again to derive whether value still exists in the stock. The famous plan for a $100 billion boost to stock buybacks was impressive at much lower values. My investment thesis that the stock wasn't still priced for the EPS boost still stands.
Read the full article on Seeking Alpha. 

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

 

Tuesday, August 21, 2018

SodaStream: Thank You Pepsi

SodaStream recently hit all-time highs following strong Q2 results.
Pepsi agreed to buy SodaStream at $144 per share in cash.
The premium valuation offers an ideal time to exist a winning position.
Only a few weeks ago, SodaStream (SODA) exploded above $100 after strong Q2 results. The manufacturer of home beverage systems benefited from strong quarterly sales and incredible leverage in the system to boost earnings. The company has now accepted an offer for $144 in cash allowing investors an opportunity to quickly exit on the top after a massive rally from the 2016 lows.
Read the full article on Seeking Alpha. 
Disclosure: No positioned mentioned. Sold SODA on the deal announcement. Please review the disclaimer page for more details. 

 

Monday, August 20, 2018

Shopify: Competition Knocking On The Expensive Door

Shopify recently hit a double top around $175.
Adobe Systems entered the sector with the purchase of Magento to compete for the e-commerce platform of large brands.
The alarming rate of sales deceleration is a major red flag for an expensive stock trading at a forward P/S multiple of 10x.
One of the ramifications of a massive market valuation is that competitors want a piece of the action. Shopify (SHOP) faces this exact scenario as investors rewarded the company with P/S multiple of 10x '19 revenue estimates.
Read the full article for more details. 
Disclosure: No position mentioned. Please review the disclaimer page for more details. 
 

Wednesday, August 15, 2018

Synergy Pharma: Sales Ramp Ignored

  • Synergy Pharma continues a slow ramp of Turlance prescriptions.
  • Significant cost controls helped cut the quarterly loss my nearly $10 million.
  • The Express Scripts deal for 2019 places the biotech on a path to a huge sales ramp by Q2'19.
Synergy Pharma (SGYP) has made several rallies towards $2, but the biotech stock hasn't held any gains despite improving prescription numbers for Trulance that treats IBS. The business developments during the last few months sets the stock up for a sustainable rally. 

Read the full article on Seeking Alpha. 

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

 

Saturday, June 9, 2018

Allergan: Unwelcome Guests?

Appaloosa and Senator sent letter to company requesting corporate changes that are rearview mirror leaning.
The activists are right that a more focused and nimble company is needed to achieve better results.
The company already has a plan that needs focus and any disruption from activists could be a negative on the existing plan for higher EPS targets in 2019/2020.
Allergan (AGN) is down 50% from all-time highs back in 2015 so understandably activists are agitating for changes. The time to make those moves was a few years back while now the biopharma needs to execute on the initiatives already set forward by the CEO.
Read the full article on Seeking Alpha. 

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


Friday, June 8, 2018

Under Armour: Rock Solid

Under Armour has quickly learned how to market footwear to generate buzz.
The footwear segment is where the athletic apparel company has the most growth potential.
The stock remains cheap at 2x forward sales estimates.
Under Armour (UAUAA) made a huge mistake while trying to grow too fast. The move into discount stores hurt the brand value and the recent release of shoes for "The Rock" shows the company has finally regained a marketing edge that will reward shareholders now and in the future.
Read the full article on Seeking Alpha. 

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



Thursday, May 24, 2018

Chipotle: Corporate Disruption

Chipotle announced the restaurant is moving their headquarters from Denver to Newport Beach.
The company is shutting down the Denver office and facing substantial re-organization costs.
The move does nothing to improve the food with integrity concept desired by customers.
Expect EPS estimates to collapse as the company has limited corporate personnel to implement new strategies.
Only a few months ago, Chipotle Mexican Grill (CMG) announced that Brian Niccol would take over as the new CEO from the co-founder. The stock has surged on this news rising $100 now, but my investment thesis has maintained that investors need to dump shares on this rally as the most likely outcome is disruption of the business model and cultural change from the hiring of an exec from Taco Bell that was at odds with the people at Chipotle. Today, the new CEO fired the first warning sign on this disruptive period.
Read the full article on Seeking Alpha. 

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


Friday, May 18, 2018

Baidu: Another Gift

Baidu trades down $25 due to the departure of the COO from daily activities.
The company has a long history of growth without the involvement of Qi Lu.
The stock continues to trade favorably to domestic peers despite massive margins.
Despite being a dominant player in the fast-growing internet space in China, Baidu (BIDU) consistently trades at a discount to American peers. The departure of a key executive and an analyst downgrade provide another gift to own this stock on a $25 dip and at levels from back in 2014.
Read the full article at Seeking Alpha. 

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