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Showing posts from September, 2019

Freeport-McMoRan: Don't Lose Faith

Freeport-McMoRan continues to trade below $10 per share due to weak copper prices. The company doesn't expect full production for the Grasberg mine to return until 2021. The stock is likely to struggle as the company reports weak Q3 cash flows due to copper prices ending the quarter at $2.60/lb. Buy the stock below $10 for the rebound in 2020 and beyond. While Freeport-McMoRan (FCX) didn't hold $10, the stock still has substantial value at this level. Copper remains weak due to the U.S. trade war with China, but this trading skirmish won't last forever. The investment thesis remains very bullish on the future of copper and this stock, especially when one can purchase shares below an identifiable value at $10. Read the full article on Seeking Alpha.  More commentary - WhoTrades
Disclosure: Long FCX. Please review the disclaimer page for more details. 

Curaleaf: Under The Radar Giant

Curaleaf is on a path to lead the cannabis market in revenues. The stock remains far under the radar of investors based on followers on financial websites. The stock is cheaply priced at 2-3x forward revenue estimates. A few months after announcing the big Grassroots merger, Curaleaf Holdings (OTCPK:CURLF) has traded relatively flat. Despite the company being in the process of becoming a leader in the global cannabis industry, the stock is relatively unknown and unfollowed. My investment thesis remains bullish on the stock and the general multi-state operators (MSOs) in the U.S. Read the full article on Seeking Alpha.  More commentary - Out Fox The $treet - September 26 Disclosure: No position. Please review the disclaimer page for more details. 

Aurora Cannabis: Desperate Times

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Aurora Cannabis traded below $5 on Friday. Management is out of tune with market realities in the cannabis space. A move similar to Canopy Growth in the U.S. would signal a desperate company. The stock isn't likely to hold $5 with a market valuation of over 10x lowered FY20 revenues estimates. The case for owning Aurora Cannabis (ACB) at $5 turned weaker following FQ4 results. The stock traded below this key price target on Friday and the MKM Partners Sell call is unfortunately correct based on the numbers and the commentary from management. My previous investment thesis called for supply rationalization to make the stock a Buy at $5 and the company has gone further over the edge into global production growth. Read the full article on Seeking Alpha.

Update - October 1
Aurora Cannabis breaks $4. No end in site so don't try to time the bottom here.


Update - September 26
The approval of the SAFE Banking Act by the House opens up the potential for Aurora Cannabis to enter the U.S. …

Microsoft: $40 Billion To Nowhere

Microsoft announced an 11% dividend hike and a $40 billion share buyback. The tech giant failed to impress with its capital return plans. The stock isn't likely to see a net payout yield to top the existing 3% level. Don't own Microsoft for this capital return plan, and actually avoid the stock on the negative ramifications of the weak signal. The announcement of a large share buyback might grab headlines and drive a stock higher in the short term, but investors really need to break down the impact before rushing to buy a related stock. The big $40 billion share buyback from Microsoft (MSFT) is a prime example of form over substance. In fact, investors should really question if the tech giant should repurchase shares at these levels and whether this move signals a top in the stock. Read the full article on Seeking Alpha.  More commentary - WhoTrades Disclosure: Long AAPL. Please review the disclaimer page for more details. 

Buy Airlines On Oil Induced Weakness

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More evidence continues to show that the strikes on Saudi oil facilities actually came from Iranian missles, not Yemen drones. Not even sure, if it matters, because the whole world knows that Iran was involved. 

Dion Nissenbaum
✔@DionNissenbaum
US looking to declassify satellite imagery to bolster contentions that Iran was origin of weekend attack on Saudi oil industry as mounting evidence points to cruise missiles fired from Iran or Iraq, not Houthi drones launched from Yemen: https://www.wsj.com/articles/iran-rejects-u-s-accusations-over-saudi-oil-facility-attacks-11568544181?mod=hp_lead_pos1 … w/@summer_said

Intel Upside Capped By Yield

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Find it interesting that certain stocks appear to have capped upside based on the dividend yield. Intel (INTC) is such a stock when the yield hits the recent 2.4% levels. The stock might rally further to reach the recent highs, but the time to buy Intel is when the dividend yield tops 3.0%. 



Read the full article on Seeking Alpha. 

More commentary on WhoTrades.

Disclosure: No position. See the disclaimer page for more details.  

Lyft: It Keeps Getting Worse

California continues to move forward on AB 5 that will turn contractors into employees. Lyft already has a slim profit margin. Avoid the stock until the company formulates a business model around generating solid operating margins. My previous work already focused on the lack of a margin of safety in Lyft (LYFT) and the news continues to get worse. The company faces legislative issues pressuring the gig work concept while the business growth is apparently decelerating at a very fast clip. The stock doesn't appear to have reached a low yet. Read the full article on Seeking Alpha.  More commentary - WhoTrades Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Aurora Cannabis: Supply Rationalization Needed Now

Canadian cannabis industry inventories continue to surge with over 300K kg in supply and monthly demand below 10K kg. The industry needs to rationalize capacity with store forecasts of only 600 retail locations by the March quarter. A stock price of $5 and a market cap of ~$5.5 billion remain lofty for breakeven EBITDA and FY20 revenue targets of $521 million. The cannabis bulls continue to claim that a lack of retail stores and legal supply has kept sales low, while the data doesn't support the thesis. No doubt, sales will increase substantially as retail stores in Canada grow, but the market is headed to a major over supply scenario led by market leader Aurora Cannabis (ACB). My previous research had the stock approaching a potential buy point near $5, but the latest Health Canada stats for June have the industry at a critical inflection point that needs immediate action. Read the full article on Seeking Alpha.  More commentary - WhoTrades

Update September 16
No surprise here. A…

Slack: Wheels Just Fell Off

Slack fell hard due to revenue growth expectations failing to meet expectations. The company is facing a period of decelerating revenue growth that always hits high multiple stocks very hard. A valuation of 8x FY22 revenues places the stock at only $17.50. By all accounts, Slack Technologies (WORK) reported a solid FQ2 for the first quarterly report following their hot IPO back in June. The stock was already down substantially from the highs above $40, but the IPO rally was so outrageous that investors should expect the IPO pricing at $26 is broken. My original research was bearish on the stock following the hot IPO, and the view hasn't changed much now. Read the full article on Seeking Alpha.  More commentary: Out Fox The $treet - September 5, 2019  Disclosure: No position. Please review the disclaimer page for more details.