There are two pools of uncertainty in the handheld communications industry.
1. Nokia (NOK) and Qualcomm are currently disputing over not just the widely published 3G patents (which resulted in a preliminary payment by Nokia of $20 million), but also a series of smaller patents with claims pending in countries including France, the UK, Germany, Italy, and China.
2. Palm (PALM) is currently waffling in the past with no new products to compete with the new smart phone handsets or the new PDA’s. To inject new blood into the company, Palm has been subject to a whirlwind of buyout rumors. Most rumors have included Motorola, but those are just rumors. To this end Palm is a great short or put opportunity.
Research in Motion (RIMM) unveiled its new, more consumer friendly, Blackberry Pearl back in 2006. The Pearl does have competitors, namely Nokia’s line of business smart phones and Motorola’s Blackjack and in June the iPhone. RIMM has a couple of competitive advantages:
1. Respect of the business community, approval and trust is essential to gain market share in the business PDA industry. A similar case, AMD has long out performed Intel in benchmark tests for computations per second, but Intel maintained its market share because AMD does not have the respect level of Intel within the business community.
2. Niche approach (i.e. specialization), Nokia and Motorola (and Apple will) derive the majority of their revenue from the consumer market; hence their appeal should target their breadbasket market segments. Growing into a new market can be a complex and risky. Development of products specialized for business purposes can be expensive and incur smaller returns due to economies of scale. Economies of scale applies to the business handheld industry. Specializing in the business tier of the handheld communications market, has allowed RIMM to reap the competitive advantages of the economies of scale. This will have long-run effects in revenue and market share.
With handheld communications sector poised for growth as the market for handhelds is far from saturated, especially when looking at the future demand for connectivity in the developing countries (namely the BRIC countries), RIMM has upside that has yet to be realized by the market.
More information and financial figures on RIMM
News has come out recently that Berkshire Hathaway, the company run by billionaire investing titan Warren Buffet, has picked up millions of shares in Burlington Northern, a large rail company. Berkshire has also said that it has picked up stakes in other rail companies.
Heavy transport industries, like rail and ocean shipping, is a very attractive option because in many cases it can save a lot of money or, in the case of shipping, is the only option.
Two good plays here are General Maritime and Guangshen Railway Co. Ltd.
General Maritime (GMR) is a fantastic company that operates oil tankers. As demand has increased for oil globally, there has been a big need for increased transport. GMR is running at full capacity because of this. They want to grow their fleet, and are looking for new ships to buy, but new ships will not be on the market until 2009. This indicates that the company has positive prospects far into the future. Oh, and did I mention there is an 8% dividend?
Guangshen Railway Co. Ltd. (GSH) is a Chinese rail company. GSH operates freight and commuter rail lines all over China and are mostly state owned. The state owned nature of this company suggests that it will be highly stable going forward. GSH could be huge, too. It is far less difficult to lay more rail than to create super highways. In the US, much shipping is done by truck because of the massive road network that we have, but China is not thus blessed. Rail is a great way to ship, and being state owned will help their prospects.
Transports are going to be big as international and intercontinental trade increases. Hopefully these to stocks can make you some money.
After using Del.icio.us for the course of this term I have come to the conclusion that I really do not find it that useful. I use it to make my tags, but that it really about it. I find that I am much too accustomed to using Google. After using Google for so many years as my search engine, I have learned to create search terms that will allow me to find pretty specific things with alarming alacrity. This is a very useful ability, and one that serves to render a site like Del.icio.us useless. I can remember many of my favorite and most frequently visited websites, and get to the content faster by using Google or just by simply typing in the URL. My of the articles that I tagged with Del.icio.us I will likely if not assuredly never read again. I read each of them before I tagged them, and, as such, I have already taken that information to memory. The ability to access bookmarks from any machine is a nice concept, but for a person who barely uses bookmarks anyway like me, it really is not all that great. Not to mention, I always have my laptop with me when I go places, so I am very rarely using a public computer that does not have the few bookmarks that I do use frequently.
Okay, when everyone talks about investment banks, let’s be honest, they always say Goldman first. They are a great company, a fantastic company in fact. However, a massive portion of their profits comes from prop trading operations. Morgan Stanley performs equally well, and even outpaces Goldman on some league tables across the Investment Banking arena. Additionally, Morgan Stanley recently replaced their CEO with John Mack, a former executive that was previously forced out but returned to the company. Since then the firm has performed exceptionally well. Recently Morgan Stanley launched its “World Wise� ad campaign, which is a vast departure from the way the firm previously portrayed itself. This is just another step in the turn around. Right now is a great buying time, too. They are well under their high for the year. MS is trading with the lower PE than Goldman and it has a much lower amount of risk due to the fact that its revenues are not so dependent on prop trading. One of these days, GS is going to get crushed on their trading, and MS will be the one there to pick up the pieces.
Cognos, a business intelligence company based in Canada, beat earnings expectations last week, but amidst a very pessimistic Canadian atmosphere issued a revenue forecast below analyst expectations. For those of you that do not want to read a long sentence about Canada: Canada is currently facing record high oil prices. Consequently, Canadian stocks have been beaten down recently.
Business intelligence (BI) is a very broad category, but the meat of the industry is implementing IT solutions to give managers more detailed and analyzed information so that more informed decisions can be made quicker and easier than before. With the housing slump in the states and high oil prices holding down the Canadian economy, efficiency is key for companies to continue growth. To borrow a cliché, BI solutions allow managers to “squeeze blood out of the rock� Hence, demand for BI solutions should rise over the next year.
When it comes to winning an investment challenge, fundamentals or even knowing what the company does is important. Its about finding the most volatile companies and accurately predicting (and with a bit of luck) where when the stock has been overbought or oversold and when it has bottomed or topped.
In this entry I will discuss a strategy that I often use to trade in my portfolio. When using this type of strategy, which I call Volatility Trading your trading day should begin by looking at the daily gainers and daily losers of the NASDAQ. The reason you should look at stock who trade in the NASDAQ is because these companies are usually microcaps technology stocks. Not many traders now of these companies and even less analyst have recommendations on these stocks.
In the Daily Gainers and Daily losers part of Yahoo Finance look for companies with around 100,000 in daily volume. The most important thing to check if these companies had news that day or three days before. If there is now news on the company look at its competitors or if theres any news on the environment that these companies are operating in. For example, you dont want to long a stock that operates in Iran or short a stock that operates in an industry where major consolidation is going on.
This strategy is incredibly risky, its definetly not for the faint of heart or those who are looking to have steady flow of income from their investments. Volatility Trading should only be used by young and agile investors who don't have much to lose and have years to regain the possible loses that can happen by using this strategy. With that said, you can make a lot of money using volatility trading. I returned 42% last year with this strategy. There might be a day where your stock goes 60% the opposite way but then theres a day where you just hit it out of the ball park and make 100%, 200% in a couple of hours. Theres money to be made, all you need is a lot of practice in finding these stocks and a little bit of luck. Happy trading.
To find the Daily Losers and Daily Gainers follow this link
Posted by eamed at 02:26 PM
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Lets all drink Jones Soda! Its a buy!
Jones Soda (JSDA)
Jones Soda began as a garage company that made carbonated drinks for trend setters, environmentally friendly and "cool" clients. The sodas now sell in places such as Target and Starbucks. Gone are the days of Coca-Cola and Pepsi. Today’s youth (and adults!) are finding themselves apt to try “alternative beverages�, that is, soft drinks, with and without carbonation, in an effort to expand their pallets’ beyond the status quo. Jones Soda Co. is one of the smallest, yet fastest growing producers in the alternative beverage market. With the highest gross margin’s in the industry, great management, no debt, and an enterprise value of less than $600 MM, JSDA is an ideal acquisition for one of the major beverage makers.
With a notable increase in volume, it is becoming increasingly apparent that a takeover may be approaching. There have been a number of big hedge funds buying up with the stock with block trades of thousands of shares coming in every hour of the trading day. Even without the acquisition of JSDA, their cashflow, nonexistent debt, stellar management, percentage held by insiders and growth targets are ideal for any small-cap company.
Pros:
• Gross Margin (39.21%)
• Recently Announced Wal-Mart contract
• Very attractive take-over candidate
• Growth (180% Next year, 30% per annum for the next 5 years)
• Cash-to-debt ratio
Cons:
o P/E (106.45)
o Small-Cap volatility
o Limited product lines, multitude of competitors
To track the performance of DECK follow this link
JSDA Statistics
Copyright © Eric Medina
Posted by eamed at 01:53 PM
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Lets all drink Jones Soda! Its a buy!
Jones Soda (JSDA)
Jones Soda began as a garage company that made carbonated drinks for trend setters, environmentally friendly and "cool" clients. The sodas now sell in places such as Target and Starbucks. Gone are the days of Coca-Cola and Pepsi. Today’s youth (and adults!) are finding themselves apt to try “alternative beverages�, that is, soft drinks, with and without carbonation, in an effort to expand their pallets’ beyond the status quo. Jones Soda Co. is one of the smallest, yet fastest growing producers in the alternative beverage market. With the highest gross margin’s in the industry, great management, no debt, and an enterprise value of less than $600 MM, JSDA is an ideal acquisition for one of the major beverage makers.
With a notable increase in volume, it is becoming increasingly apparent that a takeover may be approaching. There have been a number of big hedge funds buying up with the stock with block trades of thousands of shares coming in every hour of the trading day. Even without the acquisition of JSDA, their cashflow, nonexistent debt, stellar management, percentage held by insiders and growth targets are ideal for any small-cap company.
Pros:
• Gross Margin (39.21%)
• Recently Announced Wal-Mart contract
• Very attractive take-over candidate
• Growth (180% Next year, 30% per annum for the next 5 years)
• Cash-to-debt ratio
Cons:
o P/E (106.45)
o Small-Cap volatility
o Limited product lines, multitude of competitors
To track the performance of DECK follow this link
JSDA Statistics
Copyright © Eric Medina
Posted by eamed at 01:53 PM
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March 28, 2007
Underrated HP
Hewlett Packard (HP) made two notable acquisitions over the last two weeks.
1. Tabblo, an internet printing company with connectivity features for uploading and downloading photos, books and “custom style items�
2. Polyserve, a software company that consolidates and virtualizes network attached storage (NAS).
For the last ten plus months, HP has been hit with a flurry of self-inflicted blows. First, the board room scandal, then the corporate spying on Dell, followed by cumbersome, uphill process, of repairing the company’s image in the media. Despite the external problems, HP’s stock has risen from $29.00 back in June to $43.72 in early January of this year. This was fueled by a series of acquisitions, mergers and alliances. Since January HP’s price has slid back to $39.81. The most recent drop coming on news of profits growing 26% in the first quarter. There are two explanation of this causation: 1) HP missed expectations on earnings or 2) the stock price deflating from profit taking. This is why HP is currently underrated.
Adding Tabblo, a company acclaimed as, “potential to be the print image for the entire web� gives HP a comparative advantage over other print online services. HP’s print related services already account for 7% of the company’s $7 billion in revenue. This comes at a time when cell phones have more and more connectivity via data packages and grass route wifi’s. This is a long-term growth driver for HP, via superior market position.
More financial info on HP (HPQ)
Posted by jwbir at 12:54 PM
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Oil Is Gold Again
Late last year and early this year we saw oil prices drop from nearly $80 per barrel to just under $50 per barrel at its lowest point. This happened due to a number of different factors. One of those was over speculation. Funds of all types had been putting piles of money into crude oil driving prices skyward. As these companies started pulling their money out, crude prices rapidly deflated. On top of this pull out, the US experienced an unusually warm winter during the end of 2006 and into the very early part of 2007. This drove down demand for related commodities like heating fuel, which cause crude inventories to rise.
Since then, the winter in the US took a good turn for the Oil industry and a near month long cold snap increased demand greatly. This cause Oil futures to begin their recovery. Increased instability in Venezuela, a major supplier of Oil to the US, also contributed to the gains that Oil prices have had. Most recently, and perhaps most importantly, the situation in Iran is headed downhill. Talks have broken down, and the UN security council has passed sanctions to hurt Iran economically. In addition, Iran took British soldiers captive which increased the instability of the situation. Oil prices have rallied to nearly $65 per barrel, $15 higher than its lowest point. Part of that gain happened today after a report came out that an Iranian missile nearly struck a US vessel. This claim was denied by the US military, but the markets don't seem to care.
My forecast: $73 per barrel oil by June. Increase your gasoline inventories now, because prices are going higher.
Posted by jkill at 12:18 PM
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The Sub Prime Problem
Earlier today, Federal Reserve Chief Ben Bernanke went before a congressional panel. The biggest issue that he had to address was the sub-prime crisis that has been ravaging the market for the past couple months. Sub-prime loans are given to people with lower credit ratings. These people pay much higher interest rates than people in other segments of the borrowing industry. Due to the housing slow down, many people that were using sub-prime loans to purchase houses to flip are having trouble paying down their debts because they can't unload their properties. This inability to pay is causing an increase in default rates. Another part of the problem is that some of these sub-prime loans were initially interest only. With an interest only loan you only have to pay down interest for the first couple years; however, after that period is over your monthly payments can skyrocket several hundred percent. Those loans are now coming into that phase which is also contributing to this problem.
The question that Ben Bernanke was asked is one that has been on the minds of everyone connected to the financial markets. Will the sub-prime problem spill over into other parts of the economy? To this question, Bernanke says that the answer is likely no. He believes that it will likely be "contained". However, he also believes the situation warrants continuous monitoring.
Posted by jkill at 12:04 PM
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March 24, 2007
Stock Pick: GlobalSantaFe
title goes here
GlobalSantaFe is a international drilling contractor that provides offshore drilling services to the world’s leading oil and gas companies. This company specializes in contract drilling which makes up 80% of their business as well as providing turnkey services. This company has an excellent international presence which protects it from regional specific downturns.
With great financials compared to its competitors there are five specific reasons that GlobalSantaFe will outperform its competition in the next 12 months. To begin, for the current fiscal year, GlobalSantaFe’s tax rate guidance has been reduced to 12% from 13%-14%. This is a result of restructuring a subsidiary and higher international sales. Secondly, GSF has initiated a 2 billion share rerpurchase program currently in process in which $900 million can still be repurchased. GSF’s established presence in Africa has also given the company security against the underperforming Gulf of Mexico market. There are also consolidation efforts by top management which would enable GSF to take advantage of economies of scales and expand their international presence. Lastly, contract drilling rates have been increasing over the last 6 months and many analysts feel that this trend is liking to continue in the near future.
The current recommendation for GSF is a buy with a current price target of $74.
Posted by jcip at 01:17 AM
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March 21, 2007
Another Brick for the Bridge, This One Starts with a ‘G’
When the rumor mill started churning the winds of the iPhone, Apple’s stock experienced marginal gains. Stock price is a function of action (i.e. talk is cheap, rumors are free). Apple, Nokia, Samsung and just any company remotely related to cell phones are currently entering the mobile hardware market, the question is why?
If you want to buy a cell phone, there are two tiers and a considerable gap between the tiers. Consumer grade phones are the cute phones prevalent in the soccer mom and teenager stereotypes. Business phones are the keys cards in corporate America, in the suit pockets of all industries. Business phones offer constant connectivity to content but at times lack in style as well as broad functionality. Consumer grade offer the basic phone functionality bundled with lifestyle features such as voice recognition and cameras. Consequently, there is a gap with certain niche smart phones filling the gap between consumer and business. This market can be expanded at a rate of $299 per phone, quite the metaphorical carrot.
Rumors started early last week about Google producing a phone, similar to the iPhone, but targeted for the more mainstream market. The high price tag and the lack of functionality will limit the iPhone to niche markets where the applications of its specific advantages justify the price.
Google confirmed in a Spanish interview late last week that 100 Googlers have been investigating methods to expand Google’s presence in the mobile search market. The goal, more user connectivity equals more searches which generates more advertising revenue for Google. So what makes Google’s entrance into the smart phone market any different from Nokia or Apple? Google’s applications, search, business models, internal operations, all symbolize one adjective: simple. Google’s email Gmail turns the complex world of email into a simple web based application. Google’s calendar web app consolidates all appointments across an infinitely large team into one streamlined, easy to interpret display.
Only Google can offer bundling with a suite of web-based applications. Microsoft mobile is nice, but data remains in a solitary location, with Google presentations, documents, spreadsheets are readily accessible from anywhere that you have cellular service. This is functionality that appeals to both consumers and firms, this is why Google will not only complete the other side of the Apple coin. Google owns the metaphorical coin.
Posted by jwbir at 12:50 PM
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Uranium
In the beginning of 2006, we saw a huge run up in commodity prices around the world. With the housing boom in the US, demand for copper for pipes and wire increased by an amazing amount, which caused a huge run up in price. Gold and silver also saw large run ups in that time period. All of these have since cooled off because producers have been flooding the market with supply, and, as the housing market in the US has cooled, demand for metals like copper have greatly declined.
Uranium is the next big thing. It is a resource that is hard to find, and, as a result, it has an extremely limited supply. As populations expand and more energy is needed it is clear that a large efficient source of energy is necessary. That source is nuclear power. Coal and gas fired plants are coming under fire for the immense amounts of pollution that they generate. This too makes nuclear power an attractive alternative.
What does this mean? More competition for an extremely limited supply of nuclear fuel. One of the largest mines in the world, Cigar Lake, controlled by Cameco, is currently out of commission after suffering a major flood. Taking this mine off line is to the Uranium market as taking Saudi Arabia off line would be to the oil market. This will cause further upward pressure on prices. Additionally, by buying into Uranium companies now, you would be able to take advantage of hedge fund speculation that is currently going on in the market. Funds have been buying up uranium and having it put into storage for quite some time now.
Uranium is a great play, get in now before it is too late.
Posted by jkill at 11:54 AM
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March 19, 2007
Why DECK is a buy!
Decker Outdoors (DECK)
Some say their boot was just a fad, but this sheep skin boot is here to stay! We see their products everyday, women parade in these shoes rain or shine, snow or hail. They praise their comfort and their style. UGGS is the brang of our generation.
Deckers Outdoor Corporation engages in the design, production, and brand management of footwear for men, women, and children in the United States. Its products include slides, sport sandals, thongs, amphibious footwear, trail running shoes, hiking boots, rugged closed-toe footwear, sheepskin boots and slippers, and other casual footwear. The company provides its products under Teva, Simple, and UGC brand names.
The DECK management team has consistently beat earnings, they have overdelivered on their earnings projections for the past 5 quarters. Last week the company reported a 94% increase in earnings from the previous quarter.
Another aspect of the company that DECK has come to master is the art of inventory. The problem many shoemakers and retailers make is overbuying, DECK management has won a gold medal managin inventories effectively.
DECK is also growing their sales tremendously in Asia and Europe. Another part of the business that is growing exponentially is the UGGS men's division. Just last week my roomate purchased a pair of ugg slippers and I have to admit they are very comfortable.
Gross margin rose to 46.4% in the fourth quarter which is amazing for such a small company. They are very efficient.
DECK and UGGS are there to stay. They may be a fad, but one that will make us a lot of money.
To track the performance of DECK follow this link
DECK Statistics
Copyright © Eric Medina
Posted by eamed at 01:26 AM
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March 12, 2007
Why Invest in Brazil
Brazil (EWZ)
In his state of the Union, President Bush called to eliminate our dependency on foreign oil. President Bush emphasized that alternative fuels should replace oil as a major source of energy. Particularly, the president emphasized Ethanol. In the US, ethanol is derived from corn. This can be mixed to create motor fuel and fuel additive and even though it produces 30% less energy than oil, the president as well as the House and Congress are pushing for major reforms to increase spending in developing the technology.
US can produce ethanol, but when it comes to comparative advantage, Brazil is king. Brazil's ethanol is derived from sugar cane, it contains a lot more energy than corn based ethanol and because its produced in Brazil (where land is abundant and labor is cheap) its a much better alternative than US produced ethanol.
Recently, President Bush went on a trip to visit many Latin American countries. Socialism is growing in Latin America because of Hugo Chavez in Venezuela and Morales in Bolivia. This pushed the President to turn to one of the few (economic) allies the US still has in the region, Brazil. The US has all the intentions of using ethanol and Brazil is the biggest producer and exporter.
The export of ethanol will in all likelihood improve economic conditions in all of the areas of the Brazilian economy. The increase in exports will cause foreign investors to increase their capital expenditure in this country giving way to long term economic growth.
I am bullish on Brazil as a whole. The best way to play this is to buy the Brazi ETF ticker, (EWZ). There are many risks to consider when investing in emerging markets but based on risk/reward, EWZ is definite buy.
To track the performance of EWZ follow this link
Stock Price and Key Statistics.
Posted by eamed at 02:59 AM
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Why Invest in Brazil
Brazil (EWZ)
In his state of the Union, President Bush called to eliminate our dependency on foreign oil. President Bush emphasized that alternative fuels should replace oil as a major source of energy. Particularly, the president emphasized Ethanol. In the US, ethanol is derived from corn. This can be mixed to create motor fuel and fuel additive and even though it produces 30% less energy than oil, the president as well as the House and Congress are pushing for major reforms to increase spending in developing the technology.
US can produce ethanol, but when it comes to comparative advantage, Brazil is king. Brazil's ethanol is derived from sugar cane, it contains a lot more energy than corn based ethanol and because its produced in Brazil (where land is abundant and labor is cheap) its a much better alternative than US produced ethanol.
Recently, President Bush went on a trip to visit many Latin American countries. Socialism is growing in Latin America because of Hugo Chavez in Venezuela and Morales in Bolivia. This pushed the President to turn to one of the few (economic) allies the US still has in the region, Brazil. The US has all the intentions of using ethanol and Brazil is the biggest producer and exporter.
The export of ethanol will in all likelihood improve economic conditions in all of the areas of the Brazilian economy. The increase in exports will cause foreign investors to increase their capital expenditure in this country giving way to long term economic growth.
I am bullish on Brazil as a whole. The best way to play this is to buy the Brazi ETF ticker, (EWZ). There are many risks to consider when investing in emerging markets but based on risk/reward, EWZ is definite buy.
To track the performance of EWZ follow this link
Stock Price and Key Statistics.
Posted by eamed at 02:59 AM
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March 10, 2007
Cisco (CSCO) Undervalued
Cisco has been quite lately with the exception of coming to an agreement with apple over the copyrights and royalties from the name iPhone. Here is the recap: Cisco has had the copyrights to “iPhone� for it’s internet phone line since early 2000’s. Apple and Cisco were in negotiations for a joint agreement, an agreement could not be reached, when Apple needed to announce its iPhone product (January, this year). After announcing the product with Cisco’s copyright, Apple was forced to make an agreement with Cisco. Recently the two companies came to an undisclosed agreement. With all the leverage from Apple’s public announcement, Cisco must have received generous compensation. Since the fruits from the agreement are widely unknown, the effects have not been priced into Cisco’s stock. Thus, Cisco is currently undervalued.
Looking at the fundamentals, Cisco trades at a multiple of 25.17, exhibits a PEG of 1.22, and is 11% off its 52-week high of $28.99. A beta and short ratio of 1.88 and 0.7 respectively, indicates positive market sentiment and that growth by Cisco will be priced in quickly. As far as the long run, 68.40% is held by institutions; another 1.11% by insiders demonstrates a high probability of a solid long-term investment. Currently, debt to equity is .241 resolving limitations on future growth. A current ratio of 2.482 indicates a bulk of assets that will be moving in the next year relative to current liabilities, hence, Cisco is far from the “cash cow� segment of the company cycle. Future activity seems very high with $20.68B in cash on the balance sheet; this shows that Cisco will need to invest its cash in something, most likely an acquisition, within the next year.
Relative to competitors, Cisco has quarterly revenue growth of 27.30% (yoy), which is greater than its major competitors, as well as greater operating margins and net income. Combined with the fact that Cisco trades at a multiple lower than its three leading competitors while having the lowest PEG of the group, Cisco is undervalued and should be bought.
Reported figures on Cisco
Posted by jwbir at 11:17 PM
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The Carry Trade
The carry trade is a strategy that many investment managers have been using for some time, and the amounts of money involved in this trade are astronomical. The Carry Trade is basically this: investors borrow yen in Japan where the interest rate is only .5%, and then convert this yen into US dollars in the Foreign Exchange Market. This change causes a subsiquent decrease in the value of the yen, which is advantageous because when you go to buy back your yen to pay the loan it will cost less to get yen. The US dollars are then used to purchase US securities or bonds (which have a yield near 5%, much great than the .5% and with almost no risk).
After the market drop last week many investors that have been using the carry trade have been unwinding it (selling securities and paying back their loans). The unwinding of the trade has caused the yen to increase in value by almost 4% in the past two weeks, a massive move by currency standards. No one really knows exactly how much money is involved in the carry trade, but some estimate it at around $1 trillion. This could make owning yen a very attractive thing, and it may be a very bad thing for those with assets in US dollars. Similar decreases have been seen in the British Pound Sterling. No one knows how long the process of people unwinding their trade will last, but one thing is for certian, the value of the US dollar is going to face serious devaluation pressure vs. the yen until the majority of the trades are unwound.
Posted by jkill at 04:45 PM
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March 06, 2007
Stock Watch: Amgen
title goes here
Amgen is a biotechnology company that attempts to discover, develop, and manufacture therapeutic drugs. Recently it has been hit hard as a result of negative news surrounding their production of an anemia drug named Aranesp. Just today, Medicare plan decided to drop this drug from coverage. The stock has drop from around $75 dollars per share to its closing price of $62.30 today. Some analysts feel that the worst is over for this company and that it could potentially be a prospective buy if it does not incur any other major problems. Other analysts feel that this stock could be a potential acquisition by dominant pharmaceutical companies such as Pfizer. Some major pharmaceutical companies have been trying recently to tap into the Biotech market. Analysts price the stock for buyout at about $90 per share. If a deal is made in the future this stock has the potential to make a big move.
Posted by jcip at 11:27 PM
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March 04, 2007
The Market Correction
Last week, on Tuesday, we saw one of the largest single day point drop on the Dow Jones Industrial average since the terrorist attacks of Sept. 11, 2001. This followed a 9% sell off on an important Shanghai index, and subsequent sell offs on other Asian and European markets. The Nasdaq and S&P 500 indicies also suffered major losses. 496 out of the 500 S&P stocks were down on Tuesday. Much of this drop took place in a matter of a few seconds due to trading problems at the New York Stock Exchange.
Many think that this is the first step in a larger market correction that we may have been overdue for. The VIX, a market volatility indicator, increased over 60% on that Tuesday and increased an additional 16% on Friday. This indicates a great deal of uncertainty in the market. This currently appears to be a market isolated occurrence rather than an indication of major underlying economic problems. While growth is expected to moderate and a recession is a possibility, it is unlikely that this market drop is an indicator or even a result of this. It is much more likely that the correction is due to unusually high valuations in the market. Only time will tell how far this correction will go.
Posted by jkill at 02:18 PM
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February 27, 2007
Apple: The Rebuttle - Why Apple is Not As Good as Everyone Says it is
Apple is a company that has been around for a long while, and their stylish products have set them apart recently. They are the dominant player in the mp3 player market, and their iTunes store is top of the line in the online music store industry. Their newest product announcement, the iPhone has generated a great deal of positive press, and people worship the former hippy turned business man Steve Jobs like he is God. Many see all of these things as positives, but I would disagree. Lets start with Mr. Jobs. Steve Jobs is part of an options backdating probe, and, while most say "oh he'll get away with it, he's Steve Jobs," I ask you this: what better person could the SEC find to make an example of? No one, thats who. People think Jobs can do no wrong. Maybe I'm wrong, maybe he can. maybe he isn't just a mere mortal, and maybe I'm the Queen of England. I will say this with absolute certainty, Steve Jobs is getting old, and at some point he will step down. What happened the last time he left Apple? Bad things, and their company was absolute garbage until Jobs came back. Without Jobs, Apple is nothing. So, what's wrong with the iPhone? Well, it is over priced and overrated. I seem to remember some news coming out about a certain product called Vista, which was greatly hyped, but the roll out is not going as well as everyone had expected. I expect the same thing to happen with the iPhone. At $399 or $499 each, I just can't see anyone buying them in any gigantic volume that people are expecting. Business people like their Blackberrys, and if people are hoping that they'll be able to get a big deal on an iPhone, like $200 off with a new 2 year plan, they're out of their minds. It is not going to happen. Also, the iPhone isn't really all that innovative. "Oh, but it has a touch screen!" Who cares? That is just one more thing for me to scratch. Let use that and ignore the fact that it isn't even a 3G phone, so it is limited in its ability to connect using the latest generation of wireless technology. Sure it has wifi, but if I am using a cell phone, why would I be excited to only be able to use real high speed when I'm by a wireless access point? I don't have anything bad to say about iTunes, I think that that is a quality business, but the iPod I will say something about. The iPod has saturated the market, what happens when you saturate the market and max out your market share? People stop buying your stuff. What does that mean? Slower earnings growth. Some will dismiss me as a non-believer in the glorious story that is Apple and that I'm just being cynical. Perhaps they're right, but you'll make a lot more money if I'm right because there are a lot more of them than there are of me.
Posted by jkill at 08:18 AM
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February 19, 2007
Searching for a Hospital Buyout
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Every now and then hospitals become attractive buyout targets because of their strong cash flow and capital expenditure. However, they do not come without risks as they sometimes face collection problems from insurers and various health programs. In the last month Triad Hospitals was taken private by principal investors CCMP Capital advisors and by a entity of the Goldman Sachs group. When the buyout tool place of Triad Hospitals, there stock rose about 15%. However, as others look towards finding another Hospital buyout there are few options left as two of the three biggest publicly traded chains have gone private. However, one company that still seems to be a worthy investment is Community Health Systems (CYH).
Why does CYH look like a buy?
With their earnings call just last week, Community Health 4th quarter profits rose by 11%. Recently, shares have been accumulated by financial institutions which are a favorable signs for a large company like Community Heath that has a 3.6B market cap. Furthermore, compared to its competitors it had the lowest PEG at 1.09 and the highest quarterly earnings growth, however, its PE at 22 is a little higher than the industry average. In the upcoming months I see CYH as a moderate growth stock with larger rewards possible if it comes under consideration for a buyout.
Posted by jcip at 10:27 PM
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February 18, 2007
Evaluation: Brasil Telecom Participacoes (BRP)
Brasil Telecom Participacoes, a holding company that whose major asset is Brasil Telecom S.A. drives revenue by providing landline calls, data transmission, internet, and wireless services in Brazil.
The Good
Institutional ownership at 38.70%, a healthy market cap of $3.12 billion, and operating cash flow (ttm) of 1.10B indicate some establishment and high probability of growth as Brazil develops. Quarterly revenue growth of 5.80% (yoy) demonstrates a potential upward trend, one that has not incurred a run-up in price, yet. For short-term gains on BRP a beat of 1.96 but only a 52-week change of 4.70% are also good signs. Other solid indicators for future growth include a price to sales ratio of 0.64 and a price to book ratio of only 1.24, both illustrating solid business foundation and a lag in pricing correction for company’s sales.
The Bad
Tied to volatility and potential instability of Brazil, there is and will be for the near future uncertainty that is not caused by anything within BRP, rather Brazil as a whole. Debt of $2.57 billion and a debt to equity ratio of 1.018 are cause for concern about ability to sustain future growth. However, over the next year a current ratio of 1.545 does indicate, at minimum, stability.
Recommendation
BRP is a good growth and value stock with above average financials. Analyst recommendations, according to Thomson and First Call, range from $43.00 to $62.00 with mean and median price targets of $52.01 and $50.85 respectively. Considering that BRP currently trades at $42.98, this company has room and reason for growth.
Key Statistics for BRP
Posted by jwbir at 12:41 PM
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February 17, 2007
DaimlerChrysler: Dr. Z's New Vision
The News:
This Wednesday, DaimlerChrysler's Dieter Zetsche announced that the auto maker would be slashing 13,000 jobs and be closing one plant. This is yet another big hit to the struggling US auto industry. Press releases have hinted at a possible spin off of the ailing Chrysler unit, and recent reports have suggested that DaimlerChrysler and GM are currently in talks. These announcements have lead to a near 15% increase in DaimlerChrysler (DCX) shares.
My Take:
I think that the strategy that DaimlerChrysler is proposing to cut costs is a fantastic idea. Cutting workforce and output will go a long way to decreasing their growing inventories which simply are not selling. As far as Daimler-Benz is concerned, the spin-off of the Chrysler wing is a best case scenario. It will give the high quality luxury car company a great cash injection. I would say though this this is not the time to buy into the stock. I would wait for a pretty good pull-back to load up on it if I were to buy any at all. The real trade here I think is to short GM.
GM buying Chrysler would simply be a terrible idea. They would just crank out the same old uninspired run of the mill junk, and Americans would just end up with 3 more brands (Chrysler, Dodge and Jeep) that are the same car with a different exterior. Never mind the fact that GM cannot even fix its own problems. GM's current loss of $16.95 per share, while significantly better than its former $18+ loss, is still nothing to be happy about. The thought of a company like GM taking on MORE debt to buy another money losing car company just seems absurd to me, and if the deal actually goes through GM then totally reeks of mis-management. The fact that reports like this have surfaced would make me dump my GM shares if I had any.
Now, I know what you're thinking. "Well if that is such a bad idea, that what do you think should happen big guy?" I would say this, and this would not only be the best case scenario for Chrysler, but for Ford and GM, too, Chrysler needs to be taken private. If there is anyone that can fix the problems of one of these ailing car companies it is the buy-out kings at all of these big money PE firms. Not only would this be more likely in my mind to save the ailing Chrysler, but it would leave a blueprint for GM and Ford to find their ways back to profitability. In any case, only time will tell.
Posted by jkill at 07:41 PM
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Why Apple is a buy
Apple(aapl)
When people think of stylish products, innovation and COOL, APPLE is the company that comes to mind. Six years ago apple introduced the I-Pod, it was instant hit sending the stock from a low of about $10 to the just recent high $96. Apple's Steve Jobs is a tremendous innovator and leader. Everyone from Main Street to Wall Street respects him. Recently, Apple introduced the new i-phone.
The stock was trading at$82 and with the announcement it jumped to almost $98. The next day, the stock saw a huge sell off taking it back to around $84.
In my opinion the stock was oversold. There was one reason the stock should be at that level and its the SEC investigating Jobs on options backdating. He and apple have power and this issue will be solved. The i-phone will be huge success.
Valuation
The stock is trading at 30 times earnings with an earnings growth of more than 75%. Its operating margins are well over 10% and the fact that it has absolutely no debt makes me love the stock even more. Jobs and apple deserves to be trading at a premium of more than 40. Their innovation and image will drive the company to new heights.
To find out more information on AAPL visit the websites below, you will also be able to track the companies stock price and recent upgrades and downgrades:
Apple Company Website.
Stock Price and Key Statistics.
Copyright © Eric Medina
Posted by eamed at 03:38 PM
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Qualcom Deals: Present, Past, and Future
Qualcomm made the news twice in the last couple of weeks: 1) Cingular (AT&T Wireless) and Verizon have agreed to use Qualcomm’s MediaFlow technology to supply their mobile TV services. 2) Reports speculated it is close to resolving its patent conflict with Nokia, which has been operating under a joint licensing agreement but expires in April. Both Nokia and Qualcomm did not confirm the report.
Cingular will begin to offer its mobile TV service later this year and Verizon will rollout its service in the next three months. The result will be added revenue for Qualcomm. This is common knowledge, hence these deals have been priced into QCOM, but deals with the two largest wireless carriers in the states should supply revenue to drive a company for half a decade; the resulting price jump was only 4%. So where’s the uncertainty, why hasn’t the price made a full compensation for the announcements? Mobile TV needs higher speeds to operate due to the massive amounts of data the must be transmitted. Asia and Europe have wireless technologies implemented to a more advance degree than the states. In China and India the current rush is over 3.5G, in the US we are slowly getting to 3G. The lag in installing infrastructure to support wireless technology in the states has caused concern for delay in revenues and with delay comes the chance the newer, better, different companies’ technology might enter into the market. This is Wall Street, results happen now or tomorrow, not next week.
Here’s the upside, Qualcomm has a dominant position with the wireless carriers in the states, but wireless carriers only represent a portion of the future media flow. Broadcast companies, seeking a way to combat piracy, iTunes and all other new TV mediums are seeking a way to regain control over their content. Shows like House MD, Greys Anatomy, Survivor, the Office are popular and the networks need to adapt their supply routes to their consumers. MediaFlow can potentially fill the gap between today’s TV in kitchen and your mobile, not just for the wireless carriers, but also for the standard networks. Obviously the window becomes significantly easier to shoot through as VoiP phones become more prominent and wireless networks spring up in the major cities, thus bypassing the need for wireless carriers in the state-side metropolises. This is a play to consider as QCOM is currently 23% off it’s 52-week high of $53 in May.
Key Statistics and Financials on QCOM
Posted by jwbir at 01:48 PM
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February 12, 2007
Investing in the Pharmaceutical Underdogs
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In the last twenty years, major pharmaceutical companies have spent millions of dollars in attempts to create new, revolutionary drugs. However, much to the avail of these large companies they have often failed and abandon projects when it appears that further research will not be cost effective.
When the major pharmaceutical giants such as Merck and Abbott give up, smaller companies try and solve mysteries of the abandoned drugs in attempts to making large profits. For example, GPC Biotech, a small German company, has just completed clinical trials for a prostate-cancer drug that that had previously been abandoned by Bristol –Myers Squibb Co. Furthermore, Dr. Huxley’s company, Speedel Holding AG, has just sold a drug called Aliskiren to Novartis that will help treat hypertension patients. When Dr. Huxley took her company public it was a very lucrative endeavor with shares currently trading at $136.
Companies that specialize in perfecting one or two abandoned drugs are sometimes successful due to the face that the entire business of these companies depends on the development of a small number of projects. Although producing one successful drug can make these companies rich, it is often hard to find venture capitalists that will invest in these risky endeavors. Many other hurdles also exist because of extensive FDA regulations and required clinical trials. So it is up to each individual investor to determine whether these types of companies are really worth the risk.
Posted by jcip at 08:48 PM
London Stock Exchange Fends Off Nasdaq Bid
Over the past few years, we have seen a fair amount of consolidation among the major financial exchanges. We saw the New York Stock Exchange purchasing Archipelago and Euronext and the Chicago Board of Trade agree to a merger with the Chicago Mercantile Exchange. With two of its largest competitors making these large strides to become larger and more diverse, Nasdaq, an exchange dealing primarily with technology companies, has been looking for a suitor to increase its size.
Nasdaq believes I has found this suitor in the London Stock Exchange. Over the past couple years, Nasdaq has been building a large equity stake in the LSE and has made a couple bids for the exchange. However, the other LSE share holders have been reluctant to accept any deal. This weekend, the LSE rejected yet another bit by Nasdaq, their third attempt, calling into question what the Nasdaq will do with their stake in the exchange.
UK rules prohibit Nasdaq from acquiring any more than their current stake of about 30%, which removes the option of them simply purchasing a 51% controlling stake. Many believe that the LSE may be in trouble for not taking this bid due to concerns regarding its fee structure and trading platform that have been complaints of brokerages that use the exchange and increasing competition from NYSE-Euronext. There are also questions about what Nasdaq will do with their 30% position in the LSE, should they choose to unload it, LSE shares would surely suffer losses. Where this story ends is anyone’s guess.
Posted by jkill at 03:10 PM
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February 06, 2007
Healthcare & The FDA
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Now that the Democrats are back in power healthcare reforms may soon affect the drug industry. Discussion surrounds reforming the FDA as to create tougher safety rules as well as reduce the cost of prescription drugs. It is also a possibility that a new wing of the FDA will be created which would create focus specifically on prescription drug regulation. This branch would have the jurisdiction to change labels on medicines, regulate advertising, and fine those that are not complying to prescribed regulations. Since Democrats are in power it is less likely that they would depose legislation that would bestow more authority to regulatory committees as they view this move as one that would please consumers. Some Republicans also support this democratic view because of past drug-safety problems such as the recall of Vioxx. Furthermore, 2007 calls for a contract renewal which stipulates how much the healthcare industry will contribute to fund regulatory FDA processes. Some argue that addressing other regulatory issues other than the contract for the amount of money that the healthcare industry will contribute to regulatory processes could delay the renewal of this contract and be rehabilitating to the current FDA regulatory body. The new legislation proposed would also create a path for a new FDA agency to approve generic biotech drugs. This could benefit generic drug producers as this body could help speed up the approval process and allow generic manufacture to enter the market sooner.
Companies to Keep an Eye On Include:
Posted by jcip at 09:29 PM
STOCK PICK: Barr Pharmaceuticals (BRL)
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Barr Pharmaceuticals, Inc., through its subsidiaries is responsible for manufacturing 120 generic and 25 proprietary pharmaceutical products. With its recent acquisition of Pliva, Barr Pharmaceuticals has jumped to third in global industry position. It has also increased revenues from 1.3 to 2.4 billion and added 30 additional European countries to its geographical reach. With a market cap of roughly 5.76 billion, Barr’s total debt is a minimal 15.87 million leading to a Debt/Equity ratio of .009. It also holds the industry’s second lowest PEG at 1.23 compared to the industry average of 1.67. Barr has also experienced strong success with its Plan B contraceptive in recent months and appears to be a noteworthy investment with recent news of many new product launches. In the past month, Barr has launched a generic version of Merck & Co. PROCSAR(R) as well as a generic version of Bristol-Myers Squibb Company’s METAGLIP. Barr’s future pipeline is promising with recent FDA approval of a generic version of Pfizer Inc.’s Zithromax and tentative approval of of Roche Laboratories Inc.'s KYTRIL, with final approval expected following the expiration of Roche’s patent in December. Barr Pharmaceuticals has exceeded analyst earnings estimates for second straight quarter. I also like the fact that democrats have taken control of the House and think this could be favorable for expansion of the generic drug market. I recommend Barr (BRL) and look to add it to my portfolio as a solid growth stock. For up-to-date financial statistics of Barr Pharmaceuticals please vist
BRL Key Statistics.
