May
17
2012
By Spencer Osborne:
Earlier in the week I wrote a technical analysis piece titled “Is $1.83 The Next Step For Sirius XM?” As it happens, Sirius XM (SIRI) closed at exactly $1.83 today, testing that level of support and even breaking it briefly. With that news now in hand, it is time to consider the possibilities of what will happen next.
The first thing I would like to touch on is the volume. Sirius XM went down to $1.83 on huge volume of over 170 million shares traded vs. an average volume of 60 million. In my opinion, a lot of this volume may be attributable to Liberty Media (LMCA) and its quest for control of the satellite radio provider. As of this writing, no new SEC forms have been filed by Liberty Media, but we could see some activity on May 18.
With a stock price of $1.83 now in the books,
May
17
2012
By Bret Kenwell:
With a close today in the negative territory by all three major U.S. indices, many are beginning to feel fear in the markets. The Dow Jones Industrial Average, now down 11 out of the last 12 trading sessions, closed at 12,442, off approximately 840 points from the yearly high achieved May 1. The Nasdaq has been pounded back under the 3,000 mark, settling at 2813, and the S&P 500 waved goodbye to 1400 as it plummeted toward 1300, while hanging on by a thread at 1304. You can see and hear the fear in traders and investors alike, the overwhelming amount of puts purchased trying to protect what little is left by some, and the fear in the television pundits’ voices as they talk day in and day out looking for that bounce.
With blood flowing through the cracks of Wall Street it would be wise to only do one
May
17
2012
It was another down day for the markets with stocks tumbling to session lows by midday and then continued to fall, amid concerns over the situation in Greece. On the economic front, the number of Americans filing new claims for unemployment benefits held steady at a seasonally adjusted 370,000 last [...]
May
17
2012
By Paulo Santos:
Verizon (VZ) just threw a curveball at Apple (AAPL).
The company announced that it would not allow grandfathered unlimited data plans to carry on when customers upgrade into LTE devices. This makes it a whole lot less appealing to make such an upgrade, and can be a factor limiting iPhone 5 take-up by present iPhone 4S customers with unlimited data plans.
I say this because the iPhone 5 should be an LTE phone, and Verizon represented 4.3 million iPhones sold in the latest quarter, so it’s still a significant factor. Indeed, I wonder how much of yesterday’s Apple weakness was already because of this development. The story was out at 1:44pm on “The Verge”, and that broadly coincides with Apple stock seeing increased volume and taking a hit. We had the FOMC minutes at 2:00pm but that’s clearly later than the movement, as pictured below (source: Yahoo Finance).
(click to
May
17
2012
By Ray Dirks:
Recently, Pluristem Therapeutics’ (PSTI) revealed preclinical data showing that its platform technology, PLX cells, is effective in a type of heart disease that has no current cures.
The condition is known as diabetic diastolic dysfunction, a subset of diastolic heart disease that occurs when one or both ventricles of the heart suffer in performance, leading to heart failure. This is a common condition of both Type 1 and Type 2 diabetes.
Roughly 4.8 million Americans are currently afflicted with heart failure, with new 400,000 cases annually, according to the National Heart, Lung, and Blood Institute. It has been reported by the American College of Cardiology that half of these patients develop the condition due to diabetes.
PSTI used an animal model as a preclinical trial performed at the Berlin-Bradenburg Center for Regenerative Therapies in Germany, under the auspices of Dr. Carsten Tschope, an influential member of the European Society of
May
17
2012
By Jim Van Meerten:
LogiTech International (LOGI) is a highly speculative opportunity but be cautious. Many of you know that the company made high end products to upgrade your PC with a better keyboard, mouse and webcam. But things have changed. What do you do when you have the best products and technology in the industry but the industry no longer has a need for your products? You must reinvent yourself.
Just a few years ago new buyers bought PCs and then went to the computer store and upgraded their periphery with LogiTech’s products. Almost over night technology moved on and no one is buying PCs but instead buying tablets, Kindles, iPads and other handheld mobile devices that have all the features built in.
Game Plan – New management and new product lines. The jury is out but the stock is moving up recently based on this hourly trading chart provided by Barchart:
In
May
17
2012
CenturyLink, Inc. (CTL) operates in Telecom Services – Domestic industry. I think this stock is undervalued by up to 28% or even more. Below are my calculations using FCFF model, multiples comparison and other interesting facts and threats.
Discounted Free Cash Flow Valuation
In this article I will run you through my DCF model on CTL. In particular I will be using free cash flow to the firm FCFF model to evaluate the stock. Feel free to share your opinion regarding the assumptions I made for this valuation.
Let’s start with the top line. CTL recorded $15.35B revenue in 2011, which represented 118% growth Year/Year. In 2010 revenue grew by 41.58% compared with 2009. Such high revenue growth, however, is explained by mergers, in particular, a merger with Qwest Communications International, which was completed on 1st of April, 2011. In 2012, however, I predict that the company will record 19.28%
May
17
2012
By Parsimony Investment Research:
Last Tuesday, we wrote an article titled “How Low Will Apple Share Go In a Major Market Correction?”. Since closing around $568 that day, Apple (AAPL) shares are down over 6% and the stock is now less than 4% away from the upper range of our target “Buy Zone” ($515).
As we highlighted in our previous article, our target “Buy Zone” is based on fundamental and technical resistance levels (not necessarily current valuation). While we think Apple is a great company and we currently own the stock, stock prices often diverge from fundamentals during a market correction.
Valuation and Dividend Yield Resistance Levels
Many analysts talk about technical resistance levels for stock prices, but we also believe that fundamental resistance levels exist as well. The analysis below calculates trailing EPS, forward EPS and dividend yield for a range of downside prices. The analysis also computes the cumulative percent decline from
May
17
2012
By Rajiv Tarigopula:
Gravity Co. Ltd. (GRVY), the South Korean gaming firm, has been watched carefully all this year by value investors looking to a high-return investment opportunity. Prior to this spring, the significant majority of the company’s revenue came from one of its massively-multiplayer online role playing games, Ragnarok Online. However, this spring brought the long-awaited release of Ragnarok 2 – yet many investors are left wondering why the market hasn’t corrected to what GRVY’s implied price per share should be.
Many analysts and investors believe GRVY’s fair value is in the $6-$10 range at the very least; however, shares are trading below $3 consistently. There was a short spike in trading immediately after Ragnarok 2′s release, but nothing since. On April 16 of this year, shortly after GRVY rose to the mid-$3 range (high at $3.47) before falling back to current levels in a dramatic show of market efficiency followed by
May
17
2012
Xerox (XRX) operates in the business equipment industry. I think this stock is highly undervalued by up to 72% or even more. Below are my calculations using a FCFF model, multiples comparison and other interesting facts and threats.
Discounted Free Cash Flow Valuation
In this article I will run you through my DCF model. In particular I will be using free cash flow to the firm FCFF model to evaluate the stock. Feel free to share your opinion regarding the assumptions I made for this valuation.
Let’s start with the top line. XRX recorded $22.63B in revenue in 2011, which represented 4.59% growth year/year. In 2012, however, I predict that the company will record modest growth from 2011 to $22.93B (+1.34%), and 2.27% growth in 2013. I predict 2% growth for the next four years.
Coming down to the cost side I predict COGS to be 64%, SG&A – 22%
May
17
2012
By Vatalyst:
Kodiak Oil & Gas (KOG) has extensive oil and gas holdings in North Dakota, where it focuses most of its operations. Furthermore, the company is rapidly expanding its operations through responsible capital expenditures, funded by private offerings and available cash flow, making it a growth-oriented company.
I think Kodiak makes an excellent buy for both 12-month and 3-year investors. The current price is, in my opinion, trading at a significant discount to Kodiak’s real value, given its asset base and oil-centered outlook.
The Market
The recent quarter did not treat Kodiak well, as it reported an EPS of $0.09, falling short of the Street’s consensus of $0.11. It also did not do particularly well revenue-wise, falling over $10 million short of projections. However, this should not be a particular surprise but, rather, it should be seen as part of a larger trend in the oil and gas sector. Giants of
May
17
2012
By Ted Stamas:
For the past five months, I’ve been doing extensive research on the wireless broadband industry by reading books, examining market research and studying earnings call transcripts of pure play companies in the sector. One organization I’ve uncovered and taken a position in is Glu Mobile (GLUU). Glu Mobile designs and produces gaming apps for feature phones as well as next-generation handsets and tablets. If you require a more detailed business description, my previous article will give you a more robust profile.
Many investors look at the market like a tote board at the race track attempting to make a quick kill, but I’m a bit antiquated and like to think I’m buying a piece of the company. I’m glad I have a stake in this one because my impression is their technological foresight may make them a viable alternative to legacy gaming systems in the next few years. After reading
May
17
2012
Quality Systems, Inc. (QSII) [$29.71 on 5/16/12] develops and markets computer software for medical and dental practices across the United States. The software consists of practice management, community connectivity solutions, and revenue cycle management services. The company provides electronic health records (EHR) to over 60,000 physicians spanning 2,200 group practice customers. Practices use the software to upgrade from paper records to reduce problems associated with outdated file/folder systems and reap the many benefits of electronic organization.
QSII is selling at 24x cash flow and 29x net free cash flow. Revenue and cash flow increased year over year from 1998 to the present. The P/E ratio is 22, below the median and trailing P/E of 26 and 31 respectively. Net profit margins oscillated between 29% and 36% over the last nine years, currently standing at 31.5%. Return on total capital is a strong 35%. QSII has no debt, and an assets-to-liabilities
May
17
2012
General Motors’ (GM) decision to drop Facebook (FB) ads sounded an ominous note for some over Facebook’s prospects of growing ad revenue; if General Motors says the ads don’t work, who’s going to bother to shell out the money to pay for them? This announcement probably came as no surprise to Facebook users, however, who usually close out each ad they see as it pops up, wanting to be rid of the distraction so they can get to the meaty business of sharing their lives with friends and strangers.
General Motors might be wise to pursue another option rather than turning its back on social network and mobile advertising completely. It might want to put its advertising in the capable hands of the resident expert in mobile. These days, that expert appears to be Velti Plc (VELT).
Velti, based in Ireland, is a mobile advertising and marketing company that helps
May
17
2012
By Rocco Verducci:
No sooner than the GlaxoSmithKline (GSK) $2.6 billion offer was announced, Human Genome Sciences (HGSI) made its intentions known that it thought that it was drastically undervalued and rebuked the offer. Instead of carefully weighing the long-term ramifications of it, HGSI hired Goldman Sachs and Credit Suisse to help explore strategic alternatives and promulgate that it was looking for an alternate suitor.
GSK attempted to initiate a well-choreographed Kabuki dance, an art form that would confer some majesty and respectability to the overture to HGSI. The response by HGSI was not a reciprocal Kabuki-style movement toward GSK, but rather a highly dramatized and out-of-step behavior that in no way was in the same character and class as its suitor’s dance step. In my estimation, the response by HGSI was strategically ill-advised. I believe this from the standpoint that HGSI has no viable alternative partners and it will immeasurably tarnish the
