Although, I think the broader markets have a little bit more work to do on the upside, it's time to start looking to short stocks again.
I need to research how these stocks will fall into the sector rotation and the fundamental story. But I chose all of these stocks, as they're either showing weak volume as they break through the 50 day moving average on a 3 year weekly chart, or they're displaying a bearish chart pattern.
Here they are:
CBRL (watch)
**CMG
PNRA (would like to see it break 43 with nice volume on the downside)
GEO
EPIC (wait for a retrace)
**MFN
**BRCD
CMGI
HLX (head and shoulders, hasn't been moving up with the rest of the sector)
ZBRA (wait for break down of 50 EMA)
**CELG
OZRK
I wouldn't jump into a position yet, but keep these on a watch list, they're all showing weakness. Any opinions and suggestions, let me know. For each of these stocks, be patient, and watch how they play off the moving averages. Stops of 7% to the upside for each and cover after a 20-30% gain on the downside.
Also it's important the overall market doesn't break out. Odds are these stocks will collapse as long as the broader indexes move down.
Kevin
Sunday, April 27, 2008
Wednesday, October 10, 2007
Health Care Update
Health care industry update As of October 10 2007
There has been a lot of activity in the broad market for the healthcare industry. Many of the top stories have to do with international markets. Many analysts remain bullish on the industry has a whole, as they expect it to continue double digit growth in many areas.
Ruppe Appreciation on HealthCare costs
The appreciation of the rupee is hurting the exports for the Health Care sector in India causing many of their goods and services to become overpriced in relation to the dollar.
IPO
Highlands Acquisition Corp announced today that it has completed its initial public offering of 12,000,000 units. Each unit consists of one share of common stock and one warrant, which entitles the holder to purchase one share of common stock. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $120,000,000 to the Company.
Look who they are targeting…..
Highlands Acquisition Corp. is a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination with one or more operating businesses. The Company initially intends to focus its search for a target business in the healthcare industry.
Chinas role
Chinas pharmaceutical industry is expected to grow by 18% by 2010.
Recently Zhejiang Huahai Pharmaceutical Co., the Chinese drug maker that won FDA approval. Look for a trend of China having a larger role in the industry.
Pfizer As part of a broad effort to invigorate its pipeline and move more aggressively into biotechnology, Pfizer Inc. announced Thursday a new division dedicated to developing biotherapeutic drugs and research technologies.
Wal-Mart
Wal- Mart announces that they will expand their prescription drug program. They will include three fertility and prescription birth control medications, along with medicines for glaucoma, attention deficit disorder, fungal infections, acne, and more.
Wyeth Eyes Japan
Wyeth seeking approval to launch new pneumonia drug and osteoporosis drug in Japan, as part of its effort to raise sales in Japan to $1 billion by 2010, nearly double that of 2006.
Merck approved to test HIV products
FDA releases its review of Isentress ahead of a panel meeting and finds that any negative side effects from the HIV drug aren't enough to keep it off the market.
Health care plan costs
Employers' health-insurance premiums up 6.1% in 2007, the slowest annual growth rate since 1999 but still outstripping gains in workers' earnings and general inflation.
There has been a lot of activity in the broad market for the healthcare industry. Many of the top stories have to do with international markets. Many analysts remain bullish on the industry has a whole, as they expect it to continue double digit growth in many areas.
Ruppe Appreciation on HealthCare costs
The appreciation of the rupee is hurting the exports for the Health Care sector in India causing many of their goods and services to become overpriced in relation to the dollar.
IPO
Highlands Acquisition Corp announced today that it has completed its initial public offering of 12,000,000 units. Each unit consists of one share of common stock and one warrant, which entitles the holder to purchase one share of common stock. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $120,000,000 to the Company.
Look who they are targeting…..
Highlands Acquisition Corp. is a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination with one or more operating businesses. The Company initially intends to focus its search for a target business in the healthcare industry.
Chinas role
Chinas pharmaceutical industry is expected to grow by 18% by 2010.
Recently Zhejiang Huahai Pharmaceutical Co., the Chinese drug maker that won FDA approval. Look for a trend of China having a larger role in the industry.
Pfizer As part of a broad effort to invigorate its pipeline and move more aggressively into biotechnology, Pfizer Inc. announced Thursday a new division dedicated to developing biotherapeutic drugs and research technologies.
Wal-Mart
Wal- Mart announces that they will expand their prescription drug program. They will include three fertility and prescription birth control medications, along with medicines for glaucoma, attention deficit disorder, fungal infections, acne, and more.
Wyeth Eyes Japan
Wyeth seeking approval to launch new pneumonia drug and osteoporosis drug in Japan, as part of its effort to raise sales in Japan to $1 billion by 2010, nearly double that of 2006.
Merck approved to test HIV products
FDA releases its review of Isentress ahead of a panel meeting and finds that any negative side effects from the HIV drug aren't enough to keep it off the market.
Health care plan costs
Employers' health-insurance premiums up 6.1% in 2007, the slowest annual growth rate since 1999 but still outstripping gains in workers' earnings and general inflation.
Tuesday, October 9, 2007
MMM Economic Outlook
MMM Economic Outlook 10/10/07
Seven weeks ago markets were down across the board because in times a high volatility (like now) markets become highly correlated. As of today markets are back on top after news that the credit crunch was soon to be behind us. The S&P 500 set a new high on Friday and the DOW is back above 14,000. Resources, Industrials and Technology have led since august lows. Gold hit a new 27 year high last week. All commodities are down beginning the week of 10/8; oil, copper, gold are down causing the shares to fall of several companies connected to these commodities. Year to date, commodities across the board are strong. According to RBC Capital markets, “Commodity strength is likely reflecting more than just US dollar weakness, and that it is consistent with the containment of credit market risks to global growth.” According to Allan Greenspan, if the dollar becomes weak (problematic) then there would be an acceleration in inflation. Recession is the word on everyone’s mind. According to Gene Epstein of Barron’s, “…A recession has less than a 20% chance of occurring… The weaknesses in housing and consumer expectations are both clearly voting thumbs-down. But the two employment indicators and the stock market are holding up pretty well. And more crucially, the real rate on federal funds is relatively accommodative in historical terms”
-The Commerce Department reported that orders to factories dropped 3.3%, lowest in 7 months. (Durable goods down 4.9%, non-durable goods down 1.6%, Autos down 8.5%)
-Jobs created in August originally reported a loss of 4000 but was revised to a gain of 89,000 and 110,000 in September. ( in line with estimates)
***The fed would more likely cut rates if job creation numbers fall short. Therefore, the stock market would react more favorably if the numbers fall short.
-The dollar has touched new lows against the Looney, Euro, Pound, and Yen in the past week.
As our national research source says, “While the risk of recession increased during the August financial panic, our estimates suggest that it has declined noticeably in the wake of the Fed’s September interest rate reduction.” They further note that since 1950, the economy has been in a state of recession only 13% of the time; in the past 20 years, that figure drops to only 6% of the time. In the past 20 years, market crises clearly have greatly outnumbered the number of recessions predicted by them. Of the last 11 market crises, the market resumed an uptrend on all but two occasions. Recessions tend to share common traits we believe remain largely absent today: Unemployment rises (absent today); Stock prices fall (we’re back to old highs); Yield curve inverts (it’s resuming a more normal shape now); Consumer confidence declines (okay, we’ve got that one
present). This 12-month model, designed by our national research source, shows a 13% current chance of a recession, compared with a 25% chance in prior to September. And—this recent recession panic was not the year’s high point—that was reached in March (when it rose to a 36% chance of a recession) as jobless claims rose, energy prices surge, and the yield curve inversion deepened (RBC).
Seven weeks ago markets were down across the board because in times a high volatility (like now) markets become highly correlated. As of today markets are back on top after news that the credit crunch was soon to be behind us. The S&P 500 set a new high on Friday and the DOW is back above 14,000. Resources, Industrials and Technology have led since august lows. Gold hit a new 27 year high last week. All commodities are down beginning the week of 10/8; oil, copper, gold are down causing the shares to fall of several companies connected to these commodities. Year to date, commodities across the board are strong. According to RBC Capital markets, “Commodity strength is likely reflecting more than just US dollar weakness, and that it is consistent with the containment of credit market risks to global growth.” According to Allan Greenspan, if the dollar becomes weak (problematic) then there would be an acceleration in inflation. Recession is the word on everyone’s mind. According to Gene Epstein of Barron’s, “…A recession has less than a 20% chance of occurring… The weaknesses in housing and consumer expectations are both clearly voting thumbs-down. But the two employment indicators and the stock market are holding up pretty well. And more crucially, the real rate on federal funds is relatively accommodative in historical terms”
-The Commerce Department reported that orders to factories dropped 3.3%, lowest in 7 months. (Durable goods down 4.9%, non-durable goods down 1.6%, Autos down 8.5%)
-Jobs created in August originally reported a loss of 4000 but was revised to a gain of 89,000 and 110,000 in September. ( in line with estimates)
***The fed would more likely cut rates if job creation numbers fall short. Therefore, the stock market would react more favorably if the numbers fall short.
-The dollar has touched new lows against the Looney, Euro, Pound, and Yen in the past week.
As our national research source says, “While the risk of recession increased during the August financial panic, our estimates suggest that it has declined noticeably in the wake of the Fed’s September interest rate reduction.” They further note that since 1950, the economy has been in a state of recession only 13% of the time; in the past 20 years, that figure drops to only 6% of the time. In the past 20 years, market crises clearly have greatly outnumbered the number of recessions predicted by them. Of the last 11 market crises, the market resumed an uptrend on all but two occasions. Recessions tend to share common traits we believe remain largely absent today: Unemployment rises (absent today); Stock prices fall (we’re back to old highs); Yield curve inverts (it’s resuming a more normal shape now); Consumer confidence declines (okay, we’ve got that one
present). This 12-month model, designed by our national research source, shows a 13% current chance of a recession, compared with a 25% chance in prior to September. And—this recent recession panic was not the year’s high point—that was reached in March (when it rose to a 36% chance of a recession) as jobless claims rose, energy prices surge, and the yield curve inversion deepened (RBC).
Wednesday, September 12, 2007
Consumer Goods- Hansens
Hansens-HANS $48.30
Many institutions including G. Sachs upgraded the beverage sector to attractive.
Judy E. Hong (G.S.) “judging by current spot prices, most major commodities that are needed to make and bottle beverages -- aluminum, resin, oranges and corn -- will be flat or down into 2008.”
In an industry that will prosper HANS has exceptional leadership:
Management Effectiveness (TTM)
Return on Assets
29.74%
Return on Equity
42.97%
Return on Inves. Capital
39.48%
The Return on Equity for HANS shows that it is able to reinvest its earnings more efficiently than 100% of its competitors in the Beverages (Nonalcoholic) industry. Typically, companies that have higher return on equity values are more attractive to investors.
Hansens has direct store delivery and warehouse delivery of their products which include:
Natural alternative beverages catering to those who are looking for ‘functional’ refreshment beverages with a purpose. Their lines include energy drinks, vitamin drinks, sports drinks and other natural more consciencious drinks for the consumer.
Coca Cola is also a good buy but a little more expensive with < op. margins and ROE.
Profitability (TTM)
Gross Margin
52.19%
Operating Margin
23.13%
EBITDA Margin
23.38%
Profit Margin
14.47%
HANS's Gross Margin is more than 83% of other companies in the Beverages (Nonalcoholic) industry, which means it has more cash to spend on business operations as compared to its peers. As indicated by the Operating Margin, HANS controls its costs and expenses better than 97% of its peers.
HANS boasts approval by Warren Buffet today, with a 97% 5 year EPS growth.
- which explains the P/E of 44.
- Highest ROIC in the sector
- International presence including Asia
- Quarterly revenue growth is 42% above the industry!!!
- Jones Soda is closest competitor but behind by a long shot.
- Alpha = 0.21
- Beta = 1.15
- Short interest = 8.49% as a % of float
DIRECT COMPETITOR COMPARISON
HANS
JSDA
PEP
Pvt1
Industry
Market Cap:
4.42B
232.26M
113.02B
N/A
2.15B
Qtrly Rev Growth (yoy):
56.90%
29.80%
10.20%
N/A
14.30%
Revenue (ttm):
740.61M
42.45M
36.66B
N/A
1.77B
Gross Margin (ttm):
52.19%
38.50%
54.82%
N/A
43.70%
EBITDA (ttm):
182.05M
2.32M
8.16B
N/A
253.01M
Oper Margins (ttm):
23.13%
2.23%
18.44%
N/A
6.10%
Net Income (ttm):
107.17M
2.36M
5.96B
N/A
2.36M
EPS (ttm):
1.089
0.090
3.565
N/A
0.09
P/E (ttm):
44.55
98.77
19.62
N/A
21.97
PEG (5 yr expected):
0.89
3.51
1.88
N/A
2.27
P/S (ttm):
5.80
5.42
3.08
N/A
1.51
-
Overall analyst consensus is buy-strong buy with a high target of $62.00.
Many institutions including G. Sachs upgraded the beverage sector to attractive.
Judy E. Hong (G.S.) “judging by current spot prices, most major commodities that are needed to make and bottle beverages -- aluminum, resin, oranges and corn -- will be flat or down into 2008.”
In an industry that will prosper HANS has exceptional leadership:
Management Effectiveness (TTM)
Return on Assets
29.74%
Return on Equity
42.97%
Return on Inves. Capital
39.48%
The Return on Equity for HANS shows that it is able to reinvest its earnings more efficiently than 100% of its competitors in the Beverages (Nonalcoholic) industry. Typically, companies that have higher return on equity values are more attractive to investors.
Hansens has direct store delivery and warehouse delivery of their products which include:
Natural alternative beverages catering to those who are looking for ‘functional’ refreshment beverages with a purpose. Their lines include energy drinks, vitamin drinks, sports drinks and other natural more consciencious drinks for the consumer.
Coca Cola is also a good buy but a little more expensive with < op. margins and ROE.
Profitability (TTM)
Gross Margin
52.19%
Operating Margin
23.13%
EBITDA Margin
23.38%
Profit Margin
14.47%
HANS's Gross Margin is more than 83% of other companies in the Beverages (Nonalcoholic) industry, which means it has more cash to spend on business operations as compared to its peers. As indicated by the Operating Margin, HANS controls its costs and expenses better than 97% of its peers.
HANS boasts approval by Warren Buffet today, with a 97% 5 year EPS growth.
- which explains the P/E of 44.
- Highest ROIC in the sector
- International presence including Asia
- Quarterly revenue growth is 42% above the industry!!!
- Jones Soda is closest competitor but behind by a long shot.
- Alpha = 0.21
- Beta = 1.15
- Short interest = 8.49% as a % of float
DIRECT COMPETITOR COMPARISON
HANS
JSDA
PEP
Pvt1
Industry
Market Cap:
4.42B
232.26M
113.02B
N/A
2.15B
Qtrly Rev Growth (yoy):
56.90%
29.80%
10.20%
N/A
14.30%
Revenue (ttm):
740.61M
42.45M
36.66B
N/A
1.77B
Gross Margin (ttm):
52.19%
38.50%
54.82%
N/A
43.70%
EBITDA (ttm):
182.05M
2.32M
8.16B
N/A
253.01M
Oper Margins (ttm):
23.13%
2.23%
18.44%
N/A
6.10%
Net Income (ttm):
107.17M
2.36M
5.96B
N/A
2.36M
EPS (ttm):
1.089
0.090
3.565
N/A
0.09
P/E (ttm):
44.55
98.77
19.62
N/A
21.97
PEG (5 yr expected):
0.89
3.51
1.88
N/A
2.27
P/S (ttm):
5.80
5.42
3.08
N/A
1.51
-
Overall analyst consensus is buy-strong buy with a high target of $62.00.
Saturday, August 4, 2007
UNH
Update on UNH:
Since purchasing UNH a couple months back the stock has not done to much for our portfolio, however, now may be a good time to add to it rather than divesting our ownership. It has been well over ayear since the revelation of the stock options scandal forced UNH to restate 13 years worth of earnings, and make many management changes at crucial high level positions.
The stock is up over 25% since May of 2006, but still well below its record high of 65 in late 2005. It is currently trading at 16 times next years expected earnings, which is well below the majority of their competitors. Compounding the low forward P/E ratio is the fact that its long term earns growth rate is estimated at 16% a year, much higher than many if their competitors.
UNH has been successful by focusing on three distinct business segments: Selling health insurance, offering private Medicare plans, and providing technology to companies to help control costs.
This technology aspect will continue to grow in importance over time. Just recently UNH played a huge role in highlighting the risks of the arthritis drug vioxx. UNH was able to track client data and show a correlation between the increased health risks of taking the drug.
While there still may be some side effects from the options back dating scandals which occurred, with pending litigation still awaiting trial. Some analysts, such as Thomas Caroll, say that the fallout will not make a significant impact on future earnings.
While the stock has not done much for us, this is a solid stock, in a solid industry, with good long term growth prospects.
Dave Seaton
Since purchasing UNH a couple months back the stock has not done to much for our portfolio, however, now may be a good time to add to it rather than divesting our ownership. It has been well over ayear since the revelation of the stock options scandal forced UNH to restate 13 years worth of earnings, and make many management changes at crucial high level positions.
The stock is up over 25% since May of 2006, but still well below its record high of 65 in late 2005. It is currently trading at 16 times next years expected earnings, which is well below the majority of their competitors. Compounding the low forward P/E ratio is the fact that its long term earns growth rate is estimated at 16% a year, much higher than many if their competitors.
UNH has been successful by focusing on three distinct business segments: Selling health insurance, offering private Medicare plans, and providing technology to companies to help control costs.
This technology aspect will continue to grow in importance over time. Just recently UNH played a huge role in highlighting the risks of the arthritis drug vioxx. UNH was able to track client data and show a correlation between the increased health risks of taking the drug.
While there still may be some side effects from the options back dating scandals which occurred, with pending litigation still awaiting trial. Some analysts, such as Thomas Caroll, say that the fallout will not make a significant impact on future earnings.
While the stock has not done much for us, this is a solid stock, in a solid industry, with good long term growth prospects.
Dave Seaton
Analyst General Guide Line
For Analysts the following is a general guide line in which you can follow.
What major companies are in your sector and what have they recently done?
What are the average Market Caps? Average P/E? Recent stock price performance?
What are some major events which have taken place in your sector?
What has the sector index done over the past couple of weeks?
What are other analysts and people saying about the sector or the companies in the sector?
In your opinion is there a catalyst that could drive money into or out of the sector?
All of this information could be easily found on YAHOO. It should not take long and there really is no right answer. It is the process of researching the sector and the information which you will get the most out of.
What major companies are in your sector and what have they recently done?
What are the average Market Caps? Average P/E? Recent stock price performance?
What are some major events which have taken place in your sector?
What has the sector index done over the past couple of weeks?
What are other analysts and people saying about the sector or the companies in the sector?
In your opinion is there a catalyst that could drive money into or out of the sector?
All of this information could be easily found on YAHOO. It should not take long and there really is no right answer. It is the process of researching the sector and the information which you will get the most out of.
I-Phone Hype
Some plays on the I-Phone:
Apple has seen a tremendous run up in their share price, a majority of which has been factored in from the great expectations that the I-Phone should bring them.
Rather than focusing on the I-Phone it may be a better idea to take a look at some of the other companies that could benefit from I-Phone success.
ATT (T) is the exclusive phone operator for the I-Phone in the U.S. In one article it said that they may have the most to gain since consumers will be crowding their stores for the phone and will most likely end up making additional purchases. I like this stock also because of the changes they are making to their CEO and their aggressiveness in breaking into the Internet and digital cable business.
Broadcom (BRCM) This chipmaker makes the technology for the phones touch screen controller. Beyond their success with apple this opportunity might open up the flood gates for future business with other phone providers. Another interesting spin is to look at a company like
NOKIA (nok). They have been in the high end phone market for a while, and may gain market share thanks to APPPLE opening people’s eyes and wallets to
Apple has seen a tremendous run up in their share price, a majority of which has been factored in from the great expectations that the I-Phone should bring them.
Rather than focusing on the I-Phone it may be a better idea to take a look at some of the other companies that could benefit from I-Phone success.
ATT (T) is the exclusive phone operator for the I-Phone in the U.S. In one article it said that they may have the most to gain since consumers will be crowding their stores for the phone and will most likely end up making additional purchases. I like this stock also because of the changes they are making to their CEO and their aggressiveness in breaking into the Internet and digital cable business.
Broadcom (BRCM) This chipmaker makes the technology for the phones touch screen controller. Beyond their success with apple this opportunity might open up the flood gates for future business with other phone providers. Another interesting spin is to look at a company like
NOKIA (nok). They have been in the high end phone market for a while, and may gain market share thanks to APPPLE opening people’s eyes and wallets to
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