Recommedations (as May 2, 2016): The following have been previously recommended and are still vaild. Most have had nice advances in the recent runup and will probably rest with the market over the next couple of weeks. Be aware that the leveraged contain large amounts of volatility at times.
Emerging Markets: Selected emerging markets have done well in this runup, particularly Brazil, Russia, and China, all of which have been recommended here. RSX (Russia ETF), RUSL (Russia 3X leverage ETF), EWZ (Brazil ETF), BRZU (Brazil 3x leverage ETF), FXI (China ETF) are instruments to participate in these countries. Individual emerging market stocks that have been Marketscope Recommendations include Alibaba (BABA, Chinese Internet Commerce), Vimpelcom LTD (VIP, Russian Telecom with good dividend), Mobile Telesystems (MBT, Russian telecom with good dividend), Yandex (YNDX, Russian search engine ala Google) YNDX just announced very good earnings on 28 April, Luk Oil (Lukoy, Russian Oil Company), Gazprom (OGZPY, Russian Natural Gas Company). Expect further gains in the emerging market space, as the energy, agricultural, and other commodity sectors continue to move higher in prices. These sectors have put investors/traders on notice with the magnitude of their moves. Continued advances in the emerging market and natural resource/commodity sectors further support the thesis of a declining U.S. dollar.
XLE (Energy ETF), OIH (Oil Services ETF), USO (oil ETF), UNG (Natural Gas Futures based ETF), DBE (Energy ETF 2x leverage), ERX (3x leverage), GASL (Natural Gas companies, 3X leverage)
Consol Energy (CSX) is a natural gas and coal producer. On its recent earnings conference call, it expects to weather the current low price environment without selling any properties/assets and it is free cash flow positive. It still has significant hedges in place that are cushioning the effects of the low prices. Due to the recent numerous bankruptcies in the coal space, it customer base has actually increased in that area as customers look for a reliable supplier. It can be profitable in the natural gas area with a price in the low $2’s and is expecting to get that down to $1.86 in the near future due to further cost efficiencies. I would not be in a hurry to buy here as it has almost doubled in price over the last two weeks. I would not be surprised to see it consolidate recent gains here and possibly provide an opportunity to pick it up at a prices below $8 versus its current price of $9.1.
Kinder Morgan (KMI) is primarily a natural gas pipeline owner and operator along with a bulk shipping terminal business that has been adversely affected in recent times by the bankruptcy of two of its coal mining clients, Arch Coal and Alpha Resources. In its latest earnings call, management stated they are continuing to manage their projects focusing on free cash flow and funding activities without going to the debt market. In its previous earnings conference call its management stated it had the situation well under control, it is a well-diversified business, its pipeline business, which is its largest business segment, was doing reasonably well despite low natural gas prices because to a significant degree this business segment is insulated from the low natural gas price environment (they are just transporting the natural gas through their pipelines for others, they are not drilling for it and selling it themselves), and they looked forward to the future. Warren Buffett was recently reported as taking a position in this company.
EPE (EP Energy, oil/natural gas pipelines). The company wants to keep its dividend in place and will only suspend it if is necessary but right now things are manageable. Upside potential from here looks promising.
Chesapeake Energy (CHK, 2nd largest natural gas producer in U.S.) has been in the news much this year because of their heavy debt loads and the prolonged low price environment in natural gas. CHK has a 500 million dollar debt payment due in March according to recent Wall Street Journal articles and CHK has the cash to pay that. But next year they have quite a bit more debt coming due, and it is expected that they will have to sell some properties or interests in some properties to successfully manage their debt going forward. In their last conference call they expressed having the flexibility to meet the upcoming debt payments by selling some of their non-core properties and still be in good shape for a rebound in natural gas prices.
Fuel Cell Energy Inc (FCEL), as per Yahoo, together with its subsidiaries, designs, manufactures, sells, installs, operates, and services stationary fuel cell power plants for distributed power generation. The company is also involved in the development, design, production, construction, and servicing of fuel cell products under the Direct FuelCell name. Its power plants electrochemically produce electricity and heat using various fuels, including natural gas, biogas, methanol, diesel, coal gas, coal mine methane, and propane. The company serves utilities, independent power producers, and governments; and education and healthcare, gas transmission, industrial and data centers, commercial and hospitality, oil production and refining, wastewater treatment, food and beverage, agriculture, and landfill gas sectors.
Energy- Solar Sector:
SPWR (Sunpower, solar sector) has large global exposure, residential, and expanding commercial and utility exposure. Earnings coming out soon. Stock looks like it is set up to decline in the short term. Would wait a few weeks before looking at this one too closely: FSLR (First Solar, solar sector) has been increasing its international exposure, good growth prospects going forward. Large exposure to utilities and the commercial area; TAN (solar ETF). I would wait a couple of weeks before buying these as they follow the natural gas price to some degree. Natural gas looks due for a rest here and may trade down some over the next couple of weeks.
Cybersecurity and Miscellaneous:
AKAM (Akamai Inc., Internet) would wait a couple of weeks, it looks like it is going to retest its recent bottom, VRSN (Verasign Inc., Internet), FEYE (Fireye Inc., Cyber Security, GLW (Corning, ), RHT (Redhat Inc.), MGM (MGM Resort International Inc., Casinos/Leisure), A (Agilent Inc., Life Sciences/Diagnostic Services), Agilent looks interesting in here. Recent earning report was solid. , TROX (titanium oxide producer, potential 3D printing implications, has good dividend), .
POT (fertilizer company), MOS (fertilizer company), TWI (smallcap tractor tire manufacturer)
Smallcap Tech/Life Sciences:
Five smallcaps are RMBS (Rambus Inc., Semiconductor/Cryptosecurity), LMNX (Luminex Inc., Life Sciences/Diagnostic), FLEX (Flextronics, Electronics Contract Manufacturing/Solar), and NANO (Nanometrics Inc., As per Yahoo: high-performance process control metrology and inspection systems used primarily in the fabrication of integrated circuits, high-brightness LEDs, discrete components, and data storage devices), NANO just announced good earnings with good forward guidance.
End of Current Recommendations, May 2,,2016.
UGAZ (Credit Suisse 3X Velocity Shares Long Natural Gas) & UNG (United States Gas Fund ETF) – The price of natural gas has started to move up from very low levels. Increased demand is slowly developing for natural gas in transportation. The prices of oil and natural gas usually move in tandem and oil has already significantly risen. As the dollar slides down, the price of all commodities should rise. Date Recommended: 5/6/2015, after the close.
RSX (Market Vectors Russia) & RUSL (Direxion Shares Trust Daily Bull 3X Shares) – Russian economy is primarily commodity driven and should benefit from the falling dollar and rising commodity prices. Russia has a very low debt in comparison with most other major economies. RSX and RUSL are up 64% and 361%, respectively since 12/16/2014, and this is still in the very early stages of commodities trending up and the U.S. dollar trending down. This strong move in the face of western imposed economic sanctions against Russia demonstrate the strength of this still early trend. Date Recommended: 5/6/2015, after the close.
EWZ (Ishares MSCI Brazil Capped ETF) & BRZU (Direxion Shares Trust Brazil Bull 3X) – Brazil’s economy is heavily commodity driven but this country has much more debt than Russia and therefore a more speculative play. EWZ and BRZU are up 25% and 88%, respectively, since 3/9/15, thus, are showing significant strength after making a 6.5 year low on 3/9/15. Place your stop at $31.5, which is approximately 13% from todays price ($36.13). Date Recommended: 5/6/2015, after the close.
AKAM (Akamai) – Growing company with very strong balance sheet. Their product portfolio makes the internet fast, reliable, and secure for their customers. Broke out on 2/14/2015 to make 14 year high at $67.59 and has steadily moved higher since then ($77.94 on 5/18). Has growing cyber security unit. 1st qtr EPS report showed revenue growth of 20% (adjusted for foreign exchange) and 1st qtr GAAP income up 16% (adjusted for foreign exchange) year over year. They have an active stock buyback plan ongoing. Target price 95-100. Date Recommended: 5/15/2015, before the open.
RHT (Red Hat) – World’s leading provider of open source software solutions. 4th qtr revenue up 22% (adjusted for foreign exchange) and 4th qtr operating cash flow up 18%, year over year. Total backlog for fiscal 2015 was up 19%, year over year and in excess of $1.86 billion. On 3/25/2015, company announced a new $500 million stock buyback plan to be funded out of operating cash flow. After breaking out to a new 14 year high on 12/19/2014, RHT consolidated over the next 3 months and broke out again after a good EPS report. Has been consolidating again, but has started moving up over the last 1.5 weeks (today is 5/19/2015). Date Recommended: 5/15/2015, before the open.
BABA (Alibaba) – This Chinese company is the world’s largest online and mobile commerce company in terms of Gross Merchandise Volume (GMV) and IPOed on 9/19/2014 at $92.7. Grew revenue in latest quarter 45% and GMV increased 35%, year over year. Non-GAAP income over last quarter increased by 16%, and free cash flow increased 143% to $914 million, year over year. Three very large insider buys in May 2015, two of them for over $2 million each. Chinese stocks have been very strong lately and this stock is starting to show strength after a big pop due to its EPS report on 5/7/2015. Date Recommended: 5/15/2015, before the open.
GS (Goldman Sachs)- During the latest EPS report on 4/16/2015, Goldman Sachs generated net revenues of $10.62 billion, the highest quarterly result in four years. The firm ranked first in worldwide announced and completed mergers and acquisitions for the year-to-date, and also ranked first in worldwide equity and equity-related offerings and common stock offerings for the year-to-date. Investment Banking produced net revenues of $1.91 billion, which is the highest quarterly performance since 2007. Institutional Client Services generated net revenues of $5.46 billion, which included the highest quarterly performance in equities client execution since 2010. Existing stock buyback plan is still in place with remaining share authorization of 18.6 million shares. The stock price has been trading near seven year highs including making new highs for the last five days as of 5/20/2015. Date Recommended: 5/15/15, before the open.
AIG (American International Group)- Announced new stock buyback of $3.5 billion during its latest EPS report on 4/30/2014. Profits increased 53% from the same period, year over year. Net income of $1.78 per share easily beat Wall Street estimates of $1.19. The stock price has been trading near four year highs since the latest EPS report. Date Recommended: 5/15/15, before the open.
XLF (Select Sector SPDR Trust Financial Select Sector Fund) & FAS (Direxion Shares Financial Bull 3X) – Financial stocks shares have been looking strong recently, while trading in a range since 12/1/2014. The big banks and large financial institutions such as AIG have stock buyback plans in place which should help over the near term. Date Recommended: 5/15/15, before the open.
A (Agilent)- Agilent is a global leader in life sciences, diagnostics and applied chemical markets. Agilent works with customers in more than 100 countries, providing instruments, software, services and consumables for the entire laboratory workflow. During their last EPS report on 5/18/15, second-quarter GAAP income from continuing operations was $88 million, or $0.26 per share compared to last year’s second-quarter GAAP income from continuing operations of $40 million, or $0.12 per share. They also reported orders of $1.04 billion, up 1 percent (up 8 percent adjusted for currency) from one year ago for the second fiscal quarter ended April 30, 2015. Agilent does have a stock buyback plan in place (as almost all self-respecting listed companies do) and expects to reach their planned repurchases of $365 million by year end. Price-wise the stock has been consolidating near its 14 year+ highs since the beginning of this year and looks poised for higher prices. Date recommended: 5/22/15, after the open.
EMC (EMC Corporation) – EMC allows its customers to accelerate the journey to cloud computing, helping IT departments to store, manage, protect and analyze their most valuable asset — information — in a more agile, trusted and cost-efficient way. That said, they have a very good stock buyback plan and expect to repurchase an aggregate of $3.0 billion of the company’s common stock in 2015. EMC proclaimed at their latest EPS report on 4/22/15, that they generated $1.1 billion in operating cash flow and $755 million in free cash flow in the first quarter, and ended the quarter with $13.5 billion in cash and investments. Six key high-growth areas grew combined revenue well over 100% year over year and are on track to achieve $2 billion in combined revenue in 2015. The company repurchased approximately $1.5 billion worth of its common stock in the first quarter and returned approximately $230 million to shareholders via a quarterly dividend. EMC also owns 80% of VMware and in the first-quarter 2015 revenue within EMC was up 12% year over year as the business continued making significant progress on its strategic initiatives focused on the software-defined data center, hybrid cloud solutions and end-user computing. There has been speculation and encouragement from activists to spin off its ownership stake in VMware. If that does occur, it should have a positive effect on the stock price. EMC has traditionally been a leader in providing data storage solutions, which now is also including an increased focus on cyber security and is one of their six key high growth areas. Cyber security is becoming ever more important to companies in protecting their data due to the presence of increased cyber threats. EMC made a 13+ year high on 12/26/14 of $30.92 and then descended fairly rapidly over the next three months to $25.07. It has since bounced up to $26.84 (5/22/15). Would place a stop order one point under the low of $25.07 (amounts to approximately a 10% stop). Date Recommended: 5/22/15, after the open.
EMC – Quarter 2, 2015 EPS Report Update: Company is in process of transforming their company into an integrated, federated model that takes advantage of accessing across all their units respective capabilities to seamlessly fulfill the needs of their enterprise customers who are in the process of changing from legacy storage setups to either a private cloud or hybrid cloud environments. The company is becoming a one-stop shop that provides to their customers a host of varied and needed capabilities to successfully transition into a hybrid or total cloud environment. These capabilities include data storage, management, security, and analytics delivered in a cost efficient manner. Subscription business models, where it makes sense, are being transitioned into by some of these newer, higher growth units within EMC to provide a more manageable recurring revenue stream. EMC is one of the leaders in providing storage solutions to enterprise customers but is the only one whose company is wholely dedicated to this important business segment. Excerpts from their EPS report follow:
EMC Corporation (NYSE:EMC) today reported second-quarter 2015 financial results. Consolidated second-quarter GAAP revenue was $6 billion, up 2% year over year. GAAP revenue was reduced by the amount of a VMware settlement with the DOJ and the GSA, which was entered into and paid in cash by VMware in the second quarter. Consolidated second-quarter non-GAAP1 revenue was $6.1 billion, up 3% year over year and up 8% on a constant currency basis2. GAAP earnings per weighted average diluted share was $0.25, down 11% year over year. Non-GAAP1 earnings per weighted average diluted share was $0.43, flat compared with the year-ago quarter.
EMC generated $1 billion in operating cash flow and $647 million in free cash flow3 in the second quarter, and ended the quarter with $14.8 billion in cash and investments. EMC repurchased approximately $2 billion worth of its common stock year-to-date and returned $225 million to shareholders in the second quarter via a quarterly dividend.
Joe Tucci, EMC Chairman and CEO, said, “While pleased with many aspects of the second quarter, especially with the market acceptance and rapid growth of our newer products, we also saw customers become more conservative around refreshing their traditional infrastructures as they plan their IT transformations. We also saw ongoing geo-political factors in China and Russia. To capture more opportunity we have honed our growth strategy around four pillars: best-in class products and solutions that are, or will be, offered as a service; an expanded focus on cloud services; tighter coordination of our federated go-to-market approach; and a leadership team that is second to none. We are confident in our strategy in becoming the most trusted partner to customers embarking on digital transformation and hybrid cloud journeys, and we remain laser focused on enhancing shareholder value.”
Zane Rowe, EMC CFO, said, “My thanks to the entire team for their hard work and execution in the second quarter. We are seeing success in the growth areas of our portfolio, while our traditional storage category was impacted by customers focusing on their short-term purchasing needs as they develop their digital agendas. We continue to drive growth, cost efficiency and business transformation, as well as additional alignment across our businesses.”
David Goulden, CEO of EMC Information Infrastructure, said, “In an IT market that is changing rapidly, our new businesses are performing exceptionally well, with the Emerging Storage business now at nearly a $3 billion revenue run-rate, which we expect will grow more than 30% in 2015. We are focused on evolving our storage portfolio, delivering solutions, leading in high-growth areas and getting more aggressive on costs and are taking additional steps to manage the trends in our traditional storage business. Going forward, the favorable mix toward new applications and transformational spend will serve us well beyond 2015.”
BRCM (Broadcom Corporation) – Broadcom delivered better than expected results in the 1st quarter of 2015 driven by strength in the high end smartphone and broadband access sectors. AAPL and Samsung are their major customers for smart phone chips. Looking to the next quarter, they are expecting operating performance to strengthen based on tight operating expense discipline and strong margins. Non-GAAP net income for the first quarter of 2015 was $390 million, or $0.64 per share (diluted), compared with non-GAAP net income of $197 million, or $0.33 per share (diluted), for the first quarter of 2014. The company does have an ongoing stock buyback plan. Price-wise, the stock has been on a slow and somewhat jagged rise from its low of $24.60 on 8/26/13 and recently (on 5/19/15) reached a nine year high. Date Recommended: 5/22/15, after the open. Date Closed: 5/28/15 due to company being bought out.
VALE (Vale S.A.)- Vale is a Brazilian ADR that trades on the New York Stock Exchange and is the world’s largest iron ore producer. The company has had a very rough time due to the slowdown in the global economies of the world, particularly China, who has been their largest customer. Iron ore is currently trading near its 10 year lows as well as the stock itself. The company recently signed multiple large loan agreements, one with Chinese banks and another with a consortium of 24 banks, and the company also recently sold off some of their ships to generate more cash, so the company has sufficient money to see itself through these tough times. While the Chinese economy has drastically slowed from its heyday of a few years ago, there are plans to build a new Silk Road which will include an 8,000 mile railway requiring large amounts of iron. Also, in this time of worldwide debasement of the major global fiat currencies, owning hard assets or companies that represent an interest in hard assets is key to preserving your wealth. Signs of a bottom have been detected in this company, as well as in other commodity/resource based companies but the ultimate bottom may still be some time in the future. Right now, this may be a place for someone looking to diversify some of their assets into the commodity/resource area or you may want to watch this company or sector for a while to see more concrete signs of a bottom before entering. The stock is trading on greatly increased volume since late last summer, so while many people are exiting there are also many people buying the stock in this range. People do not buy large quantities of stock at low prices to lose money. Date Recommended: 5/6/15.
PBR(Petrobas) – This large Brazilian company operates in Brazil and internationally as an integrated energy company that includes exploration, development, production, refinement, and transportation of oil, natural gas liquids, and natural gas and trades on the NYSE as an ADR. It has vast offshore oil reserves that it is in the process of developing and the company is 63% state controlled. As virtually all state-controlled businesses, it is horribly managed, which has greatly contributed to its continuous price decline since 12/09. It has been embroiled in a large corruption scandal involving several of its government appointed directors involving huge amounts of kickbacks and bribes. That said, China is one of its largest customers and recently provided them with a large loan to help see them through these tough times and aid in the development of its vast offshore reserves. The reasons I recommend this company for long term holders looking to diversify into the commodity/resource sector has nothing to do with it being a well-run company but because I believe at some point in the not too distant future (6-18 months) , you will see the commodity/resource sector re-price itself upwards due to continued currency depreciation as already seen in most major currencies over the last 2-3 years except in the U.S. dollar (not yet but likely to follow its fiat brethren downward at some point). Another point, as Benjamin Graham said (I will try to paraphrase it here) in one of his books, the poorly managed or marginal company will often appreciate the greatest when economic conditions turn and markets bottom because the marginal company has been beaten down so much during the economic slowdown or downturn (and this has been a global economic slowdown despite the blathering nonsense to the contrary that governments have been telling their constituents) that when prices of its product rise, then even marginal companies become profitable and regain much of the steep decline they have experienced. This is somewhat illustrated by its past performance in this century. The stock had a great tenfold run-up from a low in 2002 to an intermediate high in 5/06. It then based for little over a year before beginning its climax run from a relative low of $20.69 in 3/07 to its all-time high of $77.61 in 5/08. It then crashed to a relative low of $14.73, along with oil prices, reached in 11/08. But when the stock market started to bottom at the end of 2008 and a couple of months before oil reached its bottom, PBR turned and more than tripled by 12/09 when it reached $53.46, along with a steeply rising oil price during that same period. Also, China has big plans for a new Silk Road venture and China’s middle class as well as many other emerging markets middle class are greatly enlarging which will require more energy in the future. Date Recommended: 5/6/15.
STV (China Digital TV Holding Co., LTD) – This Chinese company provides conditional access (CA) systems to the digital television market. It offers CA systems, including smart cards, head-end software for television network operators, and terminal-end software for set-top box manufacturers, which enable digital television network operators to control the distribution of content and value-added services to their subscribers and block unauthorized access to their networks. The company also sells digital television application software, such as electronic program guides, and subscriber management systems to digital television network operators; and other products sourced from third party suppliers, including surface mounted device chips. In addition, it develops and commercializes solutions and products comprising digital television services, cloud computing technology-based digital video delivery solutions, and advanced digital television terminals. This company reports earnings on 6/8/2015. From its last EPS report, net revenues in the fourth quarter of 2014 were US$29.2 million, representing a 12.8% increase from the same period in 2013 and a 72.3% increase from the third quarter of 2014. Gross margin increased, year over year, to 80.9% from 76.4% for the same period. Overseas business also saw steady growth. Date Recommended: 5/22/15.
DANG (E-Commerce China Dangdang Inc.) – DANG is a leading business to consumer e-commerce company in China. This stock was a speculative recommendation based on the recent strength in Chinese stocks and its recent strength prior to its EPS report on 5/28/2015. It spiked down in price after its recent EPS report on 5/28/15 although the report had some promising items. Total net revenues increased 27.7% from the prior period year over year. Gross Merchandise Value (“GMV”) from the marketplace in the first quarter of 2015 was RMB1,771.5 million ($285.8 million), a 49.4% increase from the corresponding period in 2014. Mobile orders accounted for 41% of total orders for the first quarter of 2015, compared to 14% for the corresponding period in 2014. The Executive Chairwoman attributes the loss in earnings primarily to marketing and technology initiatives and expenditures related to e-books, mobile and content that they believe set the stage for the future healthy development of the business. Although the stock has not recovered from its drop on the EPS report, if the stock does recover and surpasses its recent high of $11.1, it would warrant consideration for re-entry. Date recommended: 5/22/15.
GLD (6 month puts) – This recommendation should have specified a strike price for the puts but did not in my haste of including the recommendation. Gold has dropped significantly since the recommendation and if you had bought puts with a strike price near the GLD price when recommended then you would be well in the money now. I expect GLD to continue down until the price of gold reaches about $950. Date recommended: 5/22/15.
SPWR (Sunpower Corp.) – Sunpower designs, manufactures and delivers the highest efficiency, highest reliability solar panels and systems available today for the residential, business, government and utility markets and has been in business for 30 years. SPWR along with FSLR are the two largest solar panel makers in the world. Its latest EPS report was on 4/30/15 with the company reporting an adjusted earnings that was down 73.5% the year ago period but still above consensus views by $.04. Earnings were expected to drop primarily due to the joint venture between SPWR and FSLR in forming a Yield Company that will be spun off later this year. Both companies are holding onto some of their completed projects from the last quarter so that they can be included into their new Yield company, although some of these asset sales may be accounted for in upcoming periods for the parent company. The company is expected to do well in the upcoming quarters and has a strong pipeline of projects including one joint venture with Apple in China, the world’s largest solar market. More China projects are included in the pipeline and expected in the future. Date Recommended: 6/3/15.
FSLR (First Solar Corp.) – FSLR earnings report on 4/30/15 revealed a loss of ($0.62)/shr and they missed consensus views. The CEO called the 1st quarter a transitional quarter as they held back on some of their completed projects to use for the upcoming Yield Co. spinoff venture with SPWR. They also announced a new joint venture with Caterpillar. Under the agreement, First Solar will design and manufacture a pre-engineered turnkey package for use in remote microgrid applications, such as small communities and mine sites. Initial markets include Asia Pacific, Africa, and Latin America and will be marketed through the Caterpillar dealer network. The microgrid package is expected to be available in the 2nd half of 2015. Date recommended: 6/3/15.
BDLP (Ballard Power Systems Inc.) – This Canadian small-cap company is primarily involved in the design, development, manufacture, sale, and service of fuel cell stacks, modules, and systems for various applications. Although total revenue, for the quarter, decreased 34% to $9.3M due to an expected decline in Technology Solutions, net income of $7.0 million or $0.05 per share, displayed improvements of 283% and 269% respectively. The increase in earnings reflects the $14.2 million gain on the sale of certain intellectual property assets to Volkswagen Group. According to the CEO, “We continue to expect 2015 revenue to be heavily weighted in the second half of the year. We are seeing significant progression of our sales pipeline based on repeat customer business and complemented by attractive new customers in both our Power Products and Technology Solutions platforms .” The stock jumped up the other day on an announcement to provide fuel cell Power Products and Technology Solutions to support the planned deployment of an initial 33 fuel cell-powered buses in two Chinese cities. The deal has an estimated value of $10 million, the majority of which is expected to be recognized in 2015. The company continues to see strong growth opportunities in the Chinese municipal transportation sector and is already collaborating with other Chinese municipalities for possible future deals. This is a play on countries wanting to diminish the amount of pollution in their municipal areas as well as the possible continued increase in oil price which will make alternative energy sources much more attractive and viable. Date Recommended: 6/9/15.
PGNX (Progenics Pharmaceuticals, Inc.) has several potential product candidates in the pipeline and are progressing through their respective clinical trials as expected according to its last earnings report on 5/6. Its net loss for the quarter was (0.15) per share and PGNX ended the quarter with cash and cash equivalents of $108.4 million, a decrease of $10.9 million in the quarter. Progenics Pharmaceuticals, Inc. is developing innovative medicines for oncology, with a pipeline that includes several product candidates in later-stage clinical development. Progenics’ first-in-class PSMA-targeted technology platform for prostate cancer includes an antibody drug conjugate therapeutic which completed a two-cohort phase 2 clinical trial and a small molecule imaging agent that has also completed a phase 2 trial. Among other assets in its pipeline of targeted radiotherapy and molecular imaging compounds is Azedra(TM), an ultra-orphan radiotherapy candidate currently in a phase 2 study under an SPA. Progenics’ first commercial product, RELISTOR(R) (methylnaltrexone bromide) for opioid-induced constipation, is partnered with and marketed by Salix Pharmaceuticals, Ltd., a Valeant Pharmaceuticals International, Inc. company. Progenics has exclusively licensed development and commercialization rights for its first commercial product, RELISTOR, to Salix Pharmaceuticals, Ltd., a Valeant Pharmaceuticals International, Inc. company. RELISTOR (methylnaltrexone bromide) subcutaneous injection is a first-in-class treatment for opioid-induced constipation approved in the United States for patients with chronic non-cancer pain, and in the U.S. and more than 50 other countries for patients with advanced illness.
GERN (Geron) is a clinical stage biopharmaceutical company focused on the collaborative development of a first-in-class telomerase inhibitor, imetelstat, in hematologic myeloid malignancies. Net loss for the first quarter of 2015 was $9.3 million, or $0.06 per share, compared to $8.4 million, or $0.06 per share, for the comparable 2014 period. For the first quarter of 2015, the company reported operating revenues of $537,000 and operating expenses of $10.0 million compared to $474,000 and $9.2 million, respectively, for the comparable 2014 period. Operating expenses in the first quarter of 2015 included restructuring charges of $406,000. The company ended the first quarter of 2015 with $163.8 million in cash and investments. According to a Motley Fool article, Geron’s drug, imetelstat, could be a game changer in its specific area as it has shown the capability to diminish and even cure the cancer unlike the current marketed drug that treats only the symptoms. It has a big backer in Johnson & Johnson who is willing to invest $935 million if the drug meets expected milestones. The drug had a previous study halted due to possible liver safety concerns but that halt has now been lifted and the company is free to proceed forward.
MNKD (Mannkind) from its last earnings report stated its net loss for the first quarter of 2015 was $30.7 million, or $0.08 per share based on 398.9 million weighted average shares outstanding, compared with a net loss of $52.1 million, or $0.14 per share based on 368.8 million weighted average shares outstanding for the first quarter of 2014. It has the only inhalable insulin product now available that is marketed by Sanofi, who has been known to market a handful of blockbuster drugs according to Investopedia. It has started out of the gate slowly in the first quarter with poor sales but Sanofi has not yet started to advertise it so there are expectations that sales will significantly increase once advertising begins in earnest. Although there are 368.8 million shares outstanding, only approximately 61% of those are floated as insiders hold approximately 39% of the outstanding shares. Next earnings report is 8/3.
JOE (The St. Joe Company) The St. Joe Company together with its consolidated subsidiaries is a real estate development and operating company with real estate assets and operations currently concentrated primarily between Tallahassee and Destin, Florida. The Company uses these assets in its residential or commercial real estate developments, resorts and leisure operations, leasing operations or its forestry operations. From the company’s EPS report in early May, for the first quarter of 2015 of $(1.7) million, or $(0.02) per share, compared with Net Income of $403.0 million, or $4.37 per share, for the first quarter of 2014. During the first quarter of 2014, the Company sold approximately 380,000 acres of the Company’s non-strategic timberlands and rural land to AgReserves, Inc (the “AgReserves Sale”). As a result of this sale, the Company recorded earnings of $511.1 million before income taxes in the first quarter of 2014. Revenue for the first quarter of 2015 was $17.1 million as compared to $23.2 million, excluding the AgReserves Sale, in the first quarter of 2014. The decrease in revenue is primarily due to a $6.3 million decrease in timber revenue as a result of the AgReserves Sale. The Company’s first quarter revenue was generated from $5.4 million of residential real estate sales, $7.8 million from resorts and leisure operations, $2.1 million from leasing operations and $1.8 million from timber sales. This company is being recommended because of its extensive land and timber holdings that will maintain their value if a strong inflationary environment arrives. At current price levels ($16.06), it is trading only about $3.25 above 20+ year lows so the downside risk is relatively low at these levels.
CHK (Chesapeake Energy Corp.) Chesapeake Energy Corporation is the second-largest producer of natural gas and the 11th largest producer of oil and natural gas liquids in the U.S. Headquartered in Oklahoma City, the company’s operations are focused on discovering and developing its large and geographically diverse resource base of unconventional oil and natural gas assets onshore in the U.S. The company also owns substantial marketing and compression businesses. From its last earnings report on 5/7, adjusted ebitda was $928 million in the 2015 first quarter, compared to $1.515 billion in the 2014 first quarter. Operating cash flow was $910 million in the 2015 first quarter, compared to $1.614 billion in the 2014 first quarter. The year-over-year decreases in adjusted ebitda and operating cash flow were primarily the result of lower realized oil, natural gas and natural gas liquid (NGL) prices. CHK is one of the lowest cost producers in the industry and is poised to benefit in a rise of natural gas prices. At current price levels ($8.71), I believe downside risk is manageable.
RMBS (Rambus Inc.) From its EPS report on 7/20, revenue for the second quarter of 2015 was $72.8 million, which was relatively flat on a sequential basis from the first quarter of 2015 primarily due to higher sales of security products offset by lower royalty revenue. As compared to the second quarter of 2014, revenue was down 5% primarily due to lower royalty revenue, offset by higher revenue from a new license agreement signed with IBM during the first quarter of 2015 as well as higher sales of security and lighting products. CEO Ron Black during the earnings conference call talked of an upcoming new product (that they have been working on for a few years) announcement prior to next month’s Intel Developer’s Forum that could not be totally divulged at this time. He stated, “as our customers and their customers all know, the era of big data is placing tremendous demands on the data center to optimize performance, power, CapEx and OpEx for vast amounts of data. Our product, while not related to storage class memory architectures, as some have speculated, will improve both bandwidth and capacity requirements to meet the growing needs of the data center”. CEO Black also talked about their CryptoManager platform that are being developed and deployed and has Qualcomm as the lead customer. He added about CrytoManager’s potential revenue, “at the upcoming investor day, we’ll take a deeper look at the downstream royalty opportunity for third-party keys, but suffice it to say that it dwarfs Rambus’s current revenue”.
VRSN (VeriSign Inc.) – VRSN is the top name by far in internet domain registry services as well as providing internet security. Verisign ensures the security, stability and resiliency of key Internet infrastructure and services, including the .com and .net domains and two of the Internet’s root servers, as well as performs the root-zone maintainer functions for the core of the Internet’s Domain Name System (DNS). Verisign ensures the security, stability and resiliency of key Internet infrastructure and services, including the .com and .net domains and two of the Internet’s root servers, as well as performs the root-zone maintainer functions for the core of the Internet’s Domain Name System (DNS). The company provided a solid 2nd quarter EPS report and repurchased 2.5 million shares of its common stock for $156 million. At June 30, 2015, $761 million remained available and authorized under the current share repurchase program which has no expiration. Some highlights from its just released EPS report include Verisign ended the second quarter with cash, cash equivalents and marketable securities of $1.9 billion, an increase of $460 million as compared with year-end 2014. Cash flow from operations was $175 million for the second quarter of 2015, compared with $121 million for the same quarter in 2014. Deferred revenues on June 30, 2015, totaled $932 million, an increase of $41 million from year-end 2014.