Seeking Alpha
  • Spin-Off NOW, Inc: Market Leadership, Experienced Management, And Pristine Balance Sheet Point To Compounding Value
    PRO Top Idea DNOW Fri, Sep. 12, 5:00 AM Value Plus Incentives 19 Comments

    Summary

    • DistributionNOW or NOW, Inc. (DNOW), the recent spin-off from National Oilwell Varco, Inc. (NOV), ranks second by market share in the fragmented but fast consolidating energy distribution market.
    • DNOW’s pristine balance sheet – $236 million in cash, no debt – and low cost of capital should facilitate organic market share gains and rapid growth via M&A activity.
    • In contrast, DNOW’s primary competitor and market leader, MRC Global (MRC), has much higher leverage and now needs to enter a period of de-leveraging, which will likely slow growth.
    • DNOW’s management team has a 10 year, successful track record of accretive M&A. The spin-off is only the most recent in a long series of strategic actions to create value.
    • DNOW’s operating margins are likely to inflect significantly higher after digesting two large acquisitions and transitioning to a global ERP system.
  • Short Famous Dave's With 33-48% Downside
    PRO Top Idea DAVE Thu, Sep. 11, 5:00 AM Ross O'Toole, CFA 8 Comments

    Summary

    • Famous Dave's is a fundamental short due to deteriorating fundamentals, namely negative SSS trends.
    • The company trades with a "growth" valuation despite virtually no current new unit growth.
    • The current valuation is already giving credit to a successful turnaround, yet there is currently no evidence to support improving fundamentals.
    • At current prices, Famous Dave's has 33-48% downside.
  • Long Run Exploration: Cheap Canadian E&P With Huge 8.4% Yield
    PRO Top Idea WFREF Thu, Sep. 11, 5:00 AM Thomas Lott 46 Comments

    Summary

    • Long Run Energy (LRE in Toronto) is an E&P company trading at a 15% FCF Yield and a huge 8.4% dividend yield.
    • Technical pressure has pushed the stock down 10% in the past month as shares issued to fund an acquisition recently hit the market.
    • Management grew production organically 5.5% in the last quarter, and at under 4x TEV/EBITDA, the stock is excessively cheap and misunderstood.
  • Paradise Entertainment: 80% Upside On Strong Earnings From Casino Management, Gaming Equipment
    PRO Top Idea PDSSF Wed, Sep. 10, 5:00 AM Hidden Value 12 Comments

    Summary

    • Non-mainstream stock pick on Macau gaming sector: Strong 2-pronged earnings growth strategy driven by (1) Casino management and (2) Gaming equipment.
    • (1) Casino management: Increased capacity and continued yield enhancement with sticky grind mass focus.
    • (2) Gaming equipment: Overseas sales upside in US and Australia from distributorships, Macau local sales upside from upcoming new Cotai casinos, and long-term upside on product mix upgrade.
    • Recent sell-off post-1H14 results offers attractive valuation now for an entry point, especially when expectations for Macau gaming sector are lowered and reset.
  • Hutchinson Technology, Revisited
    PRO Top Idea HTCH Tue, Sep. 9, 5:00 AM Thomas Lewis 8 Comments

    Summary

    • Turnaround of suspension assembly business solidly back on track.
    • The rumor about an Optical Image Stabilizer (OIS) turns out to be true, and WOW what a partner!
    • While recent developments make posited $12 per share intrinsic value look conservative, we probably won't get to see HTCH trade above $20.
  • American Capital's 2nd Quarter Results Show Transformation Progress
    PRO Top Idea ACAS Tue, Sep. 9, 5:00 AM Alan Stacy 10 Comments

    Summary

    • Net operating income shows sequential growth and appears to have bottomed.
    • Management's investment focus on debt and more stable recurring income is starting to appear on financial statements.
    • Current share price discount to book value continues to present an attractive risk-reward opportunity.
  • Alere: Diagnosing A New Strategy With Upside Of 50% Or More
    PRO Top Idea ALR Tue, Sep. 9, 5:00 AM Alpha Gen Capital 7 Comments

    Summary

    • The market reaction to the quarterly results were off base presenting an entry opportunity.
    • The company has significant upside catalysts including the divesting of the Health Management division and other non-core assets.
    • The balance sheet debt has been a hindrance to investors supporting the shares. They have aggressively been delevering over the last year.
    • Aggressive activist shareholders provide a margin of safety in the shares motivating management in restructuring the business.
  • Layne Christensen: Why We Think The Bottom Is In With Strong Risk-Reward Going Forward
    PRO Top Idea LAYN Tue, Sep. 9, 5:00 AM BuyTheDip SellTheRip 12 Comments

    Summary

    • We think LAYN’s worst days are behind it as evidenced by a sharp reversal in bookings, non-residential construction spending acceleration, and winding down of unprofitable “hard bid” contracts.
    • Breakup valuation isn't in the stock – LAYN’s best segment is likely worth over $11 per share before attributing any value to LAYN's $700 million of remaining revenue.
    • Activist shareholders are pressing management to sell part of the company and reinvest the proceeds into debt paydown and share repurchases.
    • Recent refinancing yields a de-risked balance sheet: new revolver eliminates maintenance covenants with no significant maturities until 2019 barring a $15 million principal payment in CY2014.
    • Valuation is very attractive and the stock is receiving little credit for numerous materially positive developments over the last 2-3 quarters. LAYN is worth $20+ on a SOTP basis.
  • Quartet: Joel Greenblatt Writes A Blank Check For Pangaea Logistics
    PRO Top Idea QTET Thu, Sep. 4, 5:00 AM Eight Diamonds Advisors 19 Comments

    Summary

    • Joel Greenblatt is an initial stockholder and special advisor to Quartet, a blank check company that plans to merge with Pangaea Logistics, a maritime logistics provider.
    • Pangaea Logistics displays many of the characteristics one would expect from a Joel Greenblatt investment. Sector market leadership, high return on equity, experienced management and attractive growth prospects.
    • Quartet’s management highlight that there is a significant valuation gap between the price they are paying for Pangaea Logistics and its publicly traded peers. We estimate about 28% upside potential.
    • Key catalysts to unlock value include the successful completion of the merger, growing investor awareness and Pangaea Logistics achieving its net income targets, in particular for 2014E.
    • This opportunity should start to realize material upside in the near term, with limited downside risk due to an attractive entry price versus Quartet's current cash balance and the post-merger valuation.
  • HC2's Deal Making Offers Significant Upside
    PRO Top Idea HCHC Thu, Sep. 4, 5:00 AM Whopper Investments 19 Comments

    Summary

    • Significant NOLs and shifting balance sheet obscure company's value.
    • While controversial, management has a significant ownership stake and is highly incentivized to increase net asset value.
    • Near-term catalysts include closing of Schuff deal and uplisting to major exchange.
  • Quartet Merger Rights: 40% Upside For A Short-Term Event Driven Investment
    PRO Top Idea QTETR, QTET Thu, Sep. 4, 5:00 AM Ariana Research 22 Comments

    Summary

    • Quartet Rights offer investors the opportunity to re-create Quartet common at $7.20 per share, or 40% upside if the rights trade up to the common.
    • A near-term event is in place to unlock value. On September 29th, shareholders will vote on the Company's merger with Pangaea Logistics.
    • Quartet boasts strong sponsorship through Eric Rosenfeld of Crescendo Partners and famed value investor Joel Greenblatt.
  • Arris Group: Finding Profits In Your Cable Box
    PRO Top Idea ARRS Wed, Sep. 3, 5:00 AM Helix Investment Research 10 Comments

    Summary

    • The acquisition of Motorola Home has been very successful, resulting in double-digit growth in operating income and EPS.
    • Post-earnings selloff on unfounded concerns surrounding bookings has created an attractive entry point.
    • Continued balance sheet deleveraging will lead to increased ability to return capital to shareholders.
    • Despite year-to-date gains, shares continue to trade at modest multiples, both on an absolute and relative basis.
  • Wizard World: Obscure Marketing Machine Offers Attractive Risk/Reward
    PRO Top Idea WIZD Wed, Sep. 3, 5:00 AM Unconventional Capital Wisdom 6 Comments

    Summary

    • Wizard's convention business is the quintessential low asset high return business.
    • Wizard's scale provides barriers to entry in marketing, celebrity draw and attendance.
    • Comic cons benefit from continued monetization of superhero assets by movie studios.
    • Even with the >70% increase in share price this month, we continue to see at least 46% upside in the near term, limited downside and plenty of optionality.
  • Danieli: Ultra-Cheap, Ultra-Solid, 40% Upside (At Least)
    PRO Top Idea DNIYY Wed, Sep. 3, 5:00 AM Early Retiree 23 Comments

    Summary

    • Italian steel and aluminum plant maker Danieli is trading at an EV/EBITDA ratio of under 2, despite being highly profitable.
    • Adjusting for excess cash, the company's preference shares trade at only 2.7 times expected 2014 EPS.
    • Even without adjustments the PER 2014e is only 8.35 and the PER 2015e is 7.11.
    • With the steel sector picking up speed, a return to a still modest valuation of 10 times earnings should be easy to achieve within 12 months.
  • 9% Yield And 50% Upside At Bluerock Residential Growth REIT
    PRO Top Idea BRG Wed, Sep. 3, 5:00 AM Dane Bowler 15 Comments

    Summary

    • Bluerock is a discounted multi-family REIT with large growth potential.
    • Developing and repositioning afford BRG greater yields on investment than market cap rates.
    • Misconceptions about the company's operations have kept its market price down.
  • KAR Auction Services: An Opportunity From Industry Anomalies
    PRO Top Idea KAR Wed, Sep. 3, 5:00 AM Alpha Gen Capital 1 Comment

    Summary

    • KAR is poised to benefit from a strong cyclical surge in its key whole car auction segment from late 2011 and 2012 cars coming off lease.
    • The industry is essentially an oligopoly with a few large players and very highs barriers to entry.
    • The financing arm represents a hidden asset opportunity which is a fast growing and very high incremental margin business.
  • TransAct Technologies: After A Sell-Off, Investors Have A Great Opportunity To Own This Debt-Free 4% Yielder
    PRO Top Idea TACT Sat, Aug. 30, 5:00 AM ValueArtifex 9 Comments

    Summary

    • After a heavy sell-off earlier this month an underfollowed microcap, TransAct Technologies, is now on sale.
    • Recent selling can be attributed to the market's misunderstanding of the company's product cycle and investments in new sectors of business.
    • TransAct is debt-free and offers investors a dividend yield over 4% which has been increased twice since being initiated a year and a half ago.
    • Management has also recently engaged in massive share repurchases, with a new $7.5 million share repurchase program announced producing an extremely favorable Total Shareholder Return profile.
    • Investors at current prices stand to benefit over the next year from the company's investment in new product deployment and will enjoy higher per share earnings due to share repurchases.
  • True Gold Mining Brings Good Karma To Your Portfolio
    PRO Top Idea RVREF Thu, Aug. 28, 5:00 AM Itinerant 17 Comments

    Summary

    • True Gold Mining has an extremely robust project in Burkina Faso.
    • We believe that this is only the tip of the iceberg. We expect the Karma project to develop into a long-lived and highly-profitable gold mine.
    • The terms of the recent financing, and feedback from the company have further bolstered our confidence to call for 60% mid-term upside.
    • Much more long-term potential exists, with some of the best management available to drive growth.
  • EQT Corporation: The Midstream Advantage
    PRO Top Idea EQT Thu, Aug. 28, 5:00 AM Richard Zeits 7 Comments

    Summary

    • Based on a sum-of-the-parts analysis, EQT’s upstream business is one of the best values in the Marcellus/Utica E&P peer group.
    • The company is developing takeaway solutions in the Marcellus that may support production growth to over 3 Bcf/d by 2018.
    • The stock has a catalyst in the form of a potential monetization of the General Partner interest in the MLP.
    • The recently acquired Midland acreage has the potential to evolve into a second core operating area.
    • Despite the natural gas pricing headwinds in the Marcellus/Utica area, the stock's risk/reward profile appears skewed very favorably to the upside.
  • TowerJazz: A Towering Double In Share Price
    PRO Top Idea TSEM Wed, Aug. 27, 5:00 AM Jaret Wilson 94 Comments

    Summary

    • TowerJazz's new JV with Panasonic adds $360 million-$420 million a year in revenue and also provides room for expansion.
    • The JV facilitates the closing of the Nishiwaki fab, giving $132 million in annual cost savings.
    • TowerJazz is also seeing extraordinary organic growth, especially in RF devices and image sensors.
    • I believe TowerJazz is priced at a fully diluted level of around 3 times late 2015 or early 2016 EV / EBITDA.
  • To Handsomely Beat The Market, Buy Petroamerica Oil With Both Hands
    PRO Top Idea PTAXF Tue, Aug. 26, 5:00 AM Value Digger 278 Comments

    Summary

    • Petroamerica made a transformative deal by acquiring Suroco Energy, and addressed all the challenges it was facing.
    • This acquisition significantly strengthens and diversifies the company's asset base.
    • Now, Petroamerica has everything: strong production growth, high netbacks, stellar balance sheet with a strong cash position and an aggressive management.
    • With management focused on continuing to grow, the tremendous valuation gap with the peers can close anytime and Petroamerica's shareholders stand to benefit a lot.
  • Mentor Graphics: Earn 20% With Zero Net Market Exposure
    PRO Top Idea MENT Tue, Aug. 26, 5:00 AM Beating The Street 8 Comments

    Summary

    • Mentor operates in an industry experiencing multiple long-term tailwinds.
    • The company's leading indicators suggest a business inflection is near.
    • The stock's current valuation presents multiple ways to profit from the name.
  • Eclipse Resources Corporation: A Shiny Penny Still Isn't Worth Twenty Five Cents
    PRO Top Idea ECR Sat, Aug. 23, 5:00 AM Dallas Salazar 17 Comments

    Summary

    • ECR is wildly overvalued when comparing its PV-10 to a peer group.
    • ECR may soon have to take impairments on its assets as the price of Natural Gas has fallen 19% over the last 90 days.
    • ECR fails several benchmark tests when compared to peers yet maintains valuation multiples at significant levels higher than those same peers.
  • TOP Ships: Deep Discount To NAV Presents Opportunity
    PRO Top Idea TOPS Sat, Aug. 23, 5:00 AM Sabra Capital Partners 31 Comments

    Summary

    • We believe TOPS will accrete in value over time and narrow the gap to NAV as its fleet grows and its strong FCF becomes more apparent.
    • Management owns over 40% of the company and is highly incentivized to grow its NAV and build shareholder value.
    • Patient investors will be well rewarded as we believe the intrinsic value of the company is well north of $4.40 per share currently.
  • Jason Industries - Hidden IPO Of A Proven Business With Proven Management
    PRO Top Idea JASN Fri, Aug. 22, 5:00 AM New Capital 26 Comments

    Summary

    • Jason Industries is a fast growing and profitable global industrial manufacturing business that recently merged with a blank check company and became public.
    • Due to lack of investor awareness and following among analysts the share price continues to trade in the pre-merger range, not reflecting any potential of Jason Industries.
    • The company has long and profitable history of revenue growth and successful acquisition integration. Longstanding relationships with blue-chip customers and established reputation will ensure continuation of great financial performance.
    • Peer valuation indicates 50%-55% upside. Management’s purchases of warrants signals at least 35% upside.
    • Company’s chairman and management have proven track record and very high incentives to see share price grow.
  • DTS Inc.: A Mundane Business, With Exciting Profits
    PRO Top Idea DTSI Fri, Aug. 22, 5:00 AM Helix Investment Research 7 Comments

    Summary

    • Margin-rich royalty revenues result create business with material operating leverage.
    • Partnerships with majority of leading consumer electronics companies create tailwinds as network-connected electronics sales continue to grow.
    • Clean balance sheet with over $2 per share in net cash.
  • MGIC - An Opportunity Through Mortgage Credit Exposure
    PRO Top Idea MTG Fri, Aug. 22, 5:00 AM REIT Analyst 12 Comments

    Summary

    • Expected losses on MTG's legacy book are likely a lot less than anticipated.
    • Even accounting for some conservative assumptions the fair value of MTG is over twice its market price.
    • The results are not very sensitive to future mortgage default assumptions.
  • El Pollo Loco: PE 'Bust-Out', 20+ Years Of Failed Domestic Expansion, Pre-IPO Window Dressing Make An Ideal Short
    PRO Top Idea LOCO Thu, Aug. 21, 5:00 AM Suhail Capital 110 Comments

    Summary

    • More like a ‘Pollos Hermanos’ than the Chipotle media comparison it is currently getting.
    • 20+ years of failed domestic expansion track record.
    • Two-year comp momentum is largely average check growth driven, and thus should be heavily discounted.
    • Existing equity holders will be very motivated sellers at lockup expiry.
    • There should be ZERO bid for this stock anywhere north of $20.
  • New Media Investment Group Offers 100%+ Upside With Downside Protection From Sustainable ~7% Dividend Yield
    PRO Top Idea NEWM Tue, Aug. 19, 5:00 AM VJ Shil 28 Comments

    Summary

    • As a post-bankruptcy equity and recent spin-off, NEWM is an undervalued and underfollowed local newspaper and online media stock that trades at 6.1x LTM pro-forma EBITDA and 7.2% dividend yield.
    • Not a secular dying business: investors get a turnaround, stabilizing business with free optionality for the company to generate substantial value through accretive acquisitions, offering a compelling asymmetric risk-reward opportunity.
    • NEWM owns 450+ local community newspapers that are more stable and have loyal readership base. NEWM purchases distressed newspapers at <3.5x EBITDA and has 1300 potential targets in M&A pipeline.
    • One of the main competitors for M&A is Warren Buffett’s B.H. Media group, which poses limited risk since they operate in different, large, and fragmented markets.
    • NEWM can leverage its strong local footprint and regional scale to cross-sell its Propel digital marketing, an organic high-growth segment with a potential $24B total addressable market.
  • Bellatrix Exploration: Deeply Undervalued And Likely To Achieve Significant Price Appreciation
    PRO Top Idea BXE Sat, Aug. 16, 5:00 AM TheValueMan 158 Comments

    Summary

    • Bellatrix Exploration is a USD $1.3 billion market cap E&P with an average trading volume of US$3.3 million on the NYSE and $34.8 million with the TSX included.
    • Bellatrix trades at a discount to peers and must appreciate 76% to reach the median peer group multiples.
    • Bellatrix has net debt / Q2 2014 EBITDA of 1.2x, which is lower than 7 out of 10 peers, and affirmed production increases of 33%, which is higher than peers.
    • Due to increased firm service capacity, Bellatrix alleviated near term constraints on production growth. Their 2015 and 2016 gas plants will fully eliminate those constraints.
    • Continued increases in production growth, and a new PR campaign in the US will cause a re-rating of this stock. My 12 month price target is C$16.
  • Why Consolidated Tomoka Is Taking Off And Headed Much Higher
    PRO Top Idea CTO Sat, Aug. 16, 5:00 AM Nat Stewart 29 Comments

    Summary

    • A hidden asset rich company (balance sheet land values are 100+ years out of date) with significant catalysts to realize value, yet still under-appreciated by investors.
    • Upcoming land sales, including 76 acres for a Trader Joe’s distribution center (set to close in the third quarter), should substantially accelerate the company’s transition to an income-producing company.
    • A motivated and highly experienced CEO on track to make a name for himself within the investor community.
    • Purchase and sale agreements for 16% of the company’s land have been signed with a total value of over $50 million, vs. the company’s market cap of only $280 million.
  • Cash America: Spin-Off Of Its E-Commerce Business Should Unlock Substantial Value
    PRO Top Idea CSH Fri, Aug. 15, 5:00 AM Eight Diamonds Advisors 12 Comments

    Summary

    • Cash America is an alternative financing company that operates through two main segments. A traditional pawnshop business and Enova, an online provider of non-secured consumer loans.
    • Cash America plans to spin-off Enova by early 2015. This provides a clear catalyst to unlock the value of the two businesses, currently not fully reflected in its valuation.
    • Based on comparable multiples, we estimate the two businesses will trade at a 40% plus premium to Cash America’s current market capitalization post-separation.
    • We think the downside is limited. Most of the bad news covering regulatory risks, suppressed gold prices and consumer confidence are well-known and most likely already priced in.
    • This is a medium-term trade. Around six months for the spin-off to unlock substantial value, then a series of further value creating catalysts could unfold over the next few years.
  • Radcom: Product Success And Operating Leverage Will Drive Upside
    PRO Top Idea RDCM Fri, Aug. 15, 5:00 AM Mike Arnold, CFA 5 Comments

    Summary

    • Radcom is at the cusp of significant earnings growth due to three key variables: (1) revenue growth; (2) gross margin expansion; and (3) fixed operating expenses.
    • A transition to a software-driven model via new product offering - MaveriQ - is rapidly expanding gross margins coupled with well-contained, fixed operating expenses.
    • The Q2 earnings release and conference call confirmed points (2) and (3) above. Recently announced contract wins should provide the last leg of the value thesis, revenue growth.
    • Radcom's share structure includes only ~8 million shares, about 40% of which are held by two insiders, Zohar and Yehuda Zisapel. Place limit orders, expect volatility.
  • Outerwall, Inc: An Attractive Out Of Favor Business
    PRO Top Idea OUTR Wed, Aug. 13, 5:00 AM David Tristan Liu 43 Comments

    Summary

    • Outerwall trades at ~4.0 EV/EBITDA and 8.9x forward P/E indicative of immediate distress.
    • Redbox is more sustainable than the market believes.
    • Outerwall business includes two other segments.
    • Debt levels are manageable and FCF will be returned to shareholders.
  • Marten Transport: Mispricing In The Industry Provides Strong Upside
    PRO Top Idea MRTN Tue, Aug. 12, 5:00 AM Alpha Gen Capital 9 Comments

    Summary

    • Marten is one of the premier niche transport operators in the business with top-notch management and very efficient operations.
    • The company is now a much more diverse enterprise with "three fingers of growth" and a very broad revenue base.
    • Further expansion into Southern California with their recent acquisition and into Western Mexico will likely push down operating cost ratios further and increase profitability as route density increases.
  • Noble Roman's New Initiatives Could Be Baking Up Some Profits
    PRO Top Idea NROM Tue, Aug. 12, 5:00 AM Whopper Investments 15 Comments

    Summary

    • Noble Roman's recent stand-alone take-n-bake initiative could be worth more than 50% of the company's market cap by the end of next year.
    • Even without the stand-alone initiative, the company trades at a discount to peers despite significant tax assets.
    • Strong insider ownership aligns management with shareholders.
  • Advanced Drainage Systems: Let The Share Price Drain Be Your Gain
    PRO Top Idea WMS Tue, Aug. 12, 5:00 AM Dallas Salazar 21 Comments

    Summary

    • WMS should be currently operating exclusively on its revolving credit facility.
    • WMS has more debt, contractual obligations, and operating expenses coming due, at best, over the next 36-48 months than it has borrowing capacity and cash flow generation capability.
    • WMS is operating at max levels of efficiency and has a mature operation overall, greatly limiting its ability to improve revenue growth from current levels.
  • magicJack: Short-Term Catalyst, And Significant Upside
    PRO Top Idea CALL Sat, Aug. 9, 5:00 AM William Delano 51 Comments

    Summary

    • Significant short squeeze possible when magicJack releases 2Q earnings on August 11.
    • Trading at 4.4x EBITDA, magicJack has no debt, high margins, and a new product launch; expect revenue growth and multiple expansion under the company's new management.
    • An acquisition or LBO is definite possibility.
  • LeapFrog: Product Cycle Refresh Provides The Road Map For Substantial Upside
    PRO Top Idea LF Sat, Aug. 9, 5:00 AM Money Investor 9 Comments

    Summary

    • LeapFrog stock has been beaten down due to an inventory glut that is a temporary problem.
    • New product releases scheduled for the balance of the FY should have investors looking back to what happened when LeapFrog first introduced the LeapPad.
    • Company maintains a pristine balance sheet and should generate acquisition overtures or an activist investor could step in to create value for shareholder.
  • Overstock.com: A High Conviction Idea With 150% Upside
    PRO Top Idea OSTK Fri, Aug. 8, 5:00 AM Mike Arnold, CFA 59 Comments

    Summary

    • Overstock.com is trading at a wide discount to my estimate of private market value.
    • Management is introducing higher-margin service offerings such as Supplier Oasis and an insurance broker which should lead to incremental margin expansion.
    • Clear tailwinds in eCommerce, a capital-light operating model and optionality in terms of monetizing developed in-house software and accretive capital allocation provide downside protection and significant upside potential.
  • ArcBest: 20% Earnings Related Decline Presents A Great Entry Point For Investors
    PRO Top Idea ARCB Fri, Aug. 8, 5:00 AM Money Investor 7 Comments

    Summary

    • ArcBest fell over 20% after reporting substantial revenue growth with a noisy EPS number that missed expecations.
    • The company is now experiencing significant revenue and EBITDA growth and short-term operational efficiency growing pains will not persist.
    • 30% upside for ArcBest in the next 12 months.
  • Kennedy-Wilson: European Venture Should Shine A Spotlight On Its Own Significant Upside Potential
    PRO Top Idea KW Sat, Aug. 2, 5:00 AM Eight Diamonds Advisors 1 Comment

    Summary

    • Kennedy-Wilson is a vertically integrated global real estate investment and services company with a reputation for thriving in distressed property markets.
    • Despite generating an average equity multiple of over 1.60x on its investments, the market is currently valuing them at just 1.10x book value. We estimate 25% plus upside for Kennedy-Wilson.
    • The investment process that generates these returns is complex, with Kennedy-Wilson normally taking minority equity positions in commingled funds and JVs. This confuses the market, resulting in the gaping discount.
    • We believe Kennedy-Wilson’s European venture will act as a catalyst, leading investors to question why its own investments are valued by the market well below their fair value.
    • This is a medium-term opportunity. The downside is limited due to the existing discount to market value and Kennedy-Wilson’s proven ability to generate outsized returns from a crisis.
  • Lynden Energy - Unknown Permian Basin Pure Play Could Triple
    PRO Top Idea LVLEF Sat, Aug. 2, 5:00 AM TheValueMan 168 Comments

    Summary

    • Lynden Energy is a Midland Basin pure play with zero net debt and a current USD market capitalization of $106 million.
    • Undervalued relative to peers by 220% on Enterprise Value/EBITDA, 230% on EV/Production, and 218% on EV/1P Proven Reserves.
    • Currently worth $321 million in an asset sale or takeover which is triple the current enterprise value.
    • Recent horizontal drilling partnership with Diamondback Energy increases Lynden Energy’s value and probability for asset sale/ takeover.
    • Current drilling at Mitchell Ranch asset could easily double market cap of Lynden Energy or more by itself.
  • Tree.com: When Investors Ignore, You Win!
    PRO Top Idea TREE Fri, Aug. 1, 5:00 AM Alpha Gen Capital 20 Comments

    Summary

    • The return to lower lending standards and secondary financing including second lien mortgages like HELOCs should benefit TREE strongly.
    • Investors are expecting a decline in volumes as interest rise which is counter to what we think as lenders increase lead generation usage in order to offset refinancing declines.
    • New products, including many in the non-mortgage space, continues to enhance the company's growth trajectory.
  • Mart Resources: It's The Right Time To Buy This African Oil Play
    PRO Top Idea MAUXF Thu, Jul. 31, 5:00 AM Street Smart Investor 37 Comments

    Summary

    • Mart Resources has inched higher by 22% in the last five months on some crucial positive developments.
    • Production and revenue for Mart Resources is likely to surge in FY15 as the company starts using its export pipeline for oil sale to Shell.
    • Mart Resources is undervalued based on relative valuation with a potential 63% upside over the next 12-18 months.
  • Invacare Dramatically Undervalued Due To Temporary FDA Issue
    PRO Top Idea IVC Thu, Jul. 31, 5:00 AM Dr. Hugh Akston 27 Comments

    Summary

    • IVC is global leader in mobility and seating products, but it has been dramatically under-earning for the past two years due to an FDA consent decree.
    • Once FDA consent decree is lifted, combination of $130m high-margin revenue coupled with $10m less of compliance expenses will have an explosive impact on FCF and EPS.
    • FDA action pertains to quality control systems NOT safety of product or quality of product.
    • We believe this saga with the FDA is entering the 9th inning and expect the consent decree to be lifted within the next 12 months.
    • We see the stock offering a compelling 7.4x risk/reward opportunity and see intrinsic value being $26 per share (+73% upside).
  • The Market Is Only Just Starting To Wake Up To Largo Resources
    PRO Top Idea LGORF Thu, Jul. 31, 5:00 AM Itinerant 20 Comments

    Summary

    • A growing supply deficit will drive vanadium prices higher in coming years.
    • Commissioning at Largo Resources' world-class Maracas vanadium mine has been completed and production is imminent.
    • The market has only just started to appreciate the quality of the asset, and the outstanding execution of Largo bringing the mine into production.
    • We estimate 150% upside if past performance can be maintained throughout ramp-up.
  • Coupons.com - Crazy Growth Assumptions Necessary To Justify Valuation - At Least 55% Downside With Clear Catalyst
    PRO Top Idea COUP Tue, Jul. 29, 5:00 AM New Capital 18 Comments

    Summary

    • Coupons.com trades at P/S=10 with no profit. It is currently priced 50% above its IPO price just 4 months ago. Its addressable market is limited and not growing.
    • Company is unlikely to maintain its monopoly position as competition from better capitalized rivals will put pressure on company’s margins and market share.
    • Diluted fair value assuming 30% growth and 80% market share is $11/share, a downside of 55% from the current price.
    • Huge shareholder dilution through issuance of options and RSU – 28m shares to be issued compared to 12m during IPO.
    • Strong catalyst with September lock-up expiry.
  • Aeropostale: Why It's A High-Conviction Short All The Way Down
    PRO Top Idea ARO Tue, Jul. 29, 5:00 AM Jeremy Raper 41 Comments

    Summary

    • Despite mammoth underperformance in recent years, ARO stock still looks significantly overvalued at $3.2 per share, given the magnitude of secular challenges facing the company.
    • Even adjusting for announced store closures, ongoing cash burn, as well as allowing for some improvement in comps and margins, ARO could still burn $108mm in net assets in 2Q-4Q.
    • The current store footprint remains extremely overbuilt, suggesting ARO needs to close another 300-400 stores in coming years to rightsize the business.
    • After conducting emergency financing with Sycamore, common stockholders have been effectively subordinated in the capital structure and should expect zero in recovery.
    • Given the rate of asset destruction, a reasonable price target would be a slight premium to year-end proforma book value - that is, around $1.5 per share (45% downside).
  • If You Are An Alpha Seeker Looking For The Next Big Energy Play, Load Epsilon Energy Now
    PRO Top Idea EPSEF Tue, Jul. 29, 5:00 AM Value Digger 359 Comments

    Summary

    • Epsilon Energy is a profitable energy company with a pristine balance sheet.
    • The company has two profitable and growing segments (upstream and midstream).
    • It is drilling the sweet spot of the Marcellus shale.
    • Epsilon's stock is a sleeper and the company's current valuation is irrational.
    • Epsilon's stock has to soar to come in line with the peers' valuation.